Jul
15
2026
A couple reviews financial documents and a laptop at a kitchen table, researching 401(k) tax rules.

401(k) Taxes: Rules on Withdrawals and Contributions

By | Growing Wealth, invest, Investing, Preparing for Retirement | Comments Off on 401(k) Taxes: Rules on Withdrawals and Contributions

Employer-sponsored retirement plans like a 401(k) are a common way for workers to save for retirement. According to the Bureau of Labor Statistics, 53% of private industry employees participate in a retirement plan at work. So participants need to understand how 401(k) taxes work to take advantage of this popular retirement savings tool.

With a traditional 401(k) plan, employees can contribute a portion of their salary to an account with various investment options, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs).

There are two main types of workplace 401(k) plans: a traditional 401(k) plan and a Roth 401(k). The 401(k) tax rules depend on which plan an employee participates in.

Key Points

•   Traditional 401(k) contributions are deducted from your paycheck before taxes, reducing your taxable income for the year — with taxes owed when funds are withdrawn in retirement.

•   Early withdrawals from a traditional 401(k) before age 59 ½ typically trigger both ordinary income taxes and an additional 10% penalty on the full distribution amount.

•   An exception to the early withdrawal penalty exists for employees who leave their company during or after the year they turn 55, allowing penalty-free distributions at that point.

•   Roth 401(k) distributions in retirement are tax-free (taxes are paid on contributions in the year they are made) provided the account has been held for at least five years and the owner is 59 ½ or older.

•   Employer contributions to a traditional 401(k) are not included in an employee’s taxable income when made, but are fully taxed upon withdrawal during retirement.

Traditional 401(k) Tax Rules

When it comes to this employer-sponsored retirement savings plan, here are key things to know about 401(k) taxes and 401(k) withdrawal tax.

401(k) Contributions Are Made With Pre-tax Income

One of the biggest advantages of a 401(k) plan is its tax break on contributions. When you contribute to a 401(k), the money is deducted from your paycheck before taxes are taken out, which reduces your taxable income for the year. This means that you’ll generally pay less in income tax, which can save you a significant amount of money over time.

If you’re contributing to your company’s 401(k), each time you receive a paycheck, a self-determined portion of it is deposited into your 401(k) account before taxes are taken out, and the rest is taxed and paid to you.

There are annual limits on 401(k) contributions. Here’s a look at the 401(k) contribution limits for 2025 and 2026.

Tax year 401(k) contribution limit for people under age 50 401(k) catch-up contribution limit for people aged 50 and up Super catch-up contributions for those ages 60 to 63
2025 $23,500 $7,500 (for a total of $31,000) $11,250 (for a total of $34,750)
2026 $24,500 $8,000 (for a total of $32,500) $11,250 (for a total of $35,750)

Super catch-up contributions, a provision of the SECURE 2.0 Act, are temporary enhanced catch-up contribution limits for individuals ages 60 to 63 who are enrolled in a participating retirement plan. Check with your plan administrator to see if your plan offers the super catch-up option.

Additionally, under a new law regarding catch-up contributions that went into effect on January 1, 2026, individuals aged 50 and older whose FICA wages exceeded $150,000 in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account. Because of the way Roth accounts work, these individuals will pay taxes on their catch-up contributions upfront, but can make eligible withdrawals tax-free in retirement. (See more about Roth 401(k)s below.)

401(k) Contributions Lower Your Taxable Income

The more you contribute to your 401(k) account, the lower your taxable income is in that year (aside from the catch-up exception noted above for certain individuals). If you contribute 15% of your income to your 401(k), for instance, you’ll only owe taxes on 85% of your income.

Withdrawals From a 401(k) Account Are Taxable

When you take withdrawals from your 401(k) account in retirement, you’ll be taxed on your contributions and any earnings accrued over time.

The withdrawals count as taxable income, so during the years you withdraw funds from your 401(k) account, you will owe taxes in your retirement income tax bracket.

Early 401(k) Withdrawals Come With Taxes and Penalties

If you withdraw money from your 401(k) before age 59 ½, you’ll owe both income taxes and a 10% tax penalty on the distribution.

Although individual retirement accounts (IRAs) allow penalty-free early withdrawals for qualified first-time homebuyers and qualified higher education expenses, that is not true for 401(k) plans.

That said, if an employee leaves a company during or after the year they turn 55, they can start taking distributions from their 401(k) account without paying a 10% early withdrawal penalty. They will, however, still owe taxes on distributions from a traditional 401(k) plan.

Can you take out a loan or hardship withdrawal from your plan assets? Many plans do allow that up to a certain amount, but withdrawing money from a retirement account means you lose out on the compound growth from funds withdrawn. You will also have to pay interest (yes, to yourself) on the loan.

Roth 401(k) Tax Rules

Here are some tax rules for a Roth 401(k).

Your Roth 401(k) Contributions Are Made With After-Tax Income

When it comes to taxes, a Roth 401(k) works the opposite way of a traditional 401(k). Your contributions are post-tax, meaning you pay taxes on the money in the year you contribute. Your withdrawals in retirement are tax-free.

If you have a Roth 401(k) and your company offers a 401(k) match, matching contributions have typically gone into a pre-tax account, which would be a traditional 401(k) account. But thanks to SECURE 2.0, an employer can now provide an option that allows fully-vested employees to have their employer matching contributions made on a Roth (post-tax) basis. Because the matching contributions are made with after-tax dollars, employees pay taxes on them in the year they are made.

Recommended: How an Employer 401(k) Match Works

Roth 401(k) Contributions Do Not Lower Your Taxable Income

When you have Roth 401(k) contributions automatically deducted from your paycheck, your full paycheck amount will be taxed, and then money will be transferred to your Roth 401(k).

For instance, if you’re making $50,000 and contributing 10% to a Roth 401(k), $5,000 will be deposited into your Roth 401(k) annually, but you’ll still be taxed on the full $50,000.

Roth 401(k) Withdrawals Are Tax-Free

When you take money from your Roth 401(k) in retirement, the distributions are tax-free, including your contributions and any earnings that have accrued (as long as you’ve had the account for at least five years).

No matter what your tax bracket is in retirement, qualified withdrawals from your Roth 401(k) are not counted as taxable income.

It can also be helpful to know that, like a Roth IRA, a Roth 401(k) no longer requires participants to start taking required minimum distributions at age 73.

There Are Limits on Roth 401(k) Withdrawals

In order for a withdrawal of earnings from a Roth 401(k) to count as a qualified distribution — meaning, it won’t be taxed — an employee must be age 59 ½ or older and have held the account for at least five years.

If you make a withdrawal of earnings before this point — even if you’re age 61 but have only held the account since age 58 — the withdrawal would be considered an early, or unqualified, withdrawal. If this happens, you would owe taxes on any earnings you withdraw and be subject to a 10% penalty. (You can withdraw your contributions tax-free at any time without penalty or taxes.)

Early withdrawals are prorated according to the ratio of contributions to earnings in the account. For instance, if your Roth 401(k) had $100,000 in it, made up of $70,000 in contributions and $30,000 in earnings, your early withdrawals would be made up of 70% contributions and 30% earnings. Hence, you would owe taxes and potentially penalties on 30% of your early withdrawal.

If the plan allows it, you can take a loan from your Roth 401(k), just like a traditional 401(k), and the same rules and limits apply to how much you can borrow. Any Roth 401(k) loan amount will be combined with outstanding loans from that plan or any other plan your employer maintains to determine your loan limits.

You Can Roll Roth 401(k) Money Into a Roth IRA

Money in a Roth 401(k) account can be rolled into a Roth IRA. Like an employer-sponsored Roth 401(k), a Roth IRA is funded with after-tax dollars.

It’s important to note, however, that there’s also a five-year rule for Roth IRAs: Earnings cannot be withdrawn tax- and penalty-free from a Roth IRA until five years after the account’s first contribution. If you roll a Roth 401(k) into a new Roth IRA, the five-year clock starts over at that time.

Do You Have to Pay Taxes on a 401(k) Rollover?

If you do a direct rollover of your 401(k) into an IRA or another eligible retirement account, you generally won’t have to pay taxes on the rollover. However, if you receive the funds from your 401(k) and then roll them over yourself within 60 days, you may have to pay taxes on the amount rolled over, as the IRS will treat it as a distribution from the 401(k).

Recommended: How to Roll Over Your 401(k)

Do You Have to Pay 401(k) Taxes after 59 ½?

