What everyone has said is correct (btw I am a 401(k) administrator for a mutual fund company-I manage about 14 plans)
Some summarizing......
-You pay the loan back from after tax money
which will effect your net pay.
-You repurchase into the funds as you repay the loan-this may cause you to reenter your funds at a premium-though I think that right now you'd be getting a lot more shares for your dolar. But when you take a loan, the money used to secure your loan is moved out of your funds, into a money market type fund. As you pay off the loan, you reinvest at that days NAV. Right now with the lower NAVs most funds are seeng you wil be usually repurchasing and getting more shares for your money. In a few years you will be getting less shares for your money.
-If you default on the loan-usually through job change/loss, your plan will have a proscribed maner I which you need to repay the loan-check with HR or the 401(k) company. You can have 0-90 to pay it back, a very few allow you to repay at the old amortization rate.
-As stated above, if you do not repay the loan and take a distribution (ether to another 401, an IRA, or as cash) the entire amount outstanding of the loan will be counted as taxable income, as well as being subject to a 10% early withdrawal IRS penalty (unless you are over 59 1/2). This can increase your chance of an audit and the added income can affect your tax bracket and will affect the amount of tax you owe Uncle Sammy.
-You cannot transfer the loan to a new employer (except in very limited situations, which also depend upon the employers Plan). You cannot transfer a loan to an IRA.
-The loan repay will not effect your payroll deduction into the 401-if $$ is a factor you may lower or stop your payroll deduction. This will alter your bottom line at retirement.
-Consider the total cost of the loan. Some years ago the wife and I used a 401 loan to buy a car-with rates what they were at the time it made sense. What are the rates at the bank or CU? et ut a calculator and run the numbers both ways. How secure is your job? If the compnay were to close tommorrow would you be broken by the consequences of having to pay back the loan RFN?
For a .50? Hmmm.........how's MY account looking??????