| 401k Hardship Withdrawal | 401k Loan |
| Does NOT have to be paid back | Must be paid back within the agreed-upon time (within six months if the participant leaves the company) |
| No interest | Bears interest (market rate, or thereabout) |
| Substantial federal early withdrawal penalties | No federal early withdrawal penalties, unless the loan goes into default |
| Six month suspension of 401k participation upon taking out a hardship withdrawal | No participation suspension |
| Substantial long-term negative effect on the compounding growth of the 401k account | Less substantial long-term effect on the compounding growth of the 401k account — but still a significant negative effect |
| Sometimes asset liquidation fees (assessed by investment house) | (same) |
| Plan participant generally ends up with about 1/2 of the amount withdrawn (the reminder goes to taxes and federal early withdrawal penalties) | Plan participant generally ends up with most of the amount withdrawn |
| Withdrawn money taxed as income for the year | No tax consequences (unless participant defaults on loan) |
| Must be included in all 401k plans | Does NOT have to be included in 401k plans |
| Generally involve nominal administrative processing costs | (same) |
| All other resources must have been exhausted for person to qualify | Qualifications less stringent |