If you have a traditional 401(k), you will generally have to pay taxes on withdrawals after age 59 ½. This is because the money you contributed to the 401(k) was not taxed when you earned it, so it’s considered income when you withdraw it in retirement.

However, if you have a Roth 401(k), you can withdraw your contributions and earnings tax-free in retirement as long as you meet certain requirements, such as being at least 59 ½ and having had the account for at least five years.

Do You Pay 401(k) Taxes on Employer Contributions?

The taxation of employer contributions to a 401(k) depends on whether the account is a traditional or Roth 401(k).

In the case of traditional 401(k) contributions, the employer contributions are not included in your taxable income for the year they are made, but you will pay taxes on them when you withdraw the funds from the 401(k) in retirement.

In the case of Roth 401(k) employer contributions, it depends whether the contributions are made on a Roth or traditional 401(k) basis. If they are made on a Roth basis, you will pay taxes on them in the year they’re made, but not when you withdraw them in retirement. If the contributions are made in a pre-tax traditional 401(k) basis, you won’t pay taxes on them in the year they are made, but you will pay taxes on them when you make withdrawals in retirement.

How Can I Avoid 401(k) Taxes on My Withdrawal?

The only way to avoid taxes on 401(k) withdrawals is to take advantage of a Roth 401(k), as noted above. With a Roth 401(k), your contributions are made post-tax, but withdrawals are tax-free if you meet certain criteria to avoid the penalties.

However, even if you have to pay taxes on your 401(k) withdrawals, you can take the following steps to minimize your taxes.

Consider Your Tax Bracket

Contributing to a traditional 401(k) means you’re choosing to forgo taxes now and pay taxes later, when you’re hoping to be in a lower tax bracket in retirement.

Contributing to a Roth 401(k) takes the opposite approach: Pay taxes now, so you don’t have to pay taxes later. The best approach for you will depend on your income, your tax situation, and your future tax treatment expectations.

Strategize Your Account Mix

Having savings in different accounts — both pre-tax and post-tax — may offer more flexibility in retirement.

For instance, if you need to make a large purchase, such as a vacation home or a car, it may be helpful to be able to pull the income from a source that doesn’t trigger a taxable event. This might mean a retirement strategy that includes a traditional 401(k), a Roth IRA, and a taxable brokerage account.

Decide Where To Live

Nine U.S. states don’t charge individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. (Washington state does tax capital gains of certain high earners.)

This can affect your tax planning if you live in a tax-free state now or intend to live in a tax-free state in retirement.

The Takeaway

Saving for retirement is one of the best ways to prepare for a secure future. And understanding the tax rules for 401(k) withdrawals and contributions is essential for effective retirement planning. By educating yourself on the rules and regulations surrounding 401(k) taxes, you can optimize your retirement savings and minimize your tax burden.

Another strategy to help stay on top of your retirement savings is to consider rolling over a previous 401(k) to a rollover IRA. Then you can manage your money in one place.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

Help build your nest egg with a SoFi IRA.

🛈
While SoFi does not offer 401(k) plans at this time, we do offer Individual Retirement Accounts (IRAs).

FAQ

Do you get taxed on your 401(k)?

Yes. You either pay taxes on your 401(k) contributions — in the case of a Roth 401(k) — or on your traditional 401(k) withdrawals in retirement.

When can you withdraw from a 401(k) tax-free?

You can withdraw from a Roth 401(k) tax-free if you have had the account for at least five years and are over age 59 ½. With a traditional 401(k), withdrawals are generally subject to income tax.

How can I avoid paying taxes on my 401(k)?

You never truly avoid paying taxes on a 401(k), as you either have to pay taxes on contributions or withdrawals, depending on the type of 401(k) account it is. By contributing to a Roth 401(k) instead of a traditional 401(k), you can withdraw your contributions and earnings tax-free in retirement, but you will pay taxes on your contributions in the year you make them.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Mutual Funds (MFs): Investors should read and carefully consider the information contained in the prospectus, which contains the Mutual Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or SoFi's customer service at: 1.855.456.7634. Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risks. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may have tax implications.

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SOIN-Q226-070

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Jun
26
2026
A woman looks up information about catch-up contributions on her laptop.

Catch-Up Contributions, Explained

By | invest, Investing, Preparing for Retirement | Comments Off on Catch-Up Contributions, Explained

Catch-up contributions allow individuals 50 and older to contribute additional money to their workplace retirement plans like 401(k)s and 403(b)s, as well as to individual retirement accounts (IRAs).

Catch-up contributions are designed to help those approaching retirement age save more money for their retirement.

Learn how catch-up contributions work, the eligibility requirements, and how you might be able to take advantage of these contributions to help reach your retirement savings goals.

Key Points

•   Catch-up contributions allow individuals 50 and older to contribute additional money to their workplace retirement savings plans and individual retirement accounts (IRAs).

•   Catch-up contributions were created to help older individuals “catch up” on their retirement savings if they haven’t been able to save enough earlier in their careers.

•   The catch-up contribution limits for 2026 vary depending on the retirement savings plan, such as 401(k), 403(b), and IRAs.

•   To be eligible for catch-up contributions, individuals need to be age 50 or older; certain retirement plans may have additional allowances based on age or years of service.

•   Catch-up contributions can provide benefits such as increased retirement savings, potential tax benefits, and additional financial security as retirement approaches.

What Is a Catch-Up Contribution?

A catch-up contribution is an additional contribution individuals ages 50 and older can make to a retirement savings plan beyond the standard allowable limits each year. In addition to 401(k) plans, 403(b)s, and IRAs, catch-up contributions can also be made to Thrift Savings Accounts, 457 plans, and SIMPLE IRAs.

Catch-up contributions were created as a provision of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. They were originally planned to end in 2010. However, catch-up contributions became permanent with the Pension Protection Act of 2006 as one of the ways to save for retirement.

The idea behind catch-up contributions is to help older individuals who may not have been able to save for retirement earlier in their careers, or those who experienced financial setbacks, to “catch up.” The additional contributions could increase their retirement savings and improve their financial readiness for their golden years.

Individuals who have maxed out their 401(k) contributions, including catch-up contributions, might choose to open an IRA to save even more for retirement. They could even make an IRA catch-up contribution.

How Does a Catch-Up Contribution Work?

Catch-up contributions allow individuals aged 50 and older to contribute extra money to retirement accounts such as workplace retirement plans and IRAs beyond the standard limits. Catch-up contributions can help older workers potentially build a bigger retirement nest egg.

To make a catch-up contribution you must be at least aged 50. If you are eligible, you can make the additional catch-up contribution on top of the standard contribution limit of the retirement plan set by the IRS. See the specifics about contribution limits below.

Making catch-up contributions might also provide individuals with tax benefits by lowering their taxable income so that they could possibly save even more money. For retirement savings plans like 401(k)s and traditional IRAs, catch-up contributions are typically tax deductible, lowering an individual’s taxable income in the year they contribute. However, catch-up contributions to Roth IRAs are made with after-tax dollars. That means you pay taxes on the money you contribute now, but your withdrawals are generally tax-free in retirement.

One thing to note is that as of January 1, 2026, as part of the SECURE 2.0 Act, individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account. With Roths, individuals pay taxes on contributions upfront, but can make qualified withdrawals tax-free in retirement.

Catch-Up Contribution Limits for 2026

Each year, the IRS evaluates and modifies contribution limits for retirement plans, primarily taking the effects of inflation into account.

The standard annual 401(k) contribution limit in 2026 is $24,500. For a traditional or Roth IRA, the standard annual contribution limit is $7,500 in 2026.

Catch-up contributions can be made on top of those amounts. Here are the catch-up contribution limits for 2026 for some retirement savings plans.

Plan 2026 regular catch-up limit 2026 special SECURE 2.0 catch-up limit (for those ages 60-63) Total amount of contributions with catch-up in 2026
IRA (traditional or Roth) $1,100 N/A $8,600
401(k) $8,000 $11,250 $32,500 with standard catch-up
$35,750 with SECURE 2.0 catch-up
403(b) $8,000 $11,250 $32,500 with standard catch-up
$35,750 with SECURE 2.0 catch-up
SIMPLE IRA $4,000 $5,250 $21,000 with standard catch-up
$22,250 with SECURE 2.0 catch-up
457 plan $8,000 $11,250 $32,500 with standard catch-up
$35,750 with SECURE 2.0 catch-up
Thrift Savings Plan $8,000 $11,250 $32,500 with standard catch-up
$35,750 with SECURE 2.0 catch-up

401(k) Catch-Up Limits (Ages 60-63)

Thanks to another provision of SECURE 2.0, “super catch-up contributions” allow people ages 60 to 63 who are enrolled in a participating retirement plan to make catch-up contributions to a 401(k) beyond the standard catch-up amount. These individuals can contribute up to $11,250 to certain types of employer-sponsored plans in 2026, as shown in the chart above, as long as their plan offers the super catch-up option.

