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How do I model repaying 401k loans?
How do I model repaying 401k loans?

This article explains explains how to model repayment of 401k loans.

Nancy Gates avatar
Written by Nancy Gates
Updated over a week ago

Option 1: Model the repayment as an income stream

This approach assumes that you have already taken a loan from your 401k. This indicates that your current 401k balance has already been reduced by the amount of the loan.

This approach also assumes that you know the duration of your loan repayment. If that is the case, you can model an additional contribution stream from your income to your 401k to simulate repayment.

Step 1: Go to My Plan > Money Flows

Step 2: Open the Recurring Contributions section

Step 3: Press on "Add a contribution +"

Step 4: Select your 401k as the destination account

Step 5: Enter your monthly payment amount

Step 6: Enter the start age and end age (based on the account holder's age)

Step 7: Press Save

Option 2: Model the repayment as an expense

This approach assumes that your current 401k balance reflects the total after you repay the loan.

This approach also assumes that you know the duration of your loan repayment. If that is the case, model a debt with the description of loan repayment for the duration of your loan.

Step 1: Go to My Plan > Debts

Step 2: Open the Non-Mortgage Debts section

Step 3: Press "Add a non-mortgage debt +"

Step 4: Select that this is an "Other" debt

Step 5: Select that you will manually enter this loan

Step 6: Enter a descriptive name

Step 7: Enter the current balance

Step 8: Enter the interest rate, likely 0%

Step 9: Enter your monthly payment

Step 10: Press Save

Monthly payments will continue until your loan is paid in full.

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