Use this 401k loan calculator to estimate your loan payment, total repayment, and the real cost of borrowing from your retirement savings. This tool also helps you understand how taking a loan from your 401(k) can impact your long-term investment growth and retirement balance.
This calculator is designed based on U.S. 401(k) loan rules and limits. Loan terms and limits may vary depending on your employer plan.
How This 401k Loan Calculator Works
A 401(k) loan is a type of retirement loan that allows you to borrow money from your workplace retirement plan and repay it over time with interest. While the interest is paid back into your own account, the borrowed amount is no longer invested, which can reduce your long-term returns.
This calculator estimates:
- Your periodic loan payment (monthly, bi-weekly, or weekly)
- Total repayment amount and total interest paid
- Loan amount as a percentage of your 401(k) balance
- Missed investment growth (opportunity cost)
- Estimated impact on your retirement savings
How to Use the Calculator
- Enter your current 401(k) balance
- Input the loan amount you want to borrow
- Set the loan term in years
- Enter the loan interest rate
- Select your payment frequency (monthly, bi-weekly, or weekly)
- Add expected investment return to estimate missed growth
- Click Calculate to see your results
Example Calculation
For example, if you take a 401k loan of $20,000 from a $80,000 balance at a 9% interest rate over 5 years:
- You will have a fixed periodic payment
- You will repay the loan with interest over time
- Your retirement account may lose potential market growth during the loan period
This calculator shows both the repayment details and the long-term financial trade-offs of borrowing from your workplace retirement plan.
401k Loan Payment Formula
The loan payment is calculated using the standard amortization formula:
PMT = (P × r) / (1 − (1 + r)−n)
- P = Loan amount
- r = Interest rate per payment period
- n = Total number of payments
This formula calculates a fixed payment amount that you repay over the loan term.
Opportunity Cost of a 401k Loan
When you take a loan from your 401(k), the borrowed amount is no longer invested. This creates an opportunity cost because your money is not growing in the market.
Future Value = P × (1 + r)t
This represents how much your money could have grown if it had remained invested instead of being borrowed.
Key Things to Consider Before Taking a 401k Loan
- You repay the loan with interest, but you lose potential market growth
- Loan repayments are typically made through payroll deductions
- Loan rules vary depending on your employer-sponsored retirement plan
- Leaving your job may require immediate repayment
- Defaulting on a loan may result in taxes and penalties
FAQs
What is a 401k loan?
A 401k loan allows you to borrow from your workplace retirement plan and repay it over time with interest, usually through payroll deductions.
How is a 401k loan payment calculated?
It is calculated using a standard loan amortization formula based on loan amount, interest rate, term, and payment frequency.
Does 401k borrowing affect investment growth?
Yes. While the loan is active, the borrowed amount is not invested, which may reduce your long-term returns.
What is the maximum 401k loan amount?
Typically, you can borrow up to 50% of your vested balance or $50,000, whichever is lower under U.S. rules.
Is a 401k loan better than a personal loan?
It depends. A 401k loan may have lower interest costs, but it can reduce your retirement growth. This calculator helps you compare both effects.
What happens if I leave my job?
In many cases, the remaining loan balance must be repaid quickly, or it may be treated as a distribution and become taxable.