The super catch-up is in addition to the standard yearly contribution limit to the plan and it’s made in place of the regular catch-up amount.

IRA Catch-Up Limits

The catch-up contribution limits for Roth and traditional IRAs, including rollover IRAs, in 2026 is $1,100 for those ages 50 and up. On top of the $7,500 standard IRA contribution limit for the year, the IRA catch-up contribution brings the total up to $8,600.

Catch-Up Contribution Requirements

In order to take advantage of catch-up contributions, individuals need to be age 50 or older — or turn 50 by the end of the calendar year. If eligible, they can make catch-up contributions each year after that if they choose to — up to the annual contribution limit.

Certain retirement plans may have other allowances for catch-up eligibility. For instance, with a 403(b) plan, in addition to the catch-up contributions for participants based on age, employees with at least 15 years of service may be able to make additional contributions, depending on the rules of their employer’s plan.

To maximize the advantages of catch-up contributions, it’s a good idea to become familiar with the rules of your plan as part of your retirement planning strategy.

When Can I Make a Catch-Up Contribution?

You can make a catch-up contribution if you are aged 50 or older and have a retirement account such as a 401(k), 403(b), 457(b), Thrift Savings Plan, or a traditional or Roth IRA.

For workplace retirement accounts like 401(k)s, 403(b)s, 457(b)s, catch-up contributions must be made by the end of the calendar year — meaning by December 31. For traditional and Roth IRAs, contributions can typically be made up until the tax filing deadline for the tax year in question (not including extensions). For example, for the 2026 tax year, the catch-up contribution deadline for these IRAs is April 15, 2027.

2026 Roth Rules for High Earners

Under a new law that went into effect on January 1, 2026 as part of SECURE 2.0, individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k), 403(b), and 457(b) catch-up contributions into a Roth 401(k) account, as long as their employer offers a Roth option. With Roths, individuals pay taxes on contributions upfront, but they can make qualified withdrawals tax-free in retirement.

If your plan doesn’t offer the Roth option and you earned more than $150,000 in FICA wages in 2025, you may not be able to make catch-up contributions. Check with your plan administrator or benefits department to find out the specifics of your retirement plan.

Benefits of Catch-Up Contributions

There are a number of benefits to making catch-up contributions to eligible retirement plans. They include:

•   Increased retirement savings: By helping to make up for earlier periods of lower contributions to your retirement savings plan, catch-up contributions allow you to increase your savings and potentially grow your nest egg in the years closest to retirement.

•   Possible tax benefits: Making catch-up contributions may help lower your taxable income for the year you make them. That’s because contributions to 401(k)s and traditional IRAs are made with pre-tax dollars, giving you a right-now deduction. And contributions beyond the standard limits could lower your taxable income for the year even more. (Of course, you will pay tax on the money when you withdraw it in retirement, but you may be in a lower tax bracket by then.)

•   Additional security: Making catch-up contributions may give you an extra financial cushion as you approach full retirement age. And those contributions may add up in a way that could surprise you. For instance, if you contribute an additional $7,500 to your retirement account from age 50 to 65, assuming an annualized rate of return of 7%, you could potentially end up with more than $200,000 extra in your account.

How to Make Catch-Up Contributions

To make catch-up contributions to an employer-sponsored plan, contact your plan’s administrator or log into your account online. The process is typically incorporated into a retirement savings plan’s structure, and you should be able to easily indicate the amount you want to contribute as a catch-up.

To make IRA catch-up contributions, contact your IRA custodian (typically the institution where you opened the IRA) to start the process. In general, you have until the due date for your taxes (for example, April 15, 2027 for your 2026 taxes) to make catch-up contributions.

Finally, keep tabs on all your retirement plan contributions, including catch-ups, to make sure you aren’t exceeding the annual limits. Additionally, knowing how much is in your retirement accounts can help you decide when to retire.

The Takeaway

For those 50 and up, catch-up contributions can be an important way to help build retirement savings. They can be an especially useful tool for individuals who weren’t able to save as much for retirement when they were younger. By contributing additional money to their 401(k) or IRA now, they can work toward a goal of a comfortable and secure retirement.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

Help build your nest egg with a SoFi IRA.

🛈
While SoFi does not offer 401(k) plans at this time, we do offer Individual Retirement Accounts (IRAs).

FAQ

What is the 401(k) catch-up limit at age 50?

For 2026, the 401(k) regular catch-up contribution limit for those ages 50 and up is $8,000. That’s on top of the standard 401(k) contribution limit of $24,500 for a total of $32,500 in 2026. However, under the SECURE 2.0 Act, individuals ages 60 to 63 can make a super catch-up contribution of up to $11,250 to their 401(k) in 2026 — instead of the $8,000 catch-up — for a total of $35,750.

How does the new 2026 Roth catch-up rule work?

The new 2026 Roth catch-up rule stipulates that individuals ages 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account, as long as their plan offers a Roth option. With Roths, individuals pay taxes on contributions upfront, but can make qualified withdrawals tax-free in retirement.

If your plan does not offer a Roth option and you earned more than $150,000 in FICA wages, you may not be able to make a catch-up contribution.

Can I make catch-up contributions to a 401(k) and IRA?

Yes, you can make catch-up contributions to both a 401(k) and an IRA as long as you meet the eligibility criteria for each plan. Contributing to one of these plans does not affect whether or how much you can contribute to the other.

To be eligible to make catch-up contributions, you need to be aged 50 or older. If you are 60 to 63, you may be eligible for an enhanced “super catch-up” contribution to your 401(k) in 2026.

When can I make a catch-up contribution for 2026?

For a workplace retirement plan like a 401(k), you can make a catch-up contribution any time throughout the calendar year until December 31. If you have an IRA, you can make a catch-up contribution until the tax filing deadline for the tax year in question, which is typically April 15 of the following year. So for tax year 2026, your deadline to make an IRA catch-up contribution is April 15, 2027.

Do you get an employer match on catch-up contributions?

Catch-up contributions to workplace retirement plans may be eligible for an employer match, depending on your plan. Check with your benefits department or plan administrator to see if and what your plan allows in terms of an employer match on catch-up contributions. Also keep in mind that the IRS limits the total amount contributed by both employee and employer to the plan each year. If you’ve already reached that limit, your employer would not be able to match your catch-up contributions.

Photo credit: iStock/mapodile

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Options involve substantial risk of loss and the possibility an investor may lose the entire amount invested. Before starting options trading, investors should be familiar with the Characteristics and Risks of Standardized Options . TTax implications with options should be considered. Consult your tax advisor to understand any impacts to your taxes.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

SOIN-Q226-033

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Jun
18
2026
A person near a window in an office researching on a phone how to roll over a 401(k).

How to Roll Over Your 401(k): Knowing Your Options

By | Budgeting & Goals, Building Your Career, Growing Wealth, invest, Investing, Life & Career | No Comments

Rolling over a 401(k) means moving money from an old employer-sponsored retirement plan into another eligible retirement account, such as a new employer’s 401(k) or 403(b) plan or an individual retirement account (IRA). A rollover can help you keep retirement savings tax-advantaged, consolidate accounts, potentially access different investment options, keep contributions steady, and reduce investment costs.

The key is choosing the right account for your rollover, and using the correct rollover method to avoid unnecessary taxes or penalties.

If you recently changed jobs, have an old 401(k), or want to streamline your retirement accounts, here’s what to know about your rollover options, the steps involved, and the mistakes to avoid.

Key Points

•   When you leave a job, you may be able to roll your old 401(k) into a new employer’s plan, roll it into an IRA, leave it with your former employer, or cash it out.

•   A direct rollover is generally the simplest way to move 401(k) funds because the money goes directly to the receiving retirement account.

•   An indirect rollover can create tax risk because funds are paid to you first, and you generally have 60 days to redeposit the money into another eligible retirement account.

•   Rolling pre-tax 401(k) money into a Roth IRA is generally considered a Roth conversion and will create taxable income.

•   Before rolling over a 401(k), compare fees, investment choices, account features, tax treatment, creditor protections, and whether the receiving account can accept the rollover.

