How Much Can You Borrow from Your 401k?

Shawn Plummer

CEO, The Annuity Expert

Are you considering taking out a loan from your 401k plan but wondering how much you can borrow? This can be tricky to answer, as it depends on several factors, such as the rules of your specific 401k plan and your financial situation. However, you can usually borrow up to 50% of your vested account balance or $50,000, whichever is less.

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How Does a 401k Loan Work?

A 401k loan allows you to borrow money from your retirement savings. The loan is typically taken out for a short period, usually no more than five years, and must be repaid with interest. The interest rate you pay on a loan is typically the prime rate or a rate set by your 401(k) plan, and the interest payments go back into your account.

One of the advantages of a 401k loan is that you are essentially borrowing from yourself, so there is no credit check or approval process. However, there are some disadvantages to consider, such as the potential impact on your retirement savings and the fact that you may have to pay taxes and penalties if you cannot repay the loan.

Factors That Determine How Much You Can Borrow

The amount you can borrow from your 401k plan depends on several factors, including:

According to IRS rules, you can borrow up to 50% of your vested account balance or $50,000, whichever is less. However, this is just a general guideline, and your specific 401k plan may have different borrowing limits.

Pros and Cons of Borrowing from Your 401k

While borrowing from your 401k can be a convenient way to access funds, it’s essential to carefully consider the pros and cons before deciding.


  • Convenient access to funds
  • No credit check or approval process
  • Interest payments go back into your account


  • Can impact your retirement savings
  • You may have to pay taxes and penalties if you are unable to repay the loan
  • A short repayment period can be a challenge
How Much Can You Borrow From Your 401K

Next Steps

Borrowing from your 401k can be a great way to get the money you need without paying taxes or fees. However, it’s essential to understand how much you can borrow and the loan terms before taking one out. Hopefully, this guide has helped clear up some confusion around 401k loans. If you’re still not sure if borrowing from your retirement savings is the right move for you, we offer free quotes so you can explore all of your options. Please request a quote today; our team of experts will help you determine which financial products are best for your situation.

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How Much Can You Borrow From 401k?

You can usually borrow up to 50% of your vested account balance or $50,000, whichever is less, from your 401k plan. However, the exact amount may vary based on your plan and employer rules. Borrowing from your 401k should be considered carefully as it may have consequences on your retirement savings.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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