Why Your 401k Loan May Cost You More Than You Think

In this episode of The 401k Podcast, Lucas and Luna drill into a specific feature many plan participants overlook: the 401k loan. Using a concrete example borrowed from Fidelity's 2025 participant data, they show how a $10,000 loan over five years can silently erode your retirement balance by as much as $8,000 in lost compound growth — even though you're paying yourself interest. They walk through the mechanics of double taxation (you repay with after-tax dollars, then pay tax again on withdrawal), the opportunity cost of missing market returns during the repayment period, and the ugly math of what happens if you leave your job with an outstanding loan: it becomes a taxable distribution within 60 days, plus a 10% penalty if you're under 59 1/2. They also touch on the new SECURE 2.0 rule that raises the loan limit to $50,000 and extends repayment for terminated employees, and why even that fix doesn't eliminate the core trade-off. Relevant for anyone who has borrowed — or is thinking of borrowing — from their 401k. #401kLoan #RetirementPlanning #CompoundGrowth #OpportunityCost #DoubleTaxation #SECURE2 #Fidelity #ParticipantData #JobChange #LoanRepayment #TaxableDistribution #EarlyWithdrawalPenalty #Finance #PersonalFinance #FexingoBusiness #BusinessPodcast #401kPodcast #EmployerRetirementPlans Keep every episode free: buymeacoffee.com/fexingo