401(k) Calculator

About the 401k Calculator

A 401(k) is a tax-advantaged retirement account that lets you contribute pretax (traditional) or after-tax (Roth) dollars, often with an employer match. The combination of tax deferral, matching, and decades of compounding makes the 401(k) the single most powerful wealth-building tool most people have access to.

The Formula

FV = C × [((1+r)^n − 1) ÷ r] × (1 + Match%), where C is your annual contribution, r is your annual return, n is years. Employer match effectively multiplies your contribution by (1 + Match%). For $1 contributed with 100% match up to 6% of salary, your real input is doubled.

Worked Example

$80,000 salary, contributing 10% ($8,000/year), employer matches 50% up to 6% ($2,400/year). Total annual: $10,400. At 7% return for 30 years: $10,400 × [((1.07)^30 − 1) ÷ 0.07] ≈ $982,000. Without the match, you'd be at $755,000.

Always capture the full match

Employer match is free money. A 50% match on the first 6% of your salary is a guaranteed 50% return on those dollars. Failing to contribute enough to capture the full match is leaving 3-6% of your salary on the table every year.

Traditional vs Roth 401(k)

Traditional: contribute pretax now, pay tax on withdrawals in retirement. Best if your retirement tax rate will be lower than now (common). Roth: pay tax now, withdraw tax-free in retirement. Best if you expect higher tax rates later, or if you're early-career with lower current income. Many people benefit from splitting contributions between both.

2025 contribution limits

Employee: $23,500. Age 50+ catch-up: additional $7,500. Age 60-63 super catch-up (SECURE 2.0): additional $11,250. Total employee + employer combined: $70,000. Highly compensated employees may face additional limits.

Vesting schedules

Your contributions are 100% yours immediately. Employer match may vest over 3-6 years. Leaving before fully vested means forfeiting some/all of the match. Check your plan documents before changing jobs.

Common Mistakes

• Not contributing enough to capture the full employer match.
• Investing 401(k) too conservatively in your 20s and 30s. Decades of compounding favour equities.
• Taking 401(k) loans for non-emergencies. Lost compounding outweighs the interest you 'pay yourself'.
• Cashing out a small 401(k) when changing jobs. Roll it over instead — taxes plus 10% penalty plus lost compounding can erase 50% of the balance.

Frequently Asked Questions

Should I prioritize 401(k) over Roth IRA?
First, contribute enough to 401(k) to get full match. Then, max Roth IRA ($7,000/year). Then, back to 401(k) up to the limit. Then, taxable investing.

When can I withdraw without penalty?
Age 59½, generally. Rule of 55 if you leave the employer at 55+. SEPP 72(t) for earlier with strict rules. Hardship withdrawals available but expensive.

This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Consult a licensed professional before making significant financial decisions.