401k Loan Calculator - Calculate 401k Loan Payments & Eligibility
Free 401k loan calculator to calculate loan payments, eligibility, interest rates, and repayment options. Calculate maximum loan amount and tax implications for your retirement planning.
Last updated: December 15, 2024
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401k Loan Calculator Types & Features
Payment calculation
PMT Formula with Interest
Calculates monthly payments using standard loan amortization formulas
Eligibility rules
50% of Balance or $50k Max
Checks against IRS limits and plan-specific requirements
Interest analysis
Prime Rate + 1-2%
Shows total interest paid over the loan term
Tax implications
Double Taxation Warning
Explains after-tax repayment and future tax consequences
Repayment options
5 Years Standard
Shows various repayment strategies and early payoff benefits
Comparison analysis
Penalties vs Interest
Compares costs of loans versus early withdrawal penalties
Quick Example Result
For a $10,000 loan from a $50,000 401k balance at 6.5% interest for 5 years:
Monthly Payment
$195.66
Total Interest
$1,739.60
How Our 401k Loan Calculator Works
Our 401k loan calculator uses standard loan amortization formulas to calculate monthly payments, total interest, and eligibility based on IRS rules and plan requirements. The calculation considersretirement planning principles to help you make informed decisions about borrowing from your 401k.
Key 401k Loan Rules
Maximum Loan: 50% of vested balance or $50,000Repayment Term: 5 years (15 years for home purchase)Interest Rate: Prime rate + 1-2%Minimum Loan: $1,000These rules are set by the IRS and your 401k plan administrator. Understanding these limits helps you determine if a 401k loan is right for your situation.
Shows the loan process from application to repayment
Mathematical Foundation
401k loan calculations use the standard PMT (Payment) formula from financial mathematics. The monthly payment is calculated using the loan amount, interest rate, and term, similar to traditional loans. However, the interest paid goes back into your own retirement account.
- Monthly payment = P × [r(1+r)^n] / [(1+r)^n - 1]
- P = Principal loan amount
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of payments (years × 12)
- Interest paid goes back to your 401k account
- No credit check required for 401k loans
Sources & References
- IRS Publication 575 - Pension and Annuity IncomeOfficial IRS guidance on 401k loan rules and regulations
- Department of Labor - 401k Plan Participant RightsInformation about 401k loan rights and responsibilities
- IRS.gov - 401k Loan InformationOfficial IRS resources for 401k loan regulations and limits
Need help with other financial planning? Check out our mortgage recast calculator and borrowing power calculator.
Get Custom Calculator for Your Platform401k Loan Calculator Examples
Loan Details:
- Loan Amount: $15,000
- Interest Rate: 6.5% annually
- Loan Term: 5 years (60 payments)
- Monthly Rate: 0.5417%
Payment Calculation Steps:
- Convert annual rate to monthly: 6.5% ÷ 12 = 0.5417%
- Calculate total payments: 5 × 12 = 60
- Apply PMT formula: P × [r(1+r)^n] / [(1+r)^n - 1]
- Monthly payment = $293.49
Result: Monthly Payment = $293.49
Total interest paid over 5 years: $2,609.40
Eligibility Example
Account Balance: $80,000
Maximum Loan: $40,000 (50% of balance)
Early Payoff Example
Pay off in 3 years instead of 5
Save $1,200 in interest
Frequently Asked Questions
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