Your 401(k) Rollover Options at a Glance

When you leave an employer, you have several options for your old 401(k). The right choice depends on your existing plan rules, whether your new employer offers a retirement plan, your retirement goals, tax situation, and how much control you want over the account. It may help to use an IRA contribution calculator.

It’s important to weigh your options because not doing so can mean you lose out on significant retirement savings. As of July 2025, there were 31.9 million left-behind or forgotten 401(k) accounts holding approximately $2.1 trillion in assets, up almost 30% from mid-2023, according to data collected by Capitalize and the Center for Retirement Research.

Option How It Works Potential Pros Potential Cons
Roll into a new employer plan Move old 401(k) funds to your new employer’s plan, if allowed Keeps workplace savings together; may preserve plan features; higher contribution limits than an IRA New plan may have limited investment options or fees; not all plans accept rollovers
Roll into an IRA Move old 401(k) funds to a traditional IRA or Roth IRA, depending on tax treatment More investment choice; more control; account consolidation IRA fees/rules may differ; creditor protection may vary; Roth conversions (if chosen) may be taxable
Leave it with former employer Keep money in the old plan if allowed No immediate action needed; may keep current investments/features May be harder to track; may not allow new contributions; fees or access may change
Cash out Take the money as a lump sum distribution Immediate access to cash Withdrawals are taxed as income, possible 10% penalty, loss of retirement growth potential

What Is a 401(k) Rollover?

A 401(k) rollover is the process of moving retirement money from an old employer-sponsored plan into another eligible retirement account. Common rollover accounts include a new employer’s 401(k) or 403(b) plan, if it accepts rollovers.

Or you can open an IRA (such as a traditional or Roth IRA), although annual contribution limits for IRAs are lower: $7,500 for tax year 2026 ($8,000 for those 50 and older).

One of the chief benefits of doing a rollover is consolidating your accounts to better manage your retirement plan overall. According to a report from Vanguard, an analysis of 22,000 retirement savers found that the median 50- to 59-year-old had three separate workplace retirement accounts, and 31% had four or more, making it complicated to keep track of investments, fees, and progress toward retirement goals.

What Are the Tax Implications of a Rollover?

Understanding the tax rules around rollovers is an essential part of your rollover decision. Remember that most 401(k) and other employer-sponsored plans take pre-tax contributions. That means contributions are deductible from your taxable income the year you make them. You will owe income tax when you withdraw the funds.

Some employer plans also offer Roth 401(k) options. Roth 401(k) accounts are funded with after-tax contributions. Contributions are not deductible, and you withdraw earnings tax-free after age 59 ½ , assuming you’d had the account for at least five years.

Rollovers vs. Cashing Out

A rollover is different from cashing out. With a rollover, the goal is generally to keep the money in a tax-advantaged retirement account such as another 401(k) or an IRA. With a cash-out, the money is distributed to you, which will likely trigger income taxes and possibly a 10% early withdrawal penalty if you’re under age 59 ½ — and can put your total retirement savings at risk.

Rollovers can involve pre-tax, Roth, or after-tax funds, and the tax treatment for any rollover will vary depending on the type of funds, as well as the rollover account you choose. If you’re unsure how your previous 401(k) plan is classified, contact your plan administrator before requesting a rollover.

How to Roll Over a 401(k) in 5 Steps

The exact rollover process can vary by plan provider, but most 401(k) rollovers follow the same basic path. Before starting, gather your old plan information, compare your rollover options, and confirm whether the receiving account can accept the rollover funds.

1. Review Your Old 401(k) Details

Start by reviewing your old 401(k) account. Look at the balance, investment options, fees, account type, and whether the money is pre-tax, Roth, after-tax, or a mix.

It’s wise to check whether you have an outstanding 401(k) loan, employer stock, or plan-specific features that could affect your decision.

2. Choose Where the Money Will Go

Next, decide whether you want to roll the money into a new employer’s plan, roll it into an IRA (sometimes called a rollover IRA), leave it with your former employer if allowed, or cash it out.

If you’re considering a new employer plan, ask whether it accepts incoming rollovers. If you’re considering an IRA, decide whether a traditional IRA, Roth IRA, or another IRA type is appropriate based on the tax treatment of your old 401(k) funds. Note that IRA rollovers and transfers are two different things.

3. Open the Receiving Account, If Needed

If you’re rolling money into an IRA or a new account, you may need to open that account before requesting the rollover. If you’re rolling money into a new employer plan, the plan administrator can explain what information is needed.

Because tax treatment matters and can impact the amount of income tax you’ll owe, make sure the receiving account matches the type of money being moved. For example, pre-tax 401(k) money is often rolled into a traditional IRA or pre-tax 401(k), while Roth 401(k) money is typically rolled into a Roth IRA or Roth 401(k), if available.

Doing an apples-to-apples rollover in a timely fashion can prevent unwanted tax bills and/or penalties.

4. Request a Direct Rollover

In many cases, a direct rollover is the simplest approach. With a direct rollover, the money moves directly from the old plan to the receiving retirement account, or the check is made payable to the receiving institution for your benefit.

Contact your old 401(k) plan administrator to ask about its rollover process. You may need to complete forms online, by phone, or on paper.

5. Confirm the Funds Arrived and Choose Investments

After the rollover is processed, confirm that the funds arrived in the receiving account. Then review how the money is invested.

In many cases, rollover funds may arrive as cash and remain uninvested until you choose investments. This is often the case if the rollover account doesn’t offer the same investments you had with your previous employer. If the account is intended for long-term retirement savings, make sure the investment allocation fits your timeline, risk tolerance, and goals. You may want to consult with a professional for guidance.

Recommended: Stock Market Basics

401(k) Rollover Options

Here’s an overview of the main options for an old 401(k).

1. Roll Over Money to a New 401(k) Plan

If your new employer’s 401(k) plan accepts rollovers, you may be able to move your old 401(k) into the new plan.

This can make it easier to keep workplace retirement savings in one place. It may also preserve certain plan features, such as loan availability, creditor protections, or access rules that differ from IRAs.

However, not all plans accept rollovers. You’ll also want to compare investment choices, fees, and account features before deciding.

2. Roll Over Your 401(k) to an IRA

Another option is rolling your old 401(k) into an IRA. This may provide more investment options and more control over the account.

A traditional 401(k) is often rolled into a traditional IRA, which can preserve tax-deferred treatment. A Roth 401(k) is often rolled into a Roth IRA, which can preserve Roth tax treatment. Rolling pre-tax 401(k) money into a Roth IRA is generally treated as a Roth conversion and will likely create taxable income.

IRAs can offer flexibility, but they also have different rules than 401(k)s. For example, creditor protections only exist up to certain limits and can vary by state. IRA contribution limits are lower than 401(k) limits, and loans are not available from IRAs.

3. Leave Your 401(k) With Your Former Employer

In some cases, you may be able to leave your money in your former employer’s plan. This can be convenient if you like the plan’s investment options, fees, or features.

However, it’s important to remember that you usually cannot make new contributions to a former employer’s 401(k). It can also be harder to track multiple old accounts over time, especially if you change jobs more than once. In short, this option can be risky in terms of your long-term savings.

Leaving your funds may not be an option; some plans may require action if your balance is below a certain amount. Check the plan’s rules before assuming you can leave the account indefinitely.

4. Cash Out Your Old 401(k)

You may be able to cash out your old 401(k), but this option can be costly and can put your retirement security in jeopardy.

A cash-out is generally treated as a taxable distribution; meaning that you’ll owe income tax on the amount you cash out. If you’re under age 59½, you may also owe a 10% early withdrawal penalty on top of the income tax, unless an exception applies. Most important: Cashing out can also reduce the money available for future retirement growth. For these reasons, cashing out is often considered a last resort.

Recommended: ‘How Much Can I Contribute to an IRA?’

Direct vs. Indirect 401(k) Rollovers

How the rollover is processed matters. The two main types are direct rollovers and indirect rollovers.

Rollover Type How It Works Tax Considerations Best For
Direct rollover Money moves directly from the old plan to the receiving plan or IRA, or a check is made payable to the receiving institution for your benefit Generally avoids mandatory 20% withholding and reduces risk of missing the 60-day deadline Most rollovers
Indirect rollover Distribution is paid to you, and you redeposit it into another eligible account Generally subject to 20% withholding from employer plans; full amount must be rolled over within 60 days to avoid taxes/penalties Rare situations where direct rollover is not available or practical

In most cases, a direct rollover is simpler and less risky. With an indirect rollover, you generally have 60 days to redeposit the funds into another eligible retirement account. If 20% is withheld, you may need to use other money to replace the withheld amount if you want to roll over the full balance.

