401k Loan Calculator 2026
Calculate the real cost of borrowing from your 401k — including lost investment growth that doesn't show up in your loan statement.
Why 401k Loans Cost More Than They Appear
The interest rate on a 401k loan is misleadingly appealing — "you're paying yourself." But the real costs are invisible on the statement: (1) Lost compounding on the borrowed amount during repayment. (2) Double taxation — you repay with after-tax dollars, then pay taxes again on withdrawals in retirement. (3) Job change risk — lose your job and the full balance may be due by your next tax filing date.
Frequently Asked Questions
You can borrow up to 50% of your vested balance or $50,000, whichever is less. Most plans require a minimum of $1,000. The loan must be repaid within 5 years (or longer if used to purchase a primary residence).
The true cost includes: interest paid (which goes back to your account), lost investment growth on the borrowed amount, and the double-taxation effect (you repay with after-tax dollars, then pay taxes again on withdrawal). On a $20,000 loan at 8% expected market return, you lose roughly $8,000–$12,000 in long-term retirement value.
If you leave your employer, the full outstanding balance typically becomes due by the tax filing deadline (including extensions) for that year. If you cannot repay, the balance is treated as a distribution — subject to income tax and a 10% early withdrawal penalty if you are under 59½.
Usually no. While 401k loan interest rates are lower, the true cost — lost investment compounding — often exceeds what you would pay in interest on a personal loan. A HELOC, personal loan, or balance transfer card is typically cheaper when you account for opportunity cost.