Can I pay off my 401(k) loan early?

Usually yes. The tax rules don't stop you. Ask the plan administrator for a payoff amount and how they take payments (check, ACH or a lump sum through payroll). Some plans charge a processing fee.

Are 401(k) loan payments taken before or after tax?

After tax. The payments come out of take-home pay, which is why the interest ends up taxed again when you withdraw it in retirement.

Can I change my 401(k) loan payment amount?

Not freely. The payments have to stay substantially level under IRC 72(p). You can prepay, but you can't skip or shrink payments on your own.

401(k) loan repayment

You repay a 401(k) loan in level installments, usually taken out of every paycheck after tax, over no more than five years. You can usually pay it off early. A missed payment starts a cure period that ends with the last day of the next calendar quarter; after that, the unpaid balance is taxed as a distribution.

Updated October 24, 2026 · Figures checked against IRS and Federal Reserve sources (list)

How payments work

Under IRC 72(p)(2)(C), a plan loan has to be repaid with substantially level payments, at least quarterly. Almost every plan takes them by payroll deduction every pay period.

The payment is fixed when the loan is made: principal, rate and number of paychecks. If you get paid every two weeks, a 5-year loan is 130 payments. On $15,000 at 8%, that’s about $140.17 a paycheck, or $18,222 in total. The extra $3,222 is interest, and it goes back into your account.

Check your pay stub after the first deduction. Payroll errors happen, and a payment that silently doesn’t come out is still a missed payment as far as the tax rules are concerned.

Paying it off early

There’s no tax rule against it; ask your plan how it takes payoffs. Paying early:

puts the money back in the market sooner, which shrinks the growth gap
frees up the payroll deduction
clears the loan before a job change can turn it into a tax bill

The interest you skip isn’t a saving in the usual sense, since it was going to your own account anyway. The real gain is time back in the market and less risk if you leave.

Missed payments

The tax rules give your plan the option of a cure period. It can run no later than the last day of the calendar quarter after the quarter the payment was due.

Payment due in	Last possible day to catch up
January, February or March	June 30
April, May or June	September 30
July, August or September	December 31
October, November or December	March 31 of the next year

Miss that, and the entire unpaid balance plus accrued interest becomes a deemed distribution: taxable income for the year, plus the 10% additional tax if you’re under 59½ and no exception applies. The loan rules page covers what happens to the loan after that.

Pausing payments

Unpaid leave or reduced pay: payments can be suspended for up to a year if your pay during the leave is less than the payment. The loan still has to be paid off by its original end date, so the remaining payments go up or you settle the gap in a lump sum at the end.

Military service: payments can be suspended for the length of your service, even past a year. The loan’s end date moves out by the time you served, and payments restart when you come back.

When you leave the job

Payroll deduction stops with your last paycheck. What happens next depends on your plan and how quickly you act; see what happens to your 401(k) loan if you leave your job.