401k Loan Calculator
A 401k loan calculator helps employees evaluate borrowing from their retirement plans and calculate loan payments. Calculate 401k loan costs, opportunity costs, and repayment schedules for informed retirement plan borrowing decisions.
401k Loan Calculator
Use this calculator for retirement plan loans, 401k borrowing, and plan loan analysis.
Results:
| Monthly Payment | $475.00 |
| Total Interest | $3,500.00 |
| Total Amount Paid | $28,500.00 |
| Opportunity Cost | $4,250.00 |
| Maximum Loan Amount | $50,000.00 |
| Loan-to-Balance Ratio | 20.0% |
| Payroll Deduction | $475.00 |
| Risk Assessment | Moderate |
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| View Repayment Schedule | |
Opportunity Cost Calculator
Calculate the opportunity cost of borrowing from your 401k versus other financing options.
Results:
| 401k Loan Total Cost | $3,750.00 |
| Alternative Loan Cost | $6,800.00 |
| Interest Savings | $3,050.00 |
| Lost 401k Growth | $5,200.00 |
| Net Opportunity Cost | $2,150.00 |
| Tax Impact | $0.00 |
| Risk Factor | Low |
| Recommendation | Consider Alternative |
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| View Cost Comparison | |
401k Hardship Withdrawal Calculator
Calculate the costs and tax implications of 401k hardship withdrawals versus loans.
Results:
| Net Amount Received | $12,000.00 |
| Federal Tax | $4,800.00 |
| State Tax | $1,200.00 |
| Early Withdrawal Penalty | $2,000.00 |
| Total Tax & Penalties | $8,000.00 |
| Lost Future Value | $135,000.00 |
| True Cost of Withdrawal | $143,000.00 |
| Loan Alternative Cost | $3,200.00 |
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| View Withdrawal Analysis | |
Understanding 401k Loans
401k loans allow employees to borrow from their retirement savings with specific rules and limitations. Understanding loan terms, opportunity costs, and risks helps make informed decisions about retirement plan borrowing.
| Loan Feature | Typical Limit | Repayment Term | Interest Rate | Tax Treatment |
|---|---|---|---|---|
| General Purpose | 50% of balance | 5 years | Prime + 1-2% | After-tax repayment |
| Home Purchase | 50% of balance | 15-30 years | Prime + 1-2% | After-tax repayment |
| Hardship Withdrawal | Immediate need | N/A | N/A | Taxable + penalty |
| Maximum Loan | $50,000 | Varies | Market rate | Interest to self |
401k Loan vs Alternatives
Comparing 401k loans with other financing options helps determine the best borrowing strategy.
Financing Options Comparison
| Option | Interest Rate | Tax Deductible | Credit Check | Opportunity Cost |
|---|---|---|---|---|
| 401k Loan | 5-6% | No | No | Lost growth |
| Home Equity Loan | 6-8% | Maybe | Yes | Interest cost |
| Personal Loan | 8-15% | No | Yes | Interest cost |
| Credit Card | 15-25% | No | No | High interest |
Hardship Withdrawal Rules
Hardship withdrawals have strict IRS rules and significant tax consequences.
Qualified Hardship Reasons
| Hardship Type | Requirements | Tax Impact | Penalty |
|---|---|---|---|
| Medical Expenses | Unreimbursed medical | Taxable income | 10% if under 59½ |
| Home Purchase | Primary residence | Taxable income | 10% if under 59½ |
| Education | Tuition and fees | Taxable income | 10% if under 59½ |
| Foreclosure Prevention | Eviction/foreclosure | Taxable income | 10% if under 59½ |
401k Loan Risks and Benefits
Understanding the risks and benefits of 401k loans helps make informed retirement planning decisions.
Benefits and Risks
- Benefits: No credit check, competitive rates, pay interest to yourself, quick access
- Risks: Lost investment growth, job loss acceleration, reduced retirement savings, double taxation
- Opportunity Cost: Missing potential market gains during loan period
- Repayment Risk: Full balance due if employment terminates
- Tax Implications: Repayments made with after-tax dollars
- Contribution Impact: May reduce ongoing 401k contributions