401k Loan vs Withdrawal Calculator
Compare a 401k loan against an early withdrawal: the loan is repaid with interest, while a withdrawal triggers tax and a 10% penalty.
Penalty, tax, and net-payout figures are worked out on your device — your 401(k) balance and tax details never leave the page.Try: Withdrawal amount=10000, Current age=50, Federal tax rate=22, State tax rate=0, Exemption=none, Expected annual return=7, Years left to grow=15 → $10,000, -$2,200, -$0, -$1,000, $6,800, $17,590
How to use
A 401(k) loan is borrowed from your own account and repaid with interest, so it avoids income tax and the 10% penalty. A withdrawal is permanent and triggers both. This tool shows the tax-and-penalty cost of the withdrawal side; weigh it against the interest you would pay on a loan to decide which is cheaper.
FAQ
How is a 401(k) loan different from a withdrawal?
A loan is money you borrow from your own account and repay with interest back into it. A withdrawal is permanent: you owe income tax and, under 59½, the 10% penalty. The loan avoids both tax hits.
What if I cannot repay the loan?
An unpaid loan is treated as a distribution. That means income tax plus, if you are under 59½, the 10% penalty on the outstanding balance.
Which is better?
If you can repay it, a loan usually costs less than a withdrawal because you keep the tax-advantaged growth. A withdrawal is simpler but permanently shrinks your retirement and triggers tax and penalty.