Retirement

401(k) Contribution Calculator

See how your contributions, employer match, and compound growth build your retirement nest egg over time.

How the 401(k) calculator works

A 401(k) is an employer-sponsored retirement savings plan governed by Section 401(k) of the Internal Revenue Code. Each paycheck, a portion of your gross salary — the amount you choose, up to IRS limits — is deposited directly into your 401(k) account before federal income tax is calculated. That pre-tax treatment lowers your taxable income today, effectively giving you a discount on every dollar you save.

Most employers sweeten the deal by matching a portion of what you contribute. A common formula is “100% match on the first 3% of salary” or “50% match on the first 6%.” Either way, the employer match is free money — an immediate return that no stock market investment can reliably beat. Failing to contribute enough to capture the full match is one of the most expensive financial mistakes an employee can make.

Inside the account, your money is invested in mutual funds, index funds, or target-date funds that your plan offers. Gains, dividends, and interest all compound tax-deferred — you pay no tax on growth until you withdraw in retirement. Over decades, this tax-deferred compounding is what turns modest monthly contributions into a six- or seven-figure nest egg. This calculator models all three engines at once: your contributions, your employer's match, and long-term compounding growth.

The formula

The calculator applies these relationships each year, then compounds forward:

// Annual employee contribution
employee_contribution = salary × contribution_rate

// Employer match (capped at match limit)
employer_match = salary × min(contribution_rate, match_limit) × match_percent

// Total new money added this year
annual_addition = employee_contribution + employer_match

// Balance grows by return rate, then new money is added
balance_next = balance × (1 + annual_return) + annual_addition

// Tax savings example — 22% federal bracket
// $1.00 contributed pre-tax costs you only $0.78 out of pocket
// because you avoid $0.22 in federal income tax on that dollar
net_cost_per_dollar = 1 - marginal_tax_rate   // 1 - 0.22 = $0.78

State income taxes make the discount even larger. A worker in California (13.3% top rate) who is also in the 22% federal bracket saves 35 cents in tax for every pre-tax dollar contributed — meaning $1.00 saved costs only $0.65 out of pocket.

Worked example

Suppose you earn $75,000 per year and contribute 6% — that's $4,500 per year from your paycheck. Your employer matches 100% up to 4% of salary, adding another $3,000 per year. Combined, $7,500 enters your account annually from day one.

Assuming a 7% average annual return and a 30-year horizon, here is how the numbers stack up:

Salary:                  $75,000 / year
Your contribution (6%):  $4,500 / year
Employer match (4%):     $3,000 / year
Total annual addition:   $7,500 / year
Return rate:             7%
Years:                   30

Projected balance:       ~$944,000
Total contributions:     ~$225,000  (you: $135k + employer: $90k)
Investment growth:       ~$719,000
──────────────────────────────────────
Monthly income (4% rule): ~$3,147 / month

Nearly 76% of the final balance comes from investment returns rather than dollars you personally saved. That is the compounding effect in action. The employer match alone contributed $90,000 — money that cost you nothing and grew to roughly $268,000 over 30 years.

When to use this calculator

Deciding your contribution percentage. Find the minimum needed to capture the full employer match, then see how bumping up 1–2% more dramatically shifts your ending balance.
Evaluating a new employer's match. Compare two job offers side-by-side by running each plan's match formula through the calculator — the better match can be worth tens of thousands of dollars.
Comparing Roth 401(k) vs Traditional. Use the after-tax cost figure to understand whether paying taxes now (Roth) or deferring them (Traditional) favors your expected tax brackets.
After a job change with a new plan. Update the salary, match terms, and current balance after a rollover to see your revised trajectory.
Planning catch-up contributions after 50. The IRS allows an extra $7,500 per year for workers 50 and older. Model how aggressively using catch-up contributions can close a savings gap in the final decade before retirement.