If the full amount is not rolled over by the deadline, the amount not rolled over will likely be treated as a taxable distribution, and may be subject to an early withdrawal penalty. Some exceptions apply.

Where Should You Roll Over a 401(k)?

The right rollover destination depends partly on the tax treatment of the money in your old 401(k).

Old Account Money Common Rollover Destination Tax Consideration
Pre-tax 401(k) money Traditional IRA or new pre-tax 401(k) Usually preserves tax-deferred treatment
Roth 401(k) money Roth IRA or Roth 401(k), if available Usually preserves Roth treatment
Pre-tax 401(k) to Roth IRA Roth IRA Generally treated as a Roth conversion and will create taxable income
After-tax 401(k) money Depends on plan rules and account type Tax treatment can be complex; consider tax guidance

If your old 401(k) includes a mix of pre-tax, Roth, and after-tax money, ask the plan administrator how those assets will be handled before starting the rollover.

Before You Roll Over a 401(k): Questions to Ask

Before moving retirement funds, consider asking these questions:

•   Does your new employer plan accept incoming rollovers?

•   Are your old 401(k) funds pre-tax, Roth, after-tax, or a mix?

•   What fees apply in the old plan, new plan, or IRA?

•   How do the investment options compare?

•   Are you holding employer stock that may qualify for net unrealized appreciation treatment?

•   Do you have an outstanding 401(k) loan that must be repaid?

•   Do you need access to plan-specific features, loans, or protections?

•   Are you close to or already taking required minimum distributions?

•   Are there surrender charges or restrictions on certain investments?

•   Do you understand the tax treatment of the receiving account?

•   Do you want a self-directed account or investment help?

If you’re unsure how a rollover could affect your taxes, it may be wise to speak with a tax professional before making a move.

When Is a Good Time to Roll Over a 401(k)?

A common time to consider a 401(k) rollover is immediately after leaving a job. A rollover may also make sense if you want to consolidate retirement accounts, access different investment options, reduce fees, or simplify account management. You might consider rolling over a 401(k) if:

•   You changed jobs and want to consolidate retirement savings, to simplify recordkeeping and account management

•   Your old plan has high fees or limited investment options

•   Your new plan accepts rollovers and has strong features and more investment options

•   You want IRA investment flexibility

While you don’t want to delay, you also don’t want to rush into the wrong decision. Review your old plan’s fees, investments, protections, and special rules before deciding.

When You Might Not Want to Roll Over a 401(k)

A rollover is not always the best choice. You may want to pause before rolling over if:

•   Your old plan has very low fees or strong investment options

•   You need certain creditor protections that may differ in an IRA, per state and ERISA rules

•   You left your job during or after the year you turned 55 and may need access to funds under the rule of 55

•   You hold employer stock and may qualify for net unrealized appreciation treatment

•   You have an outstanding 401(k) loan that must be repaid

•   Your new employer plan or IRA has higher costs or fewer useful features

•   You are already taking required minimum distributions (RMDs)

These situations can be more complex, so consider getting professional guidance before acting.

What to Do After a 401(k) Rollover

Once the rollover is complete, there are a few follow-up steps to consider.

•   Confirm the funds arrived in the receiving account.

•   Verify that pre-tax and Roth assets went to the intended account type.

•   Choose new investments, such as mutual funds or ETFs, if the money arrived as cash.

•   Review your asset allocation and risk level.

•   Update the beneficiaries on the account.

•   Set up online access and alerts for online investing and troubleshooting.

•   Keep rollover documentation for tax records

•   Watch for tax forms, such as Form 1099-R and Form 5498

A rollover can help consolidate retirement savings, but the money still needs to be managed in a way that supports your long-term goals.

401(k) Rollover Mistakes to Avoid

Rollovers can be straightforward, but mistakes can create tax headaches. Here are some common ones to watch for.

Cashing Out Without Understanding the Cost

Cashing out can trigger income taxes and possibly a 10% early withdrawal penalty. It can also reduce your future retirement savings.

Choosing an Indirect Rollover When a Direct Rollover Is Available

Indirect rollovers come with more risk, including withholding and the 60-day redeposit deadline. A direct rollover is often simpler.

Missing the 60-Day Deadline

If you receive rollover funds directly and do not redeposit them into another eligible retirement account within the required timeline, the distribution will likely be treated as a withdrawal and therefore taxable.

Forgetting About 20% Withholding

For certain distributions paid directly to you from an employer plan, 20% may be withheld for federal taxes. To roll over the full amount, you may need to replace the withheld portion using other funds.

Rolling Pre-Tax Money Into a Roth Account Without Tax Planning

Moving pre-tax 401(k) money into a Roth IRA is generally a taxable Roth conversion. That may be useful in some situations, but it can also increase taxable income for the year.

Mixing Roth and Pre-Tax Funds Incorrectly

Roth and pre-tax funds have different tax treatment. Make sure each type of money goes to the correct receiving account.

Forgetting to Invest the Rollover

If rollover funds arrive as cash, they may not be invested automatically. Review your investment choices after the money arrives.

Ignoring Fees and Investment Options

Compare administrative fees, expense ratios, advisory fees, and available investments before deciding where to move the money.

Overlooking Employer Stock Rules

If your 401(k) holds employer stock, net unrealized appreciation rules may apply. These rules can be complex, so consider tax guidance before rolling over.

Forgetting to Update Beneficiaries

Beneficiary designations do not always carry over the way you expect. Review and update beneficiaries after opening or receiving a new account.

The Takeaway

When you leave a job, you generally have several options for an old 401(k): roll it into a new employer’s plan, roll it into an IRA, leave it with the former employer if allowed, or cash it out. Each option has tradeoffs. A new 401(k) may keep workplace savings together, an IRA may offer more investment choices, leaving the account alone may preserve certain plan features, and cashing out can trigger taxes, penalties, and loss of future retirement growth.

For many people, a direct rollover is the simplest and least risky method because the funds move directly to the receiving retirement account. Before making a decision, compare fees, investment options, account features, tax treatment, creditor protections, and whether you need professional tax or financial guidance.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

Easily manage your retirement savings with a SoFi IRA.

FAQ

What is a 401(k) rollover?

A 401(k) rollover is the process of moving money from an old employer-sponsored retirement plan into another eligible retirement account, such as an IRA or a new employer’s 401(k) or 403(b) plan.

Is it better to roll over a 401(k) to an IRA or a new 401(k)?

It depends on fees, investment options, account features, creditor protections, access rules, and whether your new plan accepts rollovers. An IRA may offer more investment choice, while a new 401(k) may keep workplace savings together and preserve certain plan features, like higher contribution limits vs an IRA.

How long does a 401(k) rollover take?

The timeline varies by plan provider and receiving institution. Some rollovers may take a few business days, while others may take several weeks, especially if paperwork or a mailed check is involved.

What is the 60-day rollover rule?

With an indirect rollover, you generally have 60 days from the date you receive a retirement plan distribution to deposit it into another eligible retirement account. Missing the deadline may cause taxes and penalties.

What is the difference between a direct and indirect rollover?

In a direct rollover, money moves directly to the receiving retirement account. In an indirect rollover, the money is paid to you and you are responsible for redepositing it to an eligible account with the required timeline (typically 60 days). An indirect rollover is generally subject to 20% tax withholding, meaning you may need to use other funds to replace that withheld amount if you want to roll over the full balance.

Can I roll a traditional 401(k) into a Roth IRA?

Yes, but rolling pre-tax 401(k) money into a Roth IRA is generally treated as a Roth conversion and may create taxable income.

Can I roll a Roth 401(k) into a Roth IRA?

Yes, Roth 401(k) money can generally be rolled into a Roth IRA, though five-year rule considerations may apply.

Can I roll over my 401(k) while still employed?

Sometimes. Some plans allow in-service rollovers, especially if you’re 59 ½ or older, but many do not. Check your plan rules.

What happens if I cash out my 401(k) instead of rolling it over?

The distribution may be subject to income taxes and, if you’re under age 59½, a 10% early withdrawal penalty may apply unless an exception applies. Cashing out also reduces the amount you have saved for retirement.

Do I have to pay taxes on a 401(k) rollover?

