401k Loan Max Amount: Everything You Need to Know

Greetings, fellow investors! If you’re reading this article, you’re likely interested in exploring the option of borrowing from your 401k plan. This is a common and understandable choice, as it can provide a quick source of funds without requiring a credit check or impacting your credit score. However, it’s important to understand the rules and limitations regarding how much you can borrow from your 401k, as this can greatly impact your financial future. So let’s dive in and explore the 401k loan max amount.

The Basics of a 401k Loan

Before we dive into the specifics of the maximum loan amount, let’s review the basics of borrowing from your 401k. A 401k loan is a way for you to take out a loan against the funds you’ve already contributed to your retirement plan. This loan is not considered a distribution, meaning you won’t be taxed or penalized, as long as you pay it back within the allotted timeframe.

Unlike a traditional loan, the interest you pay on a 401k loan goes back into your own account, rather than to a bank or lender. Additionally, the process of obtaining a 401k loan is relatively easy and quick, as you’re essentially borrowing from yourself. However, there are some drawbacks to consider, such as the potential impact on your retirement savings if you’re unable to pay back the loan.

The Maximum 401k Loan Amount

Alright, let’s get to the heart of the matter – what is the maximum amount you can borrow from your 401k plan? To put it simply, the maximum 401k loan amount is the lesser of:

Maximum Loan Amount
Absolute Maximum
50% of Vested Account Balance
Up to $50,000

That’s right – no matter what, you’re never able to borrow more than $50,000 from your 401k plan. However, if your vested account balance is less than $100,000, you may be limited to borrowing up to 50% of that balance. For example, if your vested account balance is $80,000, you can borrow up to $40,000.

Factors That Affect Your Maximum Loan Amount

Keep in mind, there are a few other factors that can impact your 401k loan max amount. These include:

  • The terms of your plan – some plans may have different rules or limitations
  • Your employment status – if you leave your job or are terminated, the loan may become due immediately
  • Previous outstanding loans – if you already have a loan against your 401k, it may impact the maximum amount you’re able to borrow
  • The time frame for repayment – generally, 401k loans must be repaid within 5 years

Frequently Asked Questions

1. Can I borrow more than once from my 401k plan?

Yes, you can have multiple loans from your 401k plan at once, as long as you don’t exceed the maximum loan amount.

2. Will taking out a 401k loan impact my credit score?

No, 401k loans are not reported to credit bureaus, so they won’t impact your credit score.

3. How do I repay a 401k loan?

You’ll typically repay your 401k loan through payroll deductions, which are automatically deducted from your paycheck.

4. Will I be taxed on a 401k loan?

No, as long as you repay the loan within the allotted time frame, you won’t be taxed on the funds you borrow.

5. What happens if I’m unable to repay a 401k loan?

If you’re unable to repay a 401k loan, it will be considered a distribution, which means you’ll be taxed on the funds and may be subject to a penalty if you’re under the age of 59 ½.

6. Can I repay a 401k loan early?

Yes, you can repay a 401k loan early without penalty or fees.

7. Is there an application process for a 401k loan?

No, there’s typically no formal application process for a 401k loan. You’ll simply need to contact your plan administrator to initiate the loan.

8. How quickly can I receive funds from a 401k loan?

The timeline for receiving funds from a 401k loan can vary depending on your plan administrator, but it’s generally a quick process of a few days to a week.

9. Can I borrow from a 401k plan if I’m no longer employed?

If you’re no longer employed, you may still be able to borrow from your 401k plan, depending on the terms of the plan. However, if you have an outstanding loan and are terminated, the remaining balance may become due immediately.

10. Can I borrow from a Roth 401k plan?

Yes, you can borrow from a Roth 401k plan, but the rules and restrictions are the same as with a traditional 401k.

11. Does my employer need to approve a 401k loan?

While some plans may require employer approval, it’s not a requirement for all plans.

12. How does borrowing from a 401k plan impact my retirement savings?

Borrowing from a 401k plan can impact your retirement savings in a few ways. First, you’ll be removing funds from your account, which means they won’t have the opportunity to grow tax-free. Additionally, if you’re unable to repay the loan, you may be subject to taxes and penalties, and you’ll lose out on the potential long-term gains from the funds you borrowed.

13. Can I still contribute to my 401k plan while repaying a loan?

Yes, you can still contribute to your 401k plan while repaying a loan, but it’s important to note that you may be limited in the amount you’re able to contribute, depending on the terms of your plan.


Overall, a 401k loan can be a convenient and relatively low-risk option for short-term borrowing. However, it’s crucial to understand the rules and limitations regarding the maximum 401k loan amount, as well as the potential impact on your retirement savings. Before deciding to take out a loan against your 401k, we encourage you to carefully consider your financial situation and goals, and consult with a financial advisor if needed.

Remember, the maximum 401k loan amount is the lesser of $50,000 or 50% of your vested account balance. Other factors, such as your employment status and previous loans, may also impact your eligibility. We hope this article has provided you with a comprehensive understanding of the 401k loan max amount and answered any questions you may have had. Happy investing!


This article is for informational purposes only and should not be considered financial advice. Please consult with a financial professional before making any decisions regarding borrowing from your 401k plan.