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    Auto Rates
New cars as low as
5.25%
Used cars as low as
5.75%
100% financing available
for qualified buyers
 
    
New Home equity lines of
credit for as low as
Prime + 1
Free closing costs provided
first advance is
$10,000 or more
Prime Rate: 3.25%
Current as of: 06-01-10



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Please use only numeric characters and decimal points in your input.
Present 401(k) balance:
Estimated annual rate of return:
Monthly contributions:
These are the contributions you would make if you weren't borrowing, including any employer match.
Loan amount:
Interest rate on loan:
Loan period:
Monthly contributions:
This includes any contributions you would make in addition to loan payments, as well as any employer match.



A 401(k) loan has some advantages over a traditional loan. You can borrow up to 50% of your vested amount or $50,000, whichever is less. The loan is shielded from taxes and penalties, provided you pay it back on time. Internal Revenue Service (IRS) rules state your employer must set an interest rate in line with other lenders. A typical rate is prime or prime plus one percentage point. To further sweeten the deal, you pay the loan and interest back to yourself. To see what this means in terms of real numbers, test out some scenarios below.

Most plans have a five-year window for repaying loans. If you leave your company (even if it's not your choice to leave), most plans require you to repay the outstanding balance within 30 to 90 days. If you cannot repay the money, your loan will be considered in default and the outstanding balance would be treated as a taxable withdrawal. You would owe income taxes on the outstanding balance, and if you are under age 59 1/2, you may also owe an early withdrawal penalty. This scenario often forces individuals to cash in more of their plan assets to make these payments, and that amount is also subject to taxes and a possible penalty.

Some plans may charge fees when you borrow from your account. Plans can charge a one-time fee, maintenance fee, or a combination of the two. For example, one plan may have a one-time $35 set-up fee while another may have a $15 annual maintenance fee. Each plan may have different fee structures so it is important to review your plan rules before you borrow.




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