A 401(k) loan lets you borrow from your own retirement savings — typically up to 50% of your vested balance or $50,000, whichever is less, under IRS plan loan rules — and repay yourself with interest through payroll deductions. This 401(k) loan payoff calculator shows your payment per paycheck, the total interest you'll pay back into your own account, and the number most borrowers never see: the opportunity cost of having that money out of the market while you repay.

The interest rate on a 401(k) loan is set by your plan, usually prime rate plus 1–2%. Unlike a bank loan, that interest isn't lost — it goes back into your account. That makes 401(k) loans feel free. They aren't: you repay with after-tax dollars, you miss market growth on the borrowed amount, and if you leave your job, the remaining balance can come due fast.

Your payment uses the standard amortization formula at your plan's rate and pay frequency:

Example — $15,000 at 9.5% over 5 years, paid biweekly (26 periods/year): the payment is roughly $145 per paycheck, and total interest of about $3,800 flows back into your own account over the term.

The opportunity cost estimate compares two futures: (a) the $15,000 stays invested at your expected market return, versus (b) the money leaves the account and returns gradually via your repayments, each of which starts compounding when it arrives. The difference is growth you permanently forfeit. At a 7% expected return, borrowing $15,000 for five years costs roughly $2,000–$3,000 in missed growth even though you "paid yourself back" — and that gap itself compounds until retirement.

Key IRS and plan rules to know before you model your payoff:

• Repayment term: maximum 5 years, with substantially level payments at least quarterly — payroll deduction is standard. Loans used to buy your primary residence may qualify for a longer term if your plan allows it.
• Leaving your job: if you separate with a balance outstanding, most plans require repayment quickly. If you don't repay, the balance becomes a plan loan offset — under the Tax Cuts and Jobs Act you have until your tax-filing deadline (including extensions) for that year to roll the offset amount into an IRA and avoid taxes, per IRS guidance.
• Default consequences: an unpaid balance is treated as a deemed distribution — ordinary income tax plus a 10% early-withdrawal penalty if you're under 59½.
• Double taxation on interest: you repay the loan with after-tax paycheck dollars, and those same dollars are taxed again when withdrawn in retirement. The principal isn't double-taxed — only the interest portion is.
• Contributions while repaying: some plans suspend or discourage new contributions during repayment. If repaying the loan stops you from earning your employer match, the true cost jumps dramatically — the match you skip is a 50–100% loss on those dollars.

Unlike most debt, prepaying a 401(k) loan doesn't "save interest" in the usual sense — the interest was going to you anyway. The real benefit of early payoff is getting the money back in the market sooner and eliminating the job-change risk. If you're considering leaving your employer, paying off the loan first removes the tax time bomb entirely.

Most plans allow lump-sum prepayment at any time without penalty. Model it here: shorten the term slider and compare the opportunity-cost figures. If you're weighing a 401(k) loan against other borrowing, compare the opportunity cost shown here against the total interest on a personal loan using our Loan Payoff Calculator, and check the retirement impact with the 401(k) Optimizer.

A 401(k) loan follows IRS rules that differ from any bank loan. You can borrow up to the lesser of $50,000 or 50% of your vested balance (plans may allow up to $10,000 even if 50% of your vested balance is less), and repayment generally must finish within 5 years through at least quarterly payments — typically payroll deductions. Loans used to buy your primary residence can run longer if the plan allows. The interest you pay goes back into your own account, not to a lender; the IRS details the full requirements in its plan loans guidance.

The job-change trap: if you leave your employer with a loan outstanding, the unpaid balance is typically "offset" against your account. You have until your federal tax-filing deadline (plus extensions) for that year to roll the offset amount into an IRA or new employer plan — miss it, and the balance becomes a taxable distribution, plus a 10% early-withdrawal penalty if you're under 59½. If the goal of the loan is paying down high-rate debt, first compare alternatives with the Debt Payoff Optimizer — a consolidation loan or avalanche strategy often beats raiding retirement money once the opportunity cost is counted.