401(k) loan and hardship calculator.

The loan limit, step by step

Section 72(p) lets a plan lend you money without taxing it, up to a cap. The statute says the new loan, when added to the outstanding balance of all other loans from the plan, must not exceed the lesser of two numbers: (1) $50,000, reduced by the amount by which your highest loan balance in the last 12 months exceeded your loan balance today; and (2) the greater of half your vested balance or $10,000. The IRS explains the common case as 50% of the vested balance or $50,000, whichever is less, with the $10,000 floor for small balances; plans are not required to include that floor, hence the checkbox. This tool also never lets the total exceed your vested balance.

The detail most pages skip is the part in bold. If you already owe the plan money, that balance counts toward the cap, so the new loan is the cap minus what you owe. That is why the answer to "how much can I borrow if I already have a loan" is usually lower than half your balance, and why forum threads argue about it. Two limbs do the work: $50,000 minus your highest balance in the past year, and half your vested balance minus what you owe today. The calculator shows both and takes the lower.

Repayment must be in level amounts at least quarterly, and generally within five years. The only exception to five years is a loan used to buy a home that will be your principal residence. The calculator turns your rate, term and payments per year into a payment and shows total interest. That interest goes back into your own account, but it is paid from after-tax pay.

Then it compares the loan with the money still invested. If your account would have earned the return you assume, removing the loan amount for the term gives up growth, while your repayments (principal plus interest) flow back in. The line labelled growth given up is the difference at the end of the term; it can be negative if your loan interest rate is higher than the return you assume.

Hardship withdrawal, side by side

A hardship withdrawal is a different tool. A plan may allow one only for an immediate and heavy financial need and no more than the need requires, including taxes on the distribution. The IRS safe harbor lists six qualifying expenses: medical care; costs of buying a principal residence; up to 12 months of tuition, fees and room and board; payments to prevent eviction or foreclosure; funeral costs; and certain repairs to the principal residence. The amount is taxed as income, may carry the 10% additional tax, and cannot be repaid or rolled over.

The page works out the gross withdrawal needed to net your need after income tax, state tax and, if you tick the box, the 10% additional tax. That is simply need divided by one minus the combined rate. It then shows what that gross money could have grown to at your assumed return over the same term.

Worked examples (hypothetical balances, real rules)

Large balance. With an $80,000 vested balance, half is $40,000, below $50,000, so the cap is $40,000.00. A $30,000 loan at 9.5% over 5 years with 26 pay periods needs about $290.31 each period, with $7,740.71 of interest over the term. If you instead needed $10,000 after tax from a hardship withdrawal at a 22% federal rate and the 10% penalty, the rate is 32%, so you would withdraw $14,705.88, of which $4,705.88 goes to tax and penalty. At 7% for 5 years, that gross amount would have grown to about $20,625.76.

Existing loan. Vested $150,000. Your highest loan balance in the last 12 months was $20,000 and you owe $12,000 today. The $50,000 cap falls by $8,000 to $42,000.00, while half the balance is $75,000.00, so the cap for all your loans together is $42,000.00. You already owe $12,000.00, so a new loan can be at most $30,000.00, which equals $50,000 minus the $20,000 high-water mark. A $40,000 request is over that limit.

Small balance. Vested $12,000. Half is $6,000, but with the $10,000 floor the statute allows $10,000.00; the tool caps it at your vested balance, so the limit is $10,000.00.

Risks and edge cases

• Leaving your job. Employers may require full repayment when you leave. An unpaid balance is treated as a distribution, taxed and possibly penalised, unless you roll over the loan balance by your tax return due date including extensions.
• Missed payments. A loan that exceeds the maximum or misses the schedule is a deemed distribution. The remaining balance is taxable income and may also carry the 10% additional tax.
• Plan rules. Plans do not have to offer loans, may cap the number of loans, and may require spousal consent for loans above $5,000. IRAs, SEP and SIMPLE IRAs cannot lend.
• Interest to yourself is not free money. It is paid from take-home pay and does not make you whole when the market rises.
• Hardship money does not come back. Unlike a loan it cannot be repaid.

Who this is for, and what it does not cover

It is for 401(k), 403(b) or 457(b) participants whose plans allow loans. It does not model payroll-deduction timing, loan fees, plan-specific limits or collateral rules, defaults after separation, or Roth-source loans. A plan's own limit can be lower than the federal one.

FAQ

How much can I borrow from my 401(k)?

Up to the lesser of $50,000 (reduced by the excess of your highest loan balance in the past 12 months over today's balance) and the greater of half your vested balance or $10,000. Many plans use the simpler rule: 50% of the vested balance or $50,000, whichever is less. Your plan may set a lower limit.

How much can I borrow from my 401(k) if I already have a loan?

The new loan plus the balance of your other loans from the plan must fit under the same cap. So the new loan is the cap minus what you owe: at most $50,000 minus your highest loan balance in the past 12 months, and at most half your vested balance minus today's balance. Your plan may be stricter, for example one loan at a time.

How long do I have to repay a 401(k) loan?

Generally five years, with payments at least quarterly. The exception is a loan used to buy a home that will be your principal residence.

What happens if I do not repay a 401(k) loan?

A loan that exceeds the limit or misses the repayment schedule is a deemed distribution. The unpaid balance is taxed as income and may also be subject to the 10% early distribution tax.

What happens to a 401(k) loan if I leave my job?

Your employer may require repayment of the whole balance. If you do not repay, it is treated as a distribution reported on Form 1099-R. You can avoid immediate tax by rolling over the outstanding balance to an IRA or eligible plan by your tax return due date, including extensions.

Is a 401(k) loan better than a hardship withdrawal?

A loan that follows the rules is not taxed and is repaid to your own account. A hardship withdrawal is taxed as income, may carry a 10% additional tax, and cannot be repaid. A loan needs a plan that offers it and affordable payments; a hardship withdrawal needs a qualifying need.

What counts as a hardship under the IRS safe harbor?

Medical care, buying a principal residence, up to 12 months of tuition and housing, preventing eviction or foreclosure, funeral expenses, and certain home repairs. The amount cannot exceed what is needed, but it can include the taxes caused by the withdrawal.

Can I take a 401(k) loan from an IRA?

No. The IRS says IRAs, SEP, SIMPLE IRA and SARSEP plans cannot offer loans, and a loan from an IRA is a prohibited transaction.

Sources

Retrieved 2026-10. Each link was opened and checked against the claim next to it.

• IRS: Retirement topics, plan loans: 50% or $50,000 whichever is less, $10,000 exception, five-year term, quarterly payments, deemed distributions, leaving a job.
• 26 U.S.C. 72(p): the loan plus all other plan loans must fit under the cap, the $50,000 limit with the 12-month reduction, the greater-of-half-or-$10,000 rule, the five-year term and level amortization.
• IRS: Retirement topics, hardship distributions: safe harbor expenses, taxable, no repayment or rollover.
• IRS: Hardships, early withdrawals and loans: which plans can offer loans, IRAs cannot, plan documents control.