Typically, no. A direct rollover from a pre-tax 401(k) to a traditional IRA or new pre-tax 401(k) is generally not taxable at the time of rollover. A rollover to a Roth account that involves a conversion from pre-tax to after-tax funds may create taxable income.

Can I leave my 401(k) with my old employer?

In some cases, yes. Whether you can leave the money in your old plan depends on the plan’s rules and your account balance.

What should I do after rolling over my 401(k)?

Confirm that the funds arrived, choose investments if needed, update beneficiaries, keep tax records, and review whether the account fits your long-term retirement strategy.

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How to Build Wealth in Your 40s: A Modern Financial Planning Guide

By | Budgeting & Goals, money, Preparing for Retirement | Comments Off on How to Build Wealth in Your 40s: A Modern Financial Planning Guide

Your 40s can be a pivotal decade. It’s typically a time of peak earnings, growing family responsibilities, and an increased focus on long-term financial stability. You may have a house, kids, and a busy job. College expenses may be looming. Maybe you’re hatching a plan to start your own business or buy a beach house that’ll one day be your empty-nester home.

To navigate these years successfully, it’s essential to make strategic financial moves that can secure your future and make your plans and dreams a reality. Here are some critical financial planning tips to consider as you explore how to build wealth in your 40s.

Key Points

•   By age 40, having three times your annual salary saved for retirement may help you stay on track for long-term financial goals and a comfortable retirement lifestyle.

•   Maintaining an emergency fund with at least six months’ worth of living expenses provides a financial safety net for unexpected costs like job loss or major home repairs.

•   Paying off high-interest debt, such as credit card balances, is critical in your 40s, as carrying these balances significantly hinders your ability to save and invest for the future.

•   Evaluating insurance coverage — including health, home, life, and disability — is an essential component of financial planning to ensure adequate protection for your family’s needs.

•   Balance retirement savings with saving for college for your kids. As kids reach college age, encourage them to apply for grants and scholarships and explore financial aid to help cover college costs.

Where Should I Be Financially at 40?

At 40, people are typically at the midway point between entering the workforce and retirement age. How you save and invest going forward, and the amount you’ve saved so far, can have a big impact on your future financial security.

Common Benchmarks for Net Worth and Savings

By age 40, Fidelity recommends having three times your annual salary saved for retirement. This benchmark could help put you on track to meet long-term financial goals and maintain your desired lifestyle in retirement. (By age 50, aim to have six times your income saved, and by 60, eight times your income.)

In addition, you’ll want to have an emergency fund with at least six months’ worth of living expenses to help pay for unexpected events like your roof needing to be replaced or losing your job.

Why Your 40s Are the Prime Wealth-Building Decade

Your 40s tend to be your peak earning years, which means you may be able to direct more money into your savings. Also, in your 40s, you still have many years before retirement to leverage the power of compound interest, which can help build your savings. Compound interest means you earn a return not just on the amount you originally put in a savings account, but also on the interest that accumulates. Over time, you can potentially end up with much more than you started with.

The sooner you start saving money in an account that earns compound interest, the more time your money has to grow. That’s why financial planning for 40-year-olds is crucial, since this is a key time to focus on your savings to help reach your future goals.

7 Critical Financial Goals By 40 to Help Build Wealth

At this stage of your life you’re old enough to know what you want, and you likely have enough earning years ahead to achieve your financial goals by 40 as long as you manage your money right. The following strategies can help you build wealth in your 40s.

1. Fortify Your Emergency Fund for Life’s Unexpected Turns

Life is full of unexpected twists and turns. Not all of them are fun, such an expensive car or home repair, a medical emergency, or losing your job. An emergency fund offers financial stability during a stressful time. It also saves you from running up expensive debt that could derail your financial goals.

A general rule of thumb is to have six to 12 months’ worth of living expenses stashed away for the unexpected. If you already have an emergency fund but it has been partly or fully depleted, you’ll want to prioritize replenishing it to maintain financial security. An emergency fund calculator can help you figure out how much you need.

Consider setting up automatic transfers into savings to build your emergency fund consistently. Keep these funds in a liquid, easily accessible account, such as a high-yield savings account, to withdraw money when needed.

2. Aggressively Manage and Consolidate High-Interest Debt

Debt management is a crucial aspect of financial planning at any age, but it becomes even more critical in your 40s. Since high-interest debts, like credit card balances, can significantly hinder your ability to save and invest for the future, you’ll want to prioritize paying them off as quickly as possible.

Debt payoff strategies include the avalanche method. With this technique, you list your debts in order of interest rate from highest to lowest, then put extra money toward the highest-interest debt, while continuing to pay the minimum on the others. Once that debt is paid off, you put your extra funds toward the debt with the next-highest rate, and so on.

Alternative approaches to paying down high-interest debt include getting a low- or no- interest balance transfer credit card, or consolidating debt, which combines it into one new loan or credit line — ideally with a lower interest rate than the rate on your credit cards.

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3. Supercharge Your Retirement Accounts and Investment Portfolios

In your 40s, you’re roughly at the midpoint between entering the workforce and traditional retirement age. How you invest and save for retirement at this point in your career can strongly impact your future assets and ability to one day retire comfortably.

If you’re not currently contributing to a retirement plan, such as a 401(k) or individual retirement account (IRA), now is a good time to start. If you have been, it’s time to assess your progress. Consider how much you will need to retire and, using an online retirement calculator, whether your current plan will get you there.

If you’re behind on your savings, consider stepping up your contributions. If you’re already contributing the max allowed, think about making “catch-up” contributions down the road. Starting at age 50, the IRS allows higher maximums designed to help people catch up on their retirement savings goals. In addition to regular catch-up contributions to workplace plans like a 401(k), people ages 60 to 63 can make “super catch-up contributions” in 2026, to save even more.

4. Strategically Balance Retirement With College Savings Plans

If you have kids, planning for their future education expenses may be top of mind. College costs continue to rise, and early planning can alleviate future financial stress. If you haven’t started saving for college expenses, you may want to explore opening a 529 college savings plan, which offers tax advantages and can be a flexible way to save for educational expenses.

An online college cost estimator can help you determine how much you need to stash away each month or year, based on the year your child will likely attend college and the type of school they might choose.

Just keep in mind that it’s important to balance college savings with other financial goals, like retirement. As kids get closer to leaving the nest, you may also want to encourage them to apply for scholarships and grants, and explore financial aid options.

5. Reevaluate Life, Health, and Disability Insurance Coverage

Insurance is an important component of financial planning in your 40s. You’ll want to evaluate your current insurance coverage and make sure it’s adequate to meet your family’s needs. This includes not only health and home insurance, but also life and disability insurance.

Life insurance provides financial security for your family should you die prematurely. If you don’t currently have a life insurance policy, consider purchasing one. If you do have one, you’ll want to make sure your policy’s coverage amount is sufficient to cover your family’s current living expenses, outstanding debts, and future financial needs, such as college tuition for your children.

It’s also a good idea to review your disability insurance, which protects your income if you’re unable to work due to illness or injury. Many companies provide a policy through work. However, you may want to consider supplementing employer-provided coverage or, if you’re self-employed, getting your own policy. This offers a different, but equally important, safety net for you and your family.

Recommended: Which Insurance Types Do You Really Need? Here Are 6 to Consider

6. Diversify Your Income by Investing Outside of Retirement Accounts

While retirement accounts are important, investing outside of retirement may diversify an individual’s portfolio and help them work toward long-term goals, such as a downpayment on a vacation home or a child’s wedding.

If you’re exploring the option of an investment account, you can use an investment calculator to get a sense of how, hypothetically, contributing money to such an account might make an impact. Just be aware that investing carries risk. A brokerage account is not covered by the Federal Deposit Insurance Corporation (FDIC) like bank accounts are, and it’s possible to lose the principal amount you invested.

When considering investment accounts, different types of investment vehicles, and asset allocation, individuals should keep risk tolerance and financial objectives firmly in mind.

7. Meet with a Financial Professional

Getting expert advice on managing your finances could be helpful at this stage of life. Whether you opt for regular meetings or simply go for a one-time consultation, a financial professional may provide valuable insights and help you navigate complex financial decisions.

An advisor will typically look at your whole financial picture and assist you with creating a comprehensive financial plan. This may include optimizing your investment strategy and ensuring you’re on track to meet your goals, including retirement, investments, and college saving.

Advanced Financial Planning for 40-Year-Olds

Beyond saving and investing, it’s also important to plan for your family’s future and protect your assets with an estate plan.

