401(k), IRA & Roth
Should I borrow from my 401(k)? See the cost before signing
A 401(k) loan calculator that shows the monthly repayment and the true cost of borrowing: the growth the money would have earned if it had stayed invested.
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What does a 401(k) loan really cost?
The interest is paid back to your own account, so the real cost is the investment growth lost while the money is out, plus the risk of the loan becoming a taxable distribution if you leave your job. Loans are generally limited to the lesser of $50,000 or 50% of the vested balance, repaid within 5 years (longer for a primary home)2026 · IRS. Compare the lost growth with the cost of other borrowing.
Whenever cash runs short, often mid-year
Car repairs, medical bills, a down payment or credit card debt push people toward their largest pool of money. The plan website makes borrowing easy, and the client wants to know if it's wise before clicking. It's a moment of stress, which makes clear, neutral information valuable.
What the client types into a search box
“is it a good idea to borrow from my 401k”
How a client works through it
Enter the loan amount
How much the client wants to borrow from the plan.
Enter rate and term
The plan's loan rate and repayment term in years.
Enter expected return
What the money would have earned invested.
See the true cost
Monthly repayment, value if left invested, value from repayments and the difference.
What lands in your inbox
When a client asks your firm to review the result, the request arrives as a contact record with their inputs and results attached, by email and, on paid plans, by webhook to your CRM.
Received
Loan amount, rate, term and the expected return show the size of the need and the client's expectations. A large loan relative to typical balances or a short planned tenure at the employer suggests default risk. A loan to pay off high-interest debt may be reasonable but points to a debt plan.
Why isn't the interest the cost?
Monthly Repayment is what leaves the paycheck. Value From Repayments is what the repayments grow to inside the plan. Value If Left Invested is what the original amount would have grown to. True Cost of Borrowing is the gap between the two.
When the loan rate is lower than the expected return, the cost is positive: the account ends up smaller than if the client hadn't borrowed.
Results shown: True Cost of Borrowing · Value If Left Invested · Value From Repayments · Monthly Repayment.
Why should a firm answer the 401(k) loan question?
A client considering a 401(k) loan is signaling a cash flow problem or a big purchase. Both are planning conversations: emergency funds, debt strategy, or the real cost of the purchase. Helping before they borrow builds loyalty that outlasts the moment.
For CPA firms, a loan that defaults after a job change becomes a taxable distribution, possibly with a penalty, which is a nasty surprise at filing time.
Follow-ups this request opens
- Compare the loan with a home equity line or other credit
- Build an emergency fund to avoid future loans
- Plan for repayment if the client changes jobs
- Review a debt payoff strategy
What this calculator leaves out
- Ignores taxes: repayments come from after-tax pay.
- Does not model default if the client leaves the job.
- Plan fees and loan origination charges are not included.
- Constant investment return.
Platform disclaimer shown under the calculator: Estimates only. Assumes level monthly repayments returned to the plan and a constant investment return; it ignores taxes, fees, and the risk of default if you leave your job.
Compliance note for firms
Advice on borrowing from a retirement plan is a financial decision with tax consequences if the loan defaults. Present the comparison neutrally and avoid recommending products to fill the cash need without proper disclosure.
Not legal advice. See our disclaimer and the guide to compliance for client calculators.
2026 figures this page relies on
| Figure | Value | Tax year | Source |
|---|---|---|---|
| 401(k) loan maximum and term | the lesser of $50,000 or 50% of the vested balance, repaid within 5 years (longer for a primary home) | 2026 | IRS |
| Additional tax on early retirement distributions | 10% before age 59½ (age-55 separation-from-service exception for plans) | 2026 | IRS |
The same values drive the calculator. Full list on the 2026 figures page.
Terms your client sees in the calculator
These definitions appear in the calculator's collapsible Definitions block, so clients don't have to call to ask what a label means.
- True cost of borrowing
- The value the money would have reached if left invested, minus the value your repayments reach by the payoff date. Because the interest you pay goes back into your own account, the real cost is not the interest but the growth you give up. When the expected return exceeds the loan rate, this figure is positive.
- 401(k) loan
- Borrowing from your own 401(k) or 403(b) balance, if your plan allows it, and repaying it through payroll with interest. There is no credit check, and the interest returns to your account. The money is out of the market while borrowed, and leaving your job can make the remaining balance due sooner than planned.
- Loan limit
- The most a plan may lend you. Under IRS rules in effect for 2026, it is generally the lesser of $50,000 or 50% of your vested balance (IRS). Your plan can set a lower limit or not offer loans at all. This calculator does not enforce the cap, so check the loan amount against it.
- Vested balance
- The part of your retirement account that you own outright. Your own contributions are always fully vested; employer contributions may vest over several years of service under the plan’s schedule. Loan limits are based on the vested balance, not the total shown on your statement, so unvested employer money does not count.
- Repayment term
- How long you take to repay the loan. General-purpose 401(k) loans must be repaid within 5 years; a longer term is allowed only for buying a primary home (IRS rules in effect for 2026). A longer term lowers the monthly repayment but keeps more money out of the market longer, which raises the true cost.
- Loan interest rate
- The rate your plan charges on the loan, which you pay back into your own account. It sets the monthly repayment. A higher loan rate returns more to your account and narrows the gap with investment growth, but the interest is paid with after-tax dollars and is taxed again when withdrawn in retirement.
In our glossary: Employer match
Should I Borrow From My 401(k)? calculator: questions from firms and clients
How much can I borrow from my 401(k)?
Generally the lesser of $50,000 or 50% of the vested balance, repaid within 5 years (longer for a primary home)2026 · IRS. Plans can set lower limits.
What happens if I leave my job?
The outstanding balance may need repaying by the tax filing deadline for that year; otherwise it is treated as a distribution, taxed and possibly subject to 10% before age 59½ (age-55 separation-from-service exception for plans)2026 · IRS.
Is the interest a cost?
You pay it to your own account. The real cost is lost growth.
Is a loan better than a withdrawal?
Usually, because a withdrawal is taxed and may be penalized. See the early withdrawal calculator.
Are repayments made with pre-tax money?
No, with after-tax pay, and the money is taxed again on withdrawal in retirement.
Can I keep contributing while repaying?
Usually, and it's important to keep capturing the employer match.
Should I borrow to pay off credit cards?
It can lower interest costs, but only works if the debt doesn't return. Talk to a planner.
Which plan includes it?
Network. See pricing.
No question matches that filter. Clear it to see them all, search the whole site, or ask us directly; we reply within one business day.
Clients who ask this usually ask next
Early Withdrawal Cost
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All “401(k), IRA & Roth” calculators · Everything in Retirement
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