How the 401(k) calculator works
This 401k growth calculator projects your retirement balance by simulating year-by-year compound growth. It accounts for three sources of money flowing into your account:
- Your contributions — the annual amount you put into the plan, up to IRS limits.
- Employer match — your company's matching contribution, calculated as a percentage of your contribution (up to a cap based on your salary).
- Investment growth — compound returns on your total balance at the expected annual rate of return.
Each year, the calculator adds your contribution and employer match to the existing balance, then applies the return rate. Over 30–40 years, compound interest does the heavy lifting — often accounting for more than half of your final balance.
Tip: Always contribute at least enough to get your full employer match. If your employer matches 50% on the first 6% of salary, contribute at least 6%. Anything less is leaving free money on the table — it's an instant 50% return on that portion of your savings.
2026 401(k) contribution limits
How much should I contribute to my 401k? Financial advisors recommend at least enough to get your full employer match, then increasing toward 15%. The IRS sets annual limits on how much you can contribute to a 401k. For 2026, the limits are:
| Limit Type | 2026 Amount |
|---|---|
| Employee deferral | $24,500 |
| Catch-up (50+) | $32,500 |
| Super catch-up (60–63) | $35,750 |
| Total annual addition | $72,000 |
How employer matching works
An employer match is a contribution your company makes to your 401(k) based on how much you contribute. The most common formula is a 50% match on the first 6% of salary. Here's what that means:
Example: You earn $75,000/year and contribute 6% ($4,500).
Your employer matches 50% of your $4,500 = $2,250 free money per year.
If you only contribute 3% ($2,250), your match drops to $1,125 — you'd leave $1,125 on the table.
Use the employer match calculator above to see exactly how much your employer adds based on your specific match formula and salary. Adjust the match percentage and limit to match your plan's terms.
Example calculation
Let's walk through a 30-year-old contributing $500/month ($6,000/year) with a $75,000 salary, 50% employer match on 6%, and 7% annual returns, retiring at 65:
- Your contributions: $6,000/year × 35 years = $210,000
- Employer match: 50% × $4,500 (6% of $75K) = $2,250/year × 35 years = $78,750
- Investment growth: Compound returns at 7% = $931,536
Result: $210,000 + $78,750 + $931,536 = $1,220,286 at age 65
Investment growth accounts for 76% of the final balance — that's the power of compound interest over 35 years.
Contribution comparison table
See how different monthly 401k contribution amounts grow over 35 years at 7% returns with 50% employer match on 6% of a $75,000 salary:
| Monthly | You Put In | Employer | Growth | Total |
|---|---|---|---|---|
| $0/mo | $0 | $0 | $0 | $0 |
| $250/mo | $105K | $53K | $508K | $666K |
| $500/mo | $210K | $79K | $932K | $1.2M |
| $750/mo | $315K | $79K | $1.3M | $1.7M |
| $1,000/mo | $420K | $79K | $1.6M | $2.1M |
Assumes 7% annual return, 50% employer match on first 6% of $75K salary, $0 starting balance, 35-year horizon.
Roth vs. traditional 401(k)
Most employers offer both options. The difference comes down to when you pay taxes:
Traditional 401(k)
- Contributions reduce taxable income now
- Money grows tax-deferred
- Withdrawals taxed as ordinary income
- Best if you expect a lower tax bracket in retirement
Roth 401(k)
- Contributions made with after-tax dollars
- Money grows tax-free
- Qualified withdrawals are tax-free
- Best if you expect higher taxes in retirement
Both types have the same 2026 contribution limit ($24,500 under 50, $32,500 with catch-up). Employer match contributions always go into the traditional (pre-tax) side regardless of your election.
FAQs
What is a 401(k)?
A 401(k) is an employer-sponsored retirement savings plan that lets you contribute a portion of your pre-tax salary (traditional) or after-tax salary (Roth). Your money grows tax-deferred until you withdraw it in retirement. Many employers also offer matching contributions, which is essentially free money added to your account.
What are the 2026 401(k) contribution limits?
