401(k) loan maximum: $40,000 vested → $20,000
IRC §72(p) and the IRS retirement plan loan FAQs cap a new 401(k) loan at the lesser of $50,000 and the greater of $10,000 or 50% of your vested balance. You still cannot borrow more than you have vested. This page only estimates that statutory ceiling; outstanding loans and the usual 5-year term are out of scope.
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statutory = min($50,000, max($10,000, 50% × vested)) max loan = min(statutory, vested)
Worked example: $40,000 vested
Vested balance $40,000 (IRS-style example):
- 50% of vested: $20,000.00
- Greater of $10,000 or 50%: $20,000.00
- Cap $50,000 does not bind
- Maximum new loan: $20,000.00
| Vested balance | 50% of vested | Floor / half rule | After $50k cap | Max new loan |
|---|---|---|---|---|
| $8,000 | $4,000.00 | $10,000.00 | $10,000.00 | $8,000.00 |
| $15,000 | $7,500.00 | $10,000.00 | $10,000.00 | $10,000.00 |
| $25,000 | $12,500.00 | $12,500.00 | $12,500.00 | $12,500.00 |
| $40,000 | $20,000.00 | $20,000.00 | $20,000.00 | $20,000.00 |
| $200,000 | $100,000.00 | $100,000.00 | $50,000.00 | $50,000.00 |
Hero breakdown: $40,000 vested
| Item | Rule | Amount |
|---|---|---|
| Vested balance | Plan vested account | $40,000.00 |
| Half of vested | 50% × $40,000 | $20,000.00 |
| Greater of $10,000 or half | max($10,000, $20,000) | $20,000.00 |
| $50,000 statutory dollar cap | min($50,000, $20,000) | $20,000.00 |
| Cannot exceed vested | min($20,000, $40,000) | $20,000.00 |
In scope vs out of scope
| Item | In this calculator? | Note |
|---|---|---|
| 50% of vested | Yes | Core §72(p) half rule |
| $10,000 floor vs half | Yes | Greater of $10,000 or 50% |
| $50,000 dollar cap | Yes | IRS plan-loan FAQs |
| Never more than vested | Yes | $8,000 vested → $8,000 max |
| Outstanding loan offset on the $50k cap | No | v1 ignores other loans |
| 5-year term / repayment schedule | No | Plan documents control |
| 10% early-distribution tax | No | Loan is not a distribution unless defaulted |
Related: 401(k) deferral limit, rollover withholding, early distribution 10%, paycheck take-home.
Your plan can be stricter than the IRC ceiling. Outstanding loans usually reduce the $50,000 room. Defaulted loans can become taxable distributions (and may trigger the 10% additional tax under 59½).
Official sources
- IRS — Retirement plans FAQs regarding loans
- IRC §72(p)
$20,000.00 — 50% of vested, under the $50,000 cap and above the $10,000 floor.
Half is $7,500, so the $10,000 floor applies, still limited by vested: max loan $10,000.00.
Half is $100,000, but the $50,000 statutory dollar cap binds: max loan $50,000.00.
No. At $8,000 vested the engine returns $8,000.00, even though the $10,000 floor is higher on paper.
No. Estimate only from the IRS plan-loan FAQs / IRC §72(p) ceiling used in this tool.