Retirement

Early 401(k) Withdrawal vs. 401(k) Loan

Need cash fast? Borrow up to 50% of your vested balance (max $50,000) for any purpose without a credit check. See exactly what raiding your retirement account will cost your future self-in today's dollars and at retirement.

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Your Situation

The actual amount you want in your pocket after taxes and penalties.
Max loan is 50% of your vested balance (max $50,000).
Your current federal income tax rate (top bracket).
Historical S&P 500 average is ~10%; 7–8% is a conservative estimate.

401(k) Loan Alternative

Typically prime rate + 1–2%. Interest is paid back to yourself.
Max is typically 5 years; must be less than years to retirement.

The Real Cost Comparison

Verdict
Fill in fields to calculate
Retirement Wealth Lost (Loan)
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Compound growth you miss while money is out of the market during repayment
Monthly Payment (Loan)
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Paid back to your own account with interest
Total Interest Paid (Loan)
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Interest returns to your account on top of the original loan amount
Retirement Wealth Lost (Withdrawal)
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What the gross amount would have grown to by retirement
Gross Withdrawal Required (Withdrawal)
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Amount you must pull out to net your target after the IRS takes its cut
Immediate Taxes & Penalty (Withdrawal)
--
Income tax + 10% early withdrawal penalty

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How It's Calculated

Gross Withdrawal: Because of the 10% early withdrawal penalty plus income tax, the gross needed is Net ÷ [1 − (Tax Rate + 0.10)]. At 22%, a $20k need requires pulling ~$28.6k out.
Retirement Wealth Lost (Withdrawal): The gross amount compounded at your expected return for all remaining years to retirement. This is the permanent hole in your retirement.
Loan Opportunity Cost: Each monthly repayment goes back into your account and resumes compounding. The cost is the gap between what the loan amount would have grown to if untouched versus what it actually grows to after being repaid over time.
Double Taxation Warning: 401(k) loan interest is paid with after-tax dollars - and then taxed again when you withdraw in retirement if its not a ROTH 401(k). It's the hidden sting of borrowing from yourself.

The loan usually wins. An early withdrawal is almost always the worst financial move you can make. But if your job is at risk - a 401(k) loan becomes immediately due if you leave your employer - that changes the math entirely.