401(k) loan vs. consolidation loan
401(k) loan calculator: borrow from retirement or take a loan?
Borrow from your 401(k), take a consolidation loan, or withdraw the money? Compare the payment, the cost and what happens if you leave your job.
How this works
- The tax rules let a plan lend up to the greater of $10,000 or half your vested balance, but no more than $50,000. The calculator also never lends more than the vested balance, and your plan can set lower limits.
- A plan loan is repaid in equal payments within 5 years, so the calculator caps the term there.
- The interest you pay goes back into your account. Growth the borrowed money misses uses the yearly return you enter, which is an assumption, not a forecast.
- If you leave your job and the loan is offset against your account, you have until your tax return due date, including extensions, to roll it over. Otherwise it can be taxed as a distribution.
- Early distributions before age 59½ generally carry a 10% additional tax on the part included in income. The withdrawal estimate assumes the whole amount is taxable; exceptions may apply.
- The consolidation loan is sized to cover its origination fee and paid in fixed monthly payments.
Sources
Awaiting expert reviewPreview build. Estimates only; not financial, tax or legal advice.
Common questions
How much can I borrow from my 401(k)?
Under the tax rules, a plan can lend you up to the greater of $10,000 or 50% of your vested balance, but no more than $50,000. Your plan can set lower limits.
What happens to a 401(k) loan if I leave my job?
If the unpaid balance is offset against your account because you left your job, you have until your tax return due date, including extensions, to roll it over. Otherwise it can be taxed as a distribution, with the 10% additional tax if you're under 59½.
Isn't the interest I pay myself free?
The interest goes back into your account, but it comes out of your paycheck, and the borrowed money misses whatever the account would have earned. The calculator shows that missed growth at the return you enter.
What should I look at before borrowing from retirement?
A do-it-yourself payoff plan and nonprofit credit counseling. A counselor can review whether a debt management plan fits; you may have to stop using credit, and a plan can take 48 months or more.
Is the information I enter saved or sent anywhere?
No sign-up is needed. Your numbers are saved only in this browser, and the other tools on the site reuse them.