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ROBS vs 401(k) loan calculator

Model the same funding need two ways: retirement funds committed through ROBS and a participant loan from a plan that actually permits loans. The comparison is neutral because the two structures create different cash-flow, account-balance, tax-risk, and compliance issues.

Open calculatorRead the 401(k) loan guideCompare ROBS with SBA debt

Enter the same funding need for both scenarios

Every dollar field defaults to zero. The worksheet screens the federal plan-loan ceiling and keeps principal, interest, plan-document limits, ROBS cash costs, and optional growth assumptions separate.

The same acquisition, startup, franchise, equipment, or working-capital need both scenarios are measured against.

How many years of payments, fees, remaining balance, ROBS costs, and optional foregone growth to display.

ROBS scenario

Retirement-plan assets that would buy employer stock and become exposed to the business value.

Setup, corporation, plan document, rollover, stock issuance, or professional implementation cash cost.

Annual plan administration, recordkeeping, testing, Form 5500 support, or provider cash cost.

Annual employer-stock valuation or valuation-support cash cost.

Optional final-year stock redemption, plan termination, legal, valuation, or provider exit cash cost.

Optional hypothetical annual growth rate for assets committed through ROBS if they had stayed invested elsewhere.

401(k) loan scenario

Vested account balance used for IRC 72(p) screening. Your plan document can impose a lower or zero loan limit.

New loan principal to amortize. The screening limit is not a plan approval, tax result, or availability promise.

Current outstanding balance of all plan loans from this plan.

Highest outstanding loan balance during the prior 12 months, used to reduce the $50,000 dollar limit.

Enter a lower written plan or provider limit. Leave zero only if you are not applying a lower plan-document cap.

Annual rate charged by the plan. Interest is paid back to the plan account, not to a third-party lender.

General-purpose loans generally must be repaid within five years with substantially level payments at least quarterly.

Payments must be substantially level and at least quarterly. Monthly is common; quarterly tests the statutory minimum cadence.

Loan setup, processing, or document fee paid outside principal repayment.

Annual administration or maintenance fee for the plan loan, if charged.

401(k) loan screening limit

$10,000

Loan payment

$0 monthly

ROBS funds committed

$1,000

Net loan cost excl. principal

$0

Side-by-side worksheet

Cash costs and fees
ROBS$0
401(k) loan$0
Payments during horizon
ROBSNo loan payment
401(k) loan$0
Principal returned to account
ROBSNot a loan
401(k) loan$0
Interest paid to plan account
ROBSNot loan interest
401(k) loan$0
Remaining loan balance
ROBSNo loan balance modeled
401(k) loan$0
Opportunity-growth scenario
ROBS$0
401(k) loanNot modeled
Funding gap versus need
ROBS$0
401(k) loan$0

401(k) loan screening

  • IRC 72(p) screening limit shown: $10,000 before subtracting current outstanding loans and before any lower plan cap.
  • Available new-loan amount after current balance and plan cap: $10,000.
  • Shortfall versus requested principal: $0. This is not a plan approval or availability claim.

Year-by-year timing

Year 1
Loan payments$0
Interest to account$0
Principal returned$0
Loan balance$0
Loan fees$0
ROBS admin/valuation$0
ROBS opportunity scenario$0
Year 2
Loan payments$0
Interest to account$0
Principal returned$0
Loan balance$0
Loan fees$0
ROBS admin/valuation$0
ROBS opportunity scenario$0
Year 3
Loan payments$0
Interest to account$0
Principal returned$0
Loan balance$0
Loan fees$0
ROBS admin/valuation$0
ROBS opportunity scenario$0
Year 4
Loan payments$0
Interest to account$0
Principal returned$0
Loan balance$0
Loan fees$0
ROBS admin/valuation$0
ROBS opportunity scenario$0
Year 5
Loan payments$0
Interest to account$0
Principal returned$0
Loan balance$0
Loan fees$0
ROBS admin/valuation$0
ROBS opportunity scenario$0

Formulas

  • 401(k) loan payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1); if r = 0, payment = P ÷ n.
  • Interest is modeled as an amount credited back to the plan account, not as a third-party borrowing cost. Principal repayments return borrowed principal to the account, so the net-cost line excludes principal returned.
  • Federal loan screening limit = lesser of $50,000 reduced by the prior-12-month high-balance rule, or the greater of $10,000 or 50% of vested account balance; then subtract current outstanding loans and apply any lower plan cap.
  • ROBS cash paid = setup + annual administration and valuation × horizon years + final-year exit cost when selected.
  • ROBS opportunity-growth scenario = retirement funds committed × ((1 + growth rate ÷ 100)^horizon years − 1).

No winner, no eligibility result, and no tax conclusion

This worksheet compares timing and categories. It does not say a ROBS is prudent, a 401(k) loan is available, a plan permits business-purpose borrowing, a primary-residence exception applies, or a default avoids tax. Job separation, plan termination, missed payments, and plan offsets can change the tax and rollover consequences.

