What is the impact of taking a loan?
All calculations are for illustrative purposes only and do not take into account the actual investment rate of returns or your future plan contributions. No representations, warranties or guarantees are made as to the accuracy of any projections or calculations. Calculations are not intended to provide investment, legal, tax or financial planning advice. You should consider speaking with a Financial Professional to review your retirement plan.
What is the impact of taking a loan? Definitions
- Current plan balance
- The current balance of your account.
- Annual rate of return
- This calculator assumes that your return is compounded annually. The actual rate of return is largely dependent on the types of investments you select.
It is important to remember that these scenarios are hypothetical and not guaranteed. Future rates of return can't be predicted with certainty and investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.
- Loan amount
- The amount of your intended loan. Per IRS rules, plan loans are generally limited to the lesser of 50% of your vested balance or $50,000. Your plan may impose additional restrictions. Please refer to the loan section of the site for your loan available information.
- Loan interest rate
- The annual interest rate paid on this loan. The pre-filled rate displayed is based on general loans for this plan if rate is available or else a default of 4%. The calculation assumes all payments are made according to your pay frequency if provided by your Plan Sponsor.
- Term in months
- The period of time you have to repay your loan. Your plan's rules impose limits on the maximum repayment period for a loan and may contain different maximum periods for "general purpose" and "residential" loans. If you terminate employment with your plan sponsor before your loan is fully repaid, you may be required to immediately repay the entire outstanding balance of your loan. Failure to repay a loan in accordance with plan and IRS rules will result in a deemed distribution to you from the plan, and the amount of the deemed distribution may be subject to income taxes and early withdrawal penalties.
- Income tax rate
- The marginal income tax rate you expect to pay. You may also wish to increase your marginal tax rate to also account for any state income tax. **TAXTABLE_CURRENT_DEFINITION**