401(k) loan vs. hardship withdrawal vs. personal loan vs. HELOC
For the same cash, a hardship withdrawal is almost always the most expensive choice because of income tax, the 10% additional tax and the growth you lose for good. A 401(k) loan usually costs the least out of pocket but puts your retirement money at risk if you leave your job. A personal loan or HELOC costs more interest and leaves your 401(k) alone.
| Measure | 401(k) loan | Hardship withdrawal | Personal loan | HELOC |
|---|---|---|---|---|
| Amount you take out | $10,000 | $14,706 | $10,000 | $10,000 |
| Monthly payment | $313 | None | $332 | $309 |
| Money gone for good (interest to others, fees, tax, penalty) | $282 | $4,706 | $1,940 | $1,116 |
| Interest paid back to yourself | $1,281 | None | None | None |
| 401(k) smaller when the term ends by | $387 larger | $17,515 | $0 | $0 |
| 401(k) smaller at 65 by | $1,395 larger | $63,116 | $0 | $0 |
"Money gone for good" for the 401(k) loan is any fee plus the extra tax you'll likely pay later on the interest, because you repay it with taxed pay and it's taxed again when you withdraw. Estimates from your inputs, not offers of credit or a recommendation.
How to read the table
Each column raises the same cash in hand. Where fees or taxes come out first, the “amount you take out” is grossed up so you still end up with that cash.
Money gone for good is what leaves your household and doesn’t come back: interest paid to a lender, fees, income tax and the 10% additional tax. For the 401(k) loan it’s the loan fee plus the tax you’ll likely pay later on the interest, since that interest ends up in a pre-tax account.
401(k) smaller by compares your account with what it would have been if you’d left it alone, using the return you set. A 401(k) loan can come out slightly ahead here when your loan rate is higher than the return you assume. That isn’t a forecast; set the return to 8% or 10% and watch it flip.
What each option is really for
| 401(k) loan | Hardship withdrawal | Personal loan | HELOC | |
|---|---|---|---|---|
| Credit check | Plans can consider credit; most don’t | No | Yes | Yes, plus an appraisal |
| Rate | Set by your plan | No rate; taxes instead | Depends on your credit | Usually variable |
| If you leave your job | Balance comes due | No effect | No effect | No effect |
| Puts at risk | Retirement savings | Retirement savings, permanently | Your credit | Your home |
| Limit | $50,000 or half your vested balance | The need, plus taxes on it | Lender’s limit | Your home equity |
Questions that usually settle it
- Could you leave this job before a 5-year loan is paid off? If yes, a personal loan or HELOC avoids the exit tax. Run the leaving-your-job numbers on the loan first.
- Would the 401(k) loan payment make you cut contributions? If yes, the lost match usually costs more than personal loan interest. Use the contribution fields in the true-cost calculator.
- Is a withdrawal the only thing you can afford? Then check the hardship rules and the smaller withdrawals that skip the 10% additional tax first.
The personal loan rate here starts at the Federal Reserve’s average APR for 24-month bank loans (G.19, August 2026 survey), which may be far from what you’d be offered. Every figure the tool shows is an estimate from the numbers in the boxes, not an offer. To compare against a real number, check a personal loan rate and type it in.
Questions people ask
Is a 401(k) loan better than a personal loan?
It's usually cheaper in interest, because the interest goes back to your account. It's riskier if you might leave your job, since the balance comes due, and it costs you whatever the borrowed money would have earned. A personal loan costs more in interest, leaves your retirement money invested, and doesn't come due if you change jobs.
Is a hardship withdrawal ever cheaper than a 401(k) loan?
Rarely in dollars. It can be the only option if you can't afford a loan payment, your plan doesn't offer loans, or you're already at your loan limit.
Why doesn't the HELOC column show a risk to my 401(k)?
Because it doesn't touch it. The risk is to your house, which secures the line, and most HELOCs have a variable rate that can rise. The tool repays it on the same fixed schedule as the others so the costs line up.
Price the alternative before you borrow
A personal loan leaves your retirement money invested. Check a rate with a lender and put it next to your 401(k) loan.