How the 401(k) loan limit works
A retirement plan loan is capped by statute, not by what you think you can repay. Enter your vested balance, any loan still outstanding and the highest loan balance you carried during the past 12 months, and this tool shows the percentage cap, the dollar cap and how much you could still borrow today.
The governing rule is 26 U.S.C. ยง72(p)(2), which limits a plan loan to the lesser of $50,000 - reduced by the excess of your highest outstanding balance in the preceding one-year period over the balance on the day the new loan is made - or one half of your vested accrued benefit, with an optional $10,000 floor that a plan may or may not adopt. Repayment must generally be substantially level and completed within five years, except for a loan used to buy your principal residence. Figures are current as of September 2026; the $50,000 amount is fixed by statute and is not indexed for inflation.
Your plan document may be stricter than the law, and defaulted loans are treated as taxable distributions that may also trigger the 10% early-distribution tax. This calculator is for reference only and is not legal or tax advice. Consult your plan administrator and a licensed attorney or CPA about your specific situation.
Frequently asked questions
Section 72(p)(2)(A) measures the $50,000 cap against the highest balance outstanding during the previous 12 months, so a loan you repaid recently still lowers the room available today.
No. The greater-of rule is permitted by statute but not required, so many plans simply cap loans at 50% of the vested balance. Check your plan document before relying on it.