Estate Planning, Wills, and Generational Wealth

If you haven’t yet created an estate plan, your 40s are the time to get started. You’re not alone: According to one estimate, 56% of Americans have no estate planning documents, such as a will or trust. However, no matter what amount of money you have, in the event of your death, these documents are crucial for making sure your family members are taken care of and your estate is handled as you wish. An estate plan is also a way to pass along generational wealth to your children. Otherwise, state laws may determine how your assets are distributed after your death.

Documents you need include a will and/or a trust, power of attorney and healthcare directives, and beneficiaries on your various financial accounts, including bank accounts, investment accounts, and retirement accounts. You can consult an estate attorney to help you with the estate planning process.

Navigating the Financial Impact of Caring for Aging Parents

Many people in their 40s are in the sandwich generation. They’re taking care of their kids while also caring for elderly parents.

While caring for aging parents can be rewarding, it can also be costly. Family caregivers spend approximately 26% of their income on caregiving, according to a study by AARP. That includes paying their loved ones’ home and daily living expenses and their medical expenses. An individual caring for an aging parent might also have to take time off from work or even take a leave of absence, which can be costly.

Having a plan in place to help with the costs of caregiving is essential. Talk with your parents early on to find out about their income, expenses, and debts. Create a budget to make sure their income will cover their expenses and debts as they age, plus any additional care they may need. Consider whether it may make sense to apply for long-term care insurance for them to help cover the cost of their care.

Make sure you have access to any accounts you will need to manage on their behalf as well as all relevant financial information. Keep their finances separate from yours, and keep good records of all transactions.

The Takeaway

It’s never too late to take control of your finances. In your 40s, you are likely entering your prime earning years, so it’s a good time to focus on paying down debt, preparing for the next chapter of your children’s lives, and saving and investing for your future retirement. With some wise money moves, you’ll be set to make the most of this decade and beyond.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Where exactly should I be financially at age 40?

By age 40, having three times your annual salary saved for retirement may help put you on track to meet long-term financial goals and maintain your desired lifestyle in retirement, according to an estimate by Fidelity. In addition, financial professionals suggest having an emergency fund with six to 12 months’ worth of living expenses to help pay for unexpected events like a medical bill or losing your job.

What are the most important financial goals to prioritize by 40?

Important financial goals to prioritize by age 40 include building your retirement savings, perhaps by increasing your contributions if possible; having an emergency fund with six to 12 months’ worth of income in it to cover unexpected events; saving for your children’s college costs; managing and paying off debt, especially high-interest debt; and putting an estate plan in place.

Is it too late to start serious financial planning if I am already in my 40s?

No, it’s not too late to start serious financial planning in your 40s. In fact, for many people, their 40s are often their peak earning years, which means you may be well positioned to save more money for retirement, build a savings emergency fund, and pay off debt. Plus, when you’re in your 40s, your money typically has 20 to 25 years to potentially grow until retirement. The key is to start planning and saving as soon as possible.

How can I build my wealth in my 40s while also raising a family?

To build wealth in your 40s while raising a family, balance saving for retirement with saving for college for your kids. Contribute as much as possible to your 401(k) or IRA, and then put money away for your children’s college expenses. As your kids reach college age, they can apply for scholarships and grants and explore financial aid to help cover college costs.

In addition, automate your finances to ensure that you are regularly and consistently saving, build up an emergency fund with at least six month’s worth of income, and work toward paying off high-interest debt, such as credit card debt.

Should my primary focus in my 40s be paying off my mortgage or investing toward retirement?

Generally speaking, if your mortgage rate is low (say less than 5%), you may want to make investing for retirement your primary focus in your 40s. But if your mortgage is high (say, 7% or more), you may want to prioritize paying off your mortgage. Another option to consider is to focus on both goals. Contribute at least enough to your 401(k) to get your employer match (if there is one) and pay a little extra on your mortgage’s principal balance each month (or as often as you can) to help pay it off faster.

Photo credit: iStock/shapecharge

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
*Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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05
2026

How Do Private Student Loans Work? What to Know

By | Fresh Out of School, Student Loans, student_loan | No Comments

The cost of college continues to rise. The average full cost of attending college in 2025-26 was $30,990 for in-state students attending a public institution, $50,920 for out-of-state students at a public institution, and $65,470 at private colleges, according to the College Board While grants and scholarships can significantly reduce your out-of-pocket expenses, they typically don’t cover the full cost of your college education.

Student loans can help bridge that funding gap. Federal student loans are generally the best place to start because they offer fixed interest rates, flexible repayment options, and borrower protections that private loans typically don’t provide. However, federal loans also come with borrowing limits. If you still need additional funding after exhausting your federal aid options, private student loans may help cover the remaining costs.

This guide explains how private student loans work, their advantages and disadvantages, and what to consider before applying.

Key Points

•   A private student loan is an educational loan issued by a private lender, such as a bank, credit union, or online lender, rather than the federal government.

•   Private student loans may help cover remaining college costs if federal aid options and savings have been exhausted.

•   Borrowers typically must pass a credit check to qualify; many students need a creditworthy cosigner to secure competitive rates and terms.

•   Unlike federal student loans, private loans lack access to federal benefits like income-driven repayment and potential forgiveness programs.

•   If you decide to borrow from a private lender, it is wise to compare multiple lenders and borrow only what you need.

What Is a Private Student Loan?

A private student loan is an educational loan issued by a private lender, such as a bank, credit union, or online lender, rather than the federal government. Students often use private student loans when financial aid, savings, and federal student loans aren’t enough to cover the total cost of attendance.

Funds from a private school loan can typically be used for tuition, fees, housing, meal plans, transportation, books, and other education-related costs. Interest rates may be variable or fixed and are determined by the lender.

Borrowers typically must pass a credit check to qualify for private student loans. Since many students have limited credit histories, applying with a creditworthy cosigner is often necessary to qualify for competitive rates and terms.

How Do Private Student Loans Work?

How Private Student Loans Work

Loan amounts, interest rates, repayment terms, and eligibility requirements vary by lender. If you’re considering a private student loan, it’s important to compare your multiple lenders to find the best fit for your financial situation.

To get a private student loan, you’ll submit an application directly with your chosen lender. The lender will review your credit profile, income, and other financial information to determine whether you qualify and what rates and terms you’ll receive.

LIke federal unsubsidized loans, private student loans generally begin accruing interest as soon as funds are disbursed. If you don’t make interest payments while you’re in school, the unpaid interest may capitalize, meaning it gets added to your principal balance. Future interest is then calculated on the higher balance.

Interest Rates: Fixed vs Variable

Many private student loan lenders offer both fixed-rate and variable-rate options:

•   Fixed rate loans maintain the same interest rate throughout the life of the loan, resulting in predictable monthly payments. This can make budgeting easier and protects borrowers from future rate increases.

•   Variable rates have interest rates that can change over time based on market conditions. While variable rates may start lower than fixed rates, they may increase or decrease during repayment, causing monthly payments to fluctuate.

Federal student loans, by comparison, only offer fixed interest rates.

Repayment Terms and Disbursement

If you’re approved for a private student loan, the lender typically sends the funds directly to your school. The school applies the money toward tuition, fees, room and board, and other charges. Any remaining funds are refunded to you for additional education-related costs, such as textbooks, transportation, or supplies. Repayment terms vary by lender and commonly range from five to 20 years. Many lenders also allow borrowers to choose among several repayment options while enrolled in school:

•   Interest-only repayment: You make payments toward accrued interest while in school. This can reduce the total amount repaid over the life of the loan.

•   Immediate repayment: You begin making full principal-and-interest payments right away. This option generally results in the lowest overall borrowing cost.

•   Deferred repayment: You postpone payments until after graduation, leaving school, or dropping below half-time enrollment. Because interest continues to accrue during the deferment period, this option usually results in the highest total borrowing cost.

The Pros and Cons of Private Student Loans

If federal financial aid isn’t enough to cover your educational expenses, private student loans can help fill the gap. However, it’s important to understand both the benefits and drawbacks before borrowing.

Pros of Private Student Loans Cons of Private Student Loans
Apply any time of the year May have higher interest rates
Higher borrowing limits No access to federal forgiveness programs
Potentially lower rates for highly qualified borrowers No federal interest subsidies
Fast application process Risk of overborrowing
Options for international students May require a cosigner

Benefits of Private Student Loans

Here’s a look at some of the advantages that come with private student loans.

Apply Any Time of the Year

Unlike federal student loans, which require students to submit the Free Application for Federal Student Aid (FAFSA®) annually, private student loans can be applied for throughout the year. This flexibility can be helpful if you experience an unexpected funding gap or your educational expenses increase after the academic year begins.

