For many people, their 401k retirement account is one of their most valued assets. But is a 401k an asset? In some ways, it can be.

A 401k can help you save for retirement. Additionally, a 401k typically has a low-risk profile and can provide income in retirement if you are able to withdraw the money. 

In this article we will go over some of the most common questions about a 401k and if it is considered an asset.

What type of asset is a 401k?

A 401k is typically considered an illiquid asset because you can only withdraw from it without penalties if you have reached retirement age. There are a few exceptions in which you can withdraw money from a 401k before you reach retirement age, and in those situations, a 401k might be considered a liquid asset.

Is a 401k a liquid or illiquid asset?

If you have not reached retirement age, you cannot withdraw money from your 401k without a penalty. Therefore, your 401k is an illiquid asset. This is because you will not be able to withdraw money without a penalty, which will reduce the value of the asset, and it also takes time.

If you have reached retirement age, or if you fall under some of the exceptions that allow for early withdrawals, then your 401k can be considered a liquid asset. Because you will be able to withdraw from your 401k whenever you want.

Should a 401k be considered an asset for net worth?

Yes, your 401k as well as any other asset should be used when calculating your net worth. However, if you are calculating your liquid net worth your 401k might not be added. If you are under the retirement age, your 401k does not count as liquid net worth.

If you are over your retirement age, then you can consider your 401k part of your liquid net worth.

What is considered an asset?

An asset is anything that can produce income or be sold to generate capital. Common assets include stocks, bonds, real estate, and businesses. A home is an asset because it can often be sold for a large sum of money. 

Other assets that may be worth consideration include cars, computers, and jewelry. The same way that your 401k is also considered an asset.

Is 401k an asset for a mortgage?

In order for your mortgage application to be approved, your lender will consider all of your assets. Your assets will serve as collateral for the loan, and it shows your ability to pay back the mortgage. 

Your 401k will certainly be considered as part of your net worth.

Where is 401k on a balance sheet?

For companies, a 401k is not an asset, since they have to collect the employee's 401k contributions, it is a current liability. The company acts as a fiduciary depositor of the employee's contributions, and therefore it will appear on the balance sheet as a current liability.

Does 401K count as savings?

No, a 401k does not count as savings. A 401k is considered an investment because it is a retirement and investment plan that invests in several financial assets.

Can 401k be used as collateral?

Yes, a 401k can be used as collateral for a loan. If you ask for a loan, your debtee will consider all of your assets, including your 401k.

There are also 401k-backed loans. These are a common way for individuals that have not reached retirement age to borrow money while using their 401k as collateral.

Is a 401k loan considered debt?

Yes, a 401k loan is considered debt, and it is a common way to use the money you have in your 401k without withdrawing it and having to pay an early withdrawal penalty.


A 401k is one of the most important investment vehicles for individuals to save and invest in for retirement. Not only does it have a lot of tax advantages but it is also a great way to impose savings and investments for retirement.