For 2026, the employee elective deferral limit is $24,500. If you're 50 or older, you can contribute an additional $8,000 in catch-up contributions for a total of $32,500. Under the SECURE 2.0 Act, workers aged 60–63 get a super catch-up of $11,250 (total $35,750). The overall annual addition limit including employer contributions is $72,000.
What is employer matching and how does it work?
Employer matching means your company contributes money to your 401(k) based on your contributions. A common formula is 50% match on the first 6% of your salary. For example, if you earn $75,000 and contribute 6% ($4,500), your employer adds 50% of that ($2,250). You should always contribute at least enough to get the full match — it's a guaranteed 50–100% return on that money.
What is the difference between Roth and traditional 401(k)?
Traditional 401(k) contributions are pre-tax — they reduce your taxable income now, but withdrawals in retirement are taxed as ordinary income. Roth 401(k) contributions are after-tax — you pay taxes now, but qualified withdrawals in retirement are completely tax-free. Choose traditional if you expect a lower tax bracket in retirement; choose Roth if you expect higher taxes later or want tax-free income.
When can I withdraw from my 401(k) without penalty?
You can take penalty-free withdrawals from a 401(k) starting at age 59½. If you leave your employer at age 55 or later, you may also access that specific employer's 401(k) without the 10% early withdrawal penalty (the Rule of 55). Roth 401(k) withdrawals are tax-free only if the account has been open for at least 5 years.
What is the early withdrawal penalty for a 401(k)?
Withdrawing from a traditional 401(k) before age 59½ typically incurs a 10% early withdrawal penalty on top of regular income taxes. On a $50,000 withdrawal in the 22% bracket, you'd owe $11,000 in income tax plus a $5,000 penalty — losing $16,000 total. Exceptions include disability, certain medical expenses, and substantially equal periodic payments (72t).
What are Required Minimum Distributions (RMDs)?
RMDs are mandatory withdrawals from traditional 401(k) and IRA accounts starting at age 73 (as of the SECURE 2.0 Act). The amount is based on your account balance and IRS life expectancy tables. Roth 401(k) accounts are also subject to RMDs unless you roll them into a Roth IRA. Failing to take your RMD results in a 25% excise tax on the amount not withdrawn.
What percentage of my salary should I contribute to a 401(k)?
If you're wondering how much should I contribute to 401k, financial advisors generally recommend saving 15% of your gross income for retirement (including employer match). At minimum, contribute enough to get your employer's full match. If you start at 25 and save 15% consistently, you'll likely have enough to replace 80% of your pre-retirement income. If you're starting later, you may need to save 20–25%.
Can I have both a 401(k) and an IRA?
Yes. You can contribute to both a 401(k) and an IRA in the same year. The 2026 IRA contribution limit is $7,500 ($8,600 if 50+). However, your ability to deduct traditional IRA contributions phases out at higher incomes if you're covered by a workplace plan. There's no income limit for contributing to a Roth IRA through the backdoor conversion strategy.
Are 401(k) contributions tax-deductible?
Traditional 401(k) contributions reduce your taxable income in the year you make them — they're effectively tax-deductible. If you contribute $10,000 and you're in the 22% bracket, you save $2,200 in taxes that year. Roth 401(k) contributions are not tax-deductible since they're made with after-tax dollars, but the trade-off is tax-free withdrawals in retirement.
How much do I need to retire?
A common guideline is the 25x rule: multiply your desired annual retirement spending by 25. If you want $60,000/year, you need approximately $1,500,000 saved. This is based on the 4% safe withdrawal rate from the Trinity Study. Other factors include Social Security income, pension, healthcare costs, and how long you expect to live. Use this 401k calculator to project whether you're on track.
What happens to my 401(k) when I leave a job?
When you leave an employer, you typically have four options: 1) Leave the money in your former employer's plan (if allowed), 2) Roll it over to your new employer's 401(k), 3) Roll it into an IRA (most flexible option), or 4) Cash it out (triggers income tax + 10% penalty if under 59½). Rolling into an IRA is usually recommended for the widest investment choices and lowest fees.