401kBanker

Before you touch your 401(k), price the alternatives.

Compare a 401(k) loan, a 401(k) withdrawal, a cash-out refinance and a HELOC on your own numbers. See what each one costs in total, each month, and at retirement.

The cash you need

Credit cards or loans you would close. Leave at 0 if none.

You and your 401(k)
Your home
Rates and assumptions
Retirement and taxes
401(k) loan

Often prime plus 1%.

Cash-out refinance
HELOC

Your $30,000, four ways

Estimates from the numbers you entered. Rates here are examples until a lender quotes you.

    What stands out

      Get real refinance numbers

      A licensed loan officer can quote the refinance and HELOC lines with your credit and home.

      How each option works

      401(k) loan

      You borrow from your own account and repay yourself through payroll, usually within five years. The interest goes back into your account.

      Fits when
      You need less than $50,000, your job is steady, and you can repay quickly.
      Watch for
      If you leave your job, the balance is often due by your tax filing deadline or it's taxed as a withdrawal. Borrowed money isn't invested while it's out.

      401(k) withdrawal

      You take the money out for good. Before 59½ it's usually taxed as income plus a 10% additional tax, unless an exception applies.

      Fits when
      You're 59½ or older, or you face a true emergency with no other source.
      Watch for
      To net $30,000 you may need to withdraw $45,000 or more, and that money stops compounding for good.

      VA cash-out refinance

      You replace your mortgage with a larger one and take the difference in cash. Veterans can use a VA loan; others use a conventional cash-out.

      Fits when
      Today's rate is at or below your current rate, or you're paying off high-interest debt.
      Watch for
      The new rate applies to your entire balance and your term restarts. The VA funding fee is 2.15% on first use and 3.3% after, unless you're exempt.

      HELOC

      A line of credit secured by your home. Your first mortgage and its rate stay as they are.

      Fits when
      Your current mortgage rate is low and you want to keep it.
      Watch for
      Rates are usually variable, so the payment can rise. Your home secures the debt.

      Questions people ask

      How much can I borrow from my 401(k)?

      The IRS limits 401(k) loans to the lesser of $50,000 or 50% of your vested balance. If half your balance is under $10,000, a plan may let you borrow up to $10,000. Your plan can set lower limits, and not every plan offers loans.

      Is a 401(k) loan better than a cash-out refinance?

      It depends on your rates, how long you need to repay, and how secure your job is. A 401(k) loan is short and keeps your mortgage rate. A cash-out refinance can make sense when today's rate is at or below your current rate. The calculator above runs both on your numbers.

      What does a 401(k) withdrawal cost before 59½?

      Usually your federal and state income tax rate plus a 10% additional tax, unless an exception applies. In a 22% federal bracket with 4.25% state tax, about 36 cents of every dollar goes to taxes and the penalty.

      Do I have to pay the VA funding fee?

      Most borrowers pay 2.15% of the loan amount on a first VA cash-out refinance and 3.3% after that. Veterans who receive VA disability compensation, and some other borrowers, are exempt. The fee can be financed into the loan.

      Does using the calculator affect my credit?

      No. The calculator runs in your browser and never checks credit. If you ask for a quote, a loan officer will tell you before any credit pull.

      Where to go next

      Get real numbers

      A rate quote changes every line above. Tell us what you're weighing and a licensed loan officer will follow up. Your calculator inputs come along so you don't have to repeat them.