Privacy and trust

There is no account creation, saved scenario, provider referral, lender referral, or lead form. Calculations run in this browser from FormData values submitted on this page.

What the worksheet can and cannot tell you

A ROBS transaction moves eligible retirement assets into a qualified plan sponsored by a C corporation, and that plan buys employer stock. A participant loan is different: the plan lends money to the participant under written plan terms, and repayments generally return principal and interest to the plan account. IRS guidance says plans may offer loans but are not required to do so, and the plan can impose lower limits than the federal maximum. [1] [2]

The 401(k) loan side screens the statutory ceiling as the lesser of the adjusted $50,000 rule or the greater of $10,000 or 50% of the vested account balance, then subtracts current outstanding loans and applies any lower plan cap entered by the user. Existing and recent loans matter because the $50,000 amount is reduced by the excess of the highest outstanding loan balance in the prior 12 months over the current outstanding balance. [1] [3]

The model does not treat loan principal as an economic cost because principal repayments return borrowed principal to the account. It does show the cash-flow burden of payments, the interest credited to the account, the remaining loan balance, and any user-entered loan fees. It also does not model time out of market on the borrowed amount, missed payroll deductions, tax basis after default, or investment returns inside the plan account.

Repayment and default boundaries

For a general-purpose plan loan, IRS guidance describes repayment within five years with substantially equal payments including principal and interest, made at least quarterly. A longer term may be available for a loan used to purchase the employee’s principal residence, but only if the plan terms and documentation support that exception. [1] [2]

If a loan does not satisfy amount, duration, or repayment rules, or if required payments are not made, the outstanding balance can become a deemed distribution for tax purposes and may trigger the 10% early-distribution tax. Job separation or plan termination can also cause a plan-loan offset; IRS guidance distinguishes that offset from a deemed distribution and describes rollover timing that can depend on the facts. [1] [2]

ROBS assumptions kept separate

The ROBS side asks for retirement funds committed, setup cost, recurring administration, valuation, and exit cash costs. It also offers an optional foregone-growth scenario. That scenario is not a prediction and is not added to a false winner score; it is a separate way to show what the committed retirement assets might have earned outside the business under the user’s assumed rate. IRS ROBS materials emphasize valuation, recordkeeping, Form 5500/Form 1120, employee participation, and prohibited-transaction concerns. [4] [5]

Frequently asked questions

Does the calculator decide whether ROBS or a 401(k) loan is better?

No. It separates cash fees, payments, principal returned, interest credited to the account, remaining balance, retirement funds committed, and optional foregone-growth assumptions. It does not rank or declare a winner.

Is the 401(k) loan limit an approval result?

No. The statutory screen is only a federal maximum calculation. A plan can prohibit loans, set a lower maximum, require spousal consent, limit purposes, or deny a loan that does not follow plan procedures.

Why is principal not treated as a net cost?

A plan-loan repayment returns principal to the participant's plan account. The cash-flow burden is real, but principal is different from fees and different from interest paid to an outside lender.

Can the calculator use a term longer than five years?

Only when the primary-residence checkbox is selected. The exception depends on plan terms and loan documentation, and this page does not verify that a specific loan qualifies.

Sources

  1. IRS plan-loan FAQs — Primary IRS FAQ supporting that qualified plans may but are not required to offer loans, may impose lower limits, use the IRC 72(p) maximum loan formula, require substantially level repayments at least quarterly, generally require repayment within five years, include a principal-residence exception, and treat defaults as deemed distributions. Page last reviewed Feb. 26, 2026; checked Aug. 12, 2026.
  2. IRS retirement topics: plan loans — Primary IRS participant guidance supporting plan-document availability, maximum loan amount examples, repayment-period rules, job-separation and plan-termination offset consequences, deemed distributions, 10% early-distribution-tax risk, and correction references. Page last reviewed Feb. 26, 2026; checked Aug. 12, 2026.
  3. IRC Section 72(p) — Statutory text for plan-loan treatment, the lesser-of loan limit, repayment term, level-amortization requirement, and principal-residence exception. Checked Aug. 12, 2026.
  4. IRS ROBS compliance project — Primary IRS ROBS source supporting the C corporation and qualified-plan stock purchase structure, valuation and recordkeeping concerns, Form 5500/Form 1120 issues, and the boundary that a determination letter does not approve a transaction's operation. Page last reviewed Nov. 16, 2025; checked Aug. 12, 2026.
  5. IRS TE/GE ROBS guidelines memorandum — Primary IRS memorandum supporting concern about adequate consideration, start-up stock valuation, promoter fees, employee participation, and prohibited-transaction analysis in ROBS examinations. Checked Aug. 12, 2026.