Key concepts

Employer match: Your company adds money to your 401(k) based on what you contribute. Always contribute at least enough to get the full match — it is an instant 50–100% return before the market does anything.
Vesting schedule: Employer contributions may not be fully yours right away. A graded vesting schedule might give you 20% ownership per year over five years. If you leave before fully vested, you forfeit the unvested portion. Your own contributions are always 100% vested immediately.
Traditional vs Roth 401(k): Traditional contributions are pre-tax — you reduce taxable income now and pay tax on withdrawals in retirement. Roth contributions use after-tax dollars — no deduction today, but qualified withdrawals in retirement are entirely tax-free. Many plans allow both; splitting between the two hedges against future tax rate uncertainty.
2026 contribution limits: The 2026 employee deferral limit is $23,500. Workers aged 50 and older may contribute an additional $7,500 catch-up, for a total of $31,000. The all-sources limit (employee + employer) is $70,000 ($77,500 with catch-up). Limits typically rise with inflation annually.
HCE restrictions: Highly Compensated Employees (HCEs — generally those earning over $160,000) may face lower effective contribution limits if their plan fails non-discrimination testing. If your employer notifies you of a refund of excess contributions, this is why. A Solo 401(k) or mega backdoor Roth can help higher earners work around these limits.

Common mistakes

Leaving employer match uncaptured. Contributing less than the match threshold is the single most common 401(k) mistake. Even one percentage point short means forfeiting hundreds or thousands of dollars per year.
Borrowing against the 401(k) for non-emergencies. A 401(k) loan removes money from the market during its compounding years. If you leave your job, the loan becomes due immediately — and if you can't repay it, it converts to a taxable distribution with a 10% penalty.
Cashing out on a job change. Withdrawing your 401(k) when you leave a job triggers ordinary income tax plus a 10% early withdrawal penalty. On a $50,000 balance, you could lose $15,000–$20,000 immediately. Roll over to an IRA or your new employer's plan instead.
Not increasing contributions with raises. Many people set a contribution rate once and forget it. Automating a 1% increase every year (or every raise) is one of the highest-impact, lowest-effort retirement moves you can make.
Investing only in company stock. Concentrating your retirement savings in a single employer's stock ties your income and investments to the same risk. Diversified index funds nearly always serve retirement savers better.

Frequently asked questions

Should I always max out the employer match?

Yes — capturing your full employer match is the highest-priority financial move available to most employees. It is an immediate 50–100% guaranteed return before the market does anything. The only scenario where you might delay is if you carry extremely high-interest debt (above 20%) that you are aggressively paying down. Even then, consider splitting contributions to at least capture some match while attacking the debt.

Roth 401(k) vs Traditional — which is better?

The answer depends on your current versus expected future tax rates. If you are early in your career and in a low bracket now but expect to earn more later, Roth is usually better — you pay tax at today's low rate and enjoy tax-free growth forever. If you are a high earner now and expect a lower bracket in retirement, Traditional saves more because the deduction is worth more today. Many financial planners suggest hedging by splitting contributions across both types if your plan allows it.

What are the 2026 contribution limits?

For 2026, you can contribute up to $23,500 in employee deferrals. If you are 50 or older, you can add a $7,500 catch-up contribution for a total of $31,000. The combined limit across all sources — employee plus employer contributions — is $70,000 ($77,500 with catch-up). These limits are set by the IRS and generally increase each year to keep pace with inflation.

What is a vesting schedule?

A vesting schedule controls when employer match contributions are permanently yours. Immediate vesting means you own the match the moment it is deposited. Cliff vesting grants 100% ownership after a fixed period — for example, you own nothing for two years, then own everything after year three. Graded vesting phases ownership in — 20% per year over five years is a common structure. Your own contributions are always 100% yours immediately. Check your plan documents before leaving a job to avoid forfeiting unvested employer money.

Is a 401(k) loan ever worth it?

In genuine financial emergencies — say, avoiding eviction or foreclosure when no other options exist — a 401(k) loan can be a last resort. You pay interest back to yourself, and there is no credit check. But the risks are significant: the borrowed amount stops compounding during the loan period, most plans suspend new contributions while you repay, and if you leave your employer, the full balance typically becomes due within 60 days. If you cannot repay it, the loan is treated as a taxable distribution with a 10% penalty. For most situations, a home equity line of credit or personal loan is less damaging.

What happens to my 401(k) when I change jobs?

You have four choices: (1) Leave it with your old employer's plan if their investment options are strong. (2) Roll it to your new employer's plan to keep everything in one place. (3) Roll it to an IRA — the most flexible option, with the widest investment choices. (4) Cash it out — almost always a mistake, because you will owe income tax plus a 10% early withdrawal penalty, potentially losing 30–40% of the balance immediately. For most people, an IRA rollover is the best default choice when switching jobs.

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Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial, tax, or investment advice. Projections assume a constant annual return and do not account for fees, inflation, plan-specific rules, or changes in contribution limits. Actual results will vary. Consult a qualified financial advisor before making retirement planning decisions.