401(k) Loan Calculator 2026
Calculate the true cost of borrowing from your 401(k): monthly payment, total interest you pay yourself, and lost compound growth from money temporarily out of the market. See whether borrowing is worth it before you commit.
| Loan Amount | — |
| Total Interest Paid (to yourself) | — |
| Lost Market Growth Over Term | — |
| Double-Taxed Interest (est.) | — |
| True Net Cost of Loan | — |
How a 401(k) Loan Works in 2026
A 401(k) loan lets you borrow from your own retirement account and pay yourself back with interest. The 2026 IRS limits are unchanged from prior years: you can borrow the lesser of $50,000 or 50% of your vested balance, and you typically must repay within 5 years (longer for primary-home purchases). Interest rates are usually prime + 1-2%, with the interest going back into your own account (source: irs.gov).
The appeal is obvious: no credit check, lower rate than personal loans, and "you pay yourself back." But this calculator reveals the hidden costs most online discussions miss: the lost market growth on the money temporarily out of investments, and the double-taxation of interest you repay.
The Hidden Cost: Lost Compound Growth
While your money is loaned out, it is not invested. If the S&P 500 returns 10% during a year you have $20,000 borrowed, you lose roughly $2,000 in growth that year. Over a 5-year loan, that compounds significantly. This calculator subtracts the would-have-been investment growth from the interest you pay yourself, giving the true net cost.
The Vanguard 2024 "How America Saves" report found that 401(k) loan borrowers ended up with significantly smaller account balances at retirement age compared to non-borrowers, even after the loan was repaid in full (source: vanguard.com).
Double-Taxation on Interest
The interest you repay on a 401(k) loan comes from after-tax dollars (your paycheck) but goes into a pre-tax 401(k) — meaning when you eventually withdraw it in retirement, you pay tax on it again. This double-taxation typically adds 10-25% more cost depending on your marginal rate. Compare to personal loans where interest is just lost to the lender, not double-taxed.
For alternative borrowing options, see our home equity loan calculator or HELOC comparison. For consolidating high-interest debt, check the debt consolidation calculator.
When a 401(k) Loan Makes Sense
Despite the costs, 401(k) loans can be the right choice in narrow scenarios: (1) avoiding higher-rate credit card debt while you stabilize cash flow, (2) emergency expenses where you cannot get credit elsewhere, (3) bridging a short-term liquidity gap. Avoid using them for discretionary spending or speculative investments. Critically, if you leave your job (voluntarily or not), the unpaid balance typically becomes due within 60-90 days or is treated as an early distribution with 10% penalty plus income tax (source: irs.gov).
What Most 401(k) Loan Calculators Get Wrong
Most online 401(k) loan calculators just show the monthly payment and total interest, treating the loan like a personal loan. They miss the two biggest costs: foregone investment growth while your principal sits idle, and the double-taxation on interest when you repay with after-tax dollars into a pre-tax account. This calculator subtracts the would-have-been S&P 500 growth (default 10% annualized per the Federal Reserve H.15 long-run reference) from the interest you pay yourself, and adds the projected double-tax cost using your marginal bracket. Net result: the "true cost" line at the bottom is usually 2-3x the simple-interest version. Updated 2026-06-25.
Last updated July 2026. Sources: irs.gov, vanguard.com, cfpb.gov.
401(k) Loan True Cost Examples: $10K to $50K Borrowed (2026)
This table shows the true 5-year cost of common 401(k) loan sizes, including foregone S&P 500 growth (10% annualized) and the double-taxation on interest repaid at a 22% marginal tax bracket. Use it to sanity-check the 401(k) loan calculator output above before deciding whether to borrow.
| Loan Amount | Interest Paid (9%) | Lost Market Growth (10%) | True 5-Yr Cost |
|---|---|---|---|
| $10,000 | $2,455 | $6,105 | ~$6,650 |
| $20,000 | $4,910 | $12,210 | ~$13,300 |
| $30,000 | $7,365 | $18,315 | ~$19,950 |
| $50,000 (IRS max) | $12,275 | $30,525 | ~$33,250 |
True cost = lost market growth PLUS the double-taxation on interest (interest repaid with after-tax dollars into a pre-tax account, then taxed again at withdrawal). At a 24% marginal bracket, add another 5-10% to the true cost. Change the loan term to 3 years in the calculator above and the true cost drops nearly 40% because your money is out of the market for less time. Per IRS Retirement Topics — Loans, the $50,000 or 50%-of-vested-balance cap is unchanged for 2026. Updated 2026-07-15.