Higher Loan Amounts

Federal student loans have annual and lifetime borrowing limits. For example, a first-year, dependent undergraduate can borrow up to $5,500 for that year. The aggregate max a dependent student can borrow for their undergraduate education is $31,000. Private student loan limits vary with each lender, but you can typically borrow up to the full cost of attendance each year, minus any financial aid received.

May Offer Lower Rates for Highly Qualified Borrowers

Federal student loans offer fixed rates set by Congress, currently ranging from 6.39% to 8.94% depending on your degree level and type of loan. Private student loan rates vary based on creditworthiness, with some starting just under 3.00% for exceptional credit. Federal student loans also charge an upfront fee (called an origination fee), while many private lenders do not. Keep in mind, however, that APRs on private loans vary widely and can reach 18% (or more) for borrowers with limited credit history.

Faster Application and Approval Process

Unlike federal student loans, private student loans don’t require completion of the FAFSA. Many lenders allow borrowers to apply online in just a few minutes.

Some lenders provide preliminary lending decisions within just a few minutes, though final approval and school certification may take several days. This can make private student loans a useful option when unexpected educational expenses arise.

Options for International Students

International students generally don’t qualify for federal student aid. Some private lenders offer student loans to eligible non-U.S. citizens who meet specific criteria, such as attending an approved school and applying with a qualified U.S.-based cosigner.

When we say no fees required we mean it.
No late fees
when you take out a student loan with SoFi.

Disadvantages of Private Student Loans

Private student loans also have some downsides. Here are some to keep in mind.

Potentially Higher Interest Rates

Private lenders base interest rates on creditworthiness. Students with limited credit history may receive rates that are significantly higher than federal student loan rates. Federal loans provide the same interest rate to all eligible borrowers regardless of credit score.

Not Eligible for Federal Protections

Federal loans offer benefits such as income-driven repayment, loan forgiveness programs, and certain hardship protections. Private lenders generally do not provide the same level of borrower assistance.

No Federal Subsidy

Federal Direct Subsidized Loans, which are awarded to undergraduate students who demonstrate financial need, cover your interest while you are in school and for six months after you graduate. Private loans are unsubsidized, meaning that interest starts accruing immediately, which can significantly increase costs.

Risk of Overborrowing

Private lenders may allow students to borrow up to their full cost of attendance, minus financial aid. While this can be helpful, borrowing more than necessary increases both the total interest paid and the size of future monthly payments.

May Require a Cosigner

Because many students have limited income and credit history, a cosigner is often needed to qualify for a private student loan. A cosigner shares legal responsibility for repayment and may be affected if payments are missed.

Some lenders offer cosigner release programs that allow borrowers to remove the cosigner after meeting certain repayment requirements.

Recommended: Getting a Student Loan Without a Cosigner

Federal vs Private Student Loans

Here’s a closer look at some of the major differences between federal vs. private student loans.

Federal Student Loans vs. Private Student Loans

Application Process

Federal student loans require students to complete the FAFSA each year. Eligibility is generally not based on credit history.

Private student loans require borrowers to apply directly through a lender. Typically, lenders perform a credit check and evaluate factors such as income and creditworthiness.

Recommended: Refinancing Student Loans With a Cosigner

Interest Rates

Federal student loan rates are fixed and set annually by federal law.

Private lenders establish their own rates, which may be fixed or variable. Rates depend on factors such as credit score income, loan amount, repayment term, and whether a cosigner (such as a parent) is included.

Repayment Plans

Borrowers who take out federal student loans on or after July 1, 2026 will have access to two repayment plans:

•   The Repayment Assistance Plan (RAP): This is an income-driven plan charging 1% to 10% of your adjusted gross income (AGI), spanning 30 years before forgiveness.

•   Tiered Standard Plan: This is a fixed-rate plan with terms spanning 10 to 25 years, determined by how much you borrowed.

Repayment plans for private loans are set by the individual lender. They can span from five to 20 years and typically don’t include an income-based option.

Deferment or Forbearance

Federal borrowers may qualify for forbearance during periods of financial hardship. Some private lenders also offer temporary hardship assistance, including deferment, forbearance, or reduced-payment programs. Availability varies by lender.

Loan Forgiveness

Borrowers with federal student loans may qualify for forgiveness programs such as Public Student Loan Forgiveness (PSLF), Teacher Loan Forgiveness, or after paying down their balances on an income-driven plan for a certain period of time.

Private student loans generally are not eligible for federal forgiveness programs. While some lenders may offer hardship assistance, permanent loan forgiveness is uncommon.

Should You Consider Private Student Loans?

Private student loans can be a useful tool when scholarships, grants, savings, and federal student aid aren’t enough to cover the cost of college. They may also be a practical option for international students.

However, students will generally want to consider federal student loans first because they offer valuable benefits, including income-driven repayment and potential forgiveness opportunities.

If you decide to borrow from a private lender, it’s wise to compare multiple lenders, review rates and repayment options carefully, and borrow only what you need to help ensure you can comfortably manage repayment.

You might also consider refinancing student loans in the future if doing so lowers your interest rate. Refinancing also allows you to combine federal and private student loans into a single loan with one monthly payment. Just keep in mind that refinancing federal loans with a private lender means giving up federal protections and benefits.

How to Get a Private Student Loan

Here’s a look at the steps involved in getting a private student loan.

1.    Shop around. Compare multiple lenders and evaluate factors such as interest rates, loan limits, repayment terms, fees, borrower protections, and hardship assistance tools.

2.    Check for prequalification. Some lenders allow borrowers to prequalify with a soft credit inquiry that won’t affect their credit score. This can provide an estimate of the rates and terms you may qualify for and let you know if you need to ask someone to cosign your loan.

3.    Gather required documents. You’ll typically need personal identification, proof of income, school enrollment details, and potentially financial information from a cosigner.

4.    Submit your application. Once your application is submitted, the lender reviews your information and verifies enrollment with your school. If approved, the lender coordinates disbursement with the institution.

Does Everyone Get Approved for Private Student Loans?

No. Approval depends on factors such as:

•   Credit history

•   Credit score

•   Income and employment status

•   Debt-to-income ratio

•   Cosigner qualifications

•   Enrollment at an eligible institution

If you don’t meet a lender’s requirements on your own, applying with a qualified cosigner may improve your chances of approval.

Recommended: Do I Need a Student Loan Cosigner?

The Takeaway

Private student loans can help bridge funding gaps when scholarships, grants, savings, and federal student aid aren’t enough to cover the cost of college. While they often offer higher borrowing limits and may provide competitive rates for borrowers with strong credit, they lack many of the protections available through federal student loans.

Often the best approach is to exhaust grants, scholarships, and federal student loan options before considering private student loans. If a private loan is necessary, compare lenders carefully and borrow only what you need to keep future repayment manageable.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.


Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

Why would someone get a private student loan?

Private student loans are commonly used when federal financial aid, scholarships, grants, and personal savings don’t fully cover educational expenses. They can also help students who need funding beyond federal borrowing limits or who don’t qualify for federal aid.

Will private student loans be forgiven?

Private student loans aren’t funded by the government, so they don’t offer the same forgiveness programs. In fact, private student loan forgiveness is rare.

If you experience financial hardship, however, many lenders will work with you to stay out of default. They may agree to temporarily lower your payments, waive a payment, or switch to interest-only payments. Or, you might qualify for deferment or forbearance, which temporarily postpones your payments (though interest typically continues to accrue).

Are private student loans paid to you or the school?

Private student loans are typically disbursed directly to the school. After tuition, fees, and other charges are paid, any remaining funds are then refunded to the student for qualified educational expenses.

What credit score do you need for a private student loan?

Private student loan qualification requirements vary widely, but many lenders require a minimum FICO® score of 640 for approval. Because private loans are credit-based, a higher credit score typically yields a significantly lower interest rate. If you have poor credit or a thin credit history, you will likely need a creditworthy cosigner.

What is the difference between a private student loan and a federal student loan?

Federal student loans are funded directly by the government, while private student loans are issued by banks, credit unions, or online lenders. Federal options provide benefits like subsidies, income-driven repayment, and forgiveness programs that private lenders rarely match. However, federal loans have strict annual borrowing limits, while private loans often allow you to borrow up to your school’s total cost of attendance.

Experts generally recommend using private student loans only after all financial aid, including federal student loans, has been exhausted.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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