401(k) Calculator
A 401(k) is a workplace retirement account funded from pay before it reaches you, usually with an employer contribution attached to your own. The employer portion is the part worth understanding first, because it is the only guaranteed return in personal finance and the most commonly forfeited.
The calculator projects the balance from your contribution rate, the match formula, expected raises and an assumed return — and reports separately how much additional employer money a higher contribution would have captured.
Project your 401(k) balance
The match formula is on your benefits summary — usually expressed as cents on the dollar up to a percentage of pay. Enter both parts separately.
How a match formula reads
A typical formula is stated as a rate and a ceiling: fifty cents on the dollar up to six percent of pay, or dollar for dollar up to three. The rate is what the employer adds per dollar you contribute; the ceiling is the share of your salary beyond which they stop.
Contributing below the ceiling forfeits employer money permanently — it is not deferred, it simply never appears. Contributing above it is still worthwhile for the tax treatment, but no further match accrues.
The immediate implication is that the first target is not a percentage anyone recommends generally. It is your own ceiling, whatever it happens to be, and reaching it is the highest-return move available before any other financial decision.
Some plans apply the match per pay period rather than annually, which means front-loading contributions early in the year can accidentally forfeit later matches. Check whether your plan has a true-up provision.
Vesting decides what you keep
Your own contributions are always yours. The employer portion frequently is not, until a vesting schedule is satisfied.
Cliff vesting grants the whole employer balance at once after a set period, and nothing before it. Graded vesting releases a percentage per year of service. Under either, leaving before the schedule completes forfeits the unvested portion.
This is worth knowing when weighing a job change, particularly one close to a vesting date. It is rarely decisive and it is occasionally worth several thousand dollars, which is enough to be part of the conversation about a start date.
Traditional and Roth inside the same plan
Traditional contributions reduce taxable income now and are taxed on withdrawal. Roth contributions are made from taxed income and qualified withdrawals are tax-free. Many plans offer both, and the choice turns on whether your tax rate is higher now or in retirement.
The honest answer for most people is that they do not know, which is a reasonable argument for splitting rather than agonising. A mix leaves flexibility to draw from whichever is more favourable later.
Note that the employer match is generally made on a pre-tax basis regardless of which you choose, so a Roth contributor still accumulates a traditional balance from the match itself.
Fees, and why they matter more than they look
A one percent annual difference in fees compounds against you exactly as returns compound for you. Across a full career it can consume a very substantial share of the final balance, which makes checking your plan's expense ratios one of the highest-value hours available.
- The fund expense ratio, charged annually as a percentage of assets — the largest lever you control.
- Plan administrative fees, sometimes a flat charge and sometimes a percentage.
- Advisory or managed-account fees where the plan offers a managed option.
- Revenue sharing embedded in some fund share classes, which is disclosed but easy to miss.
- Loan origination and maintenance fees, if you borrow from the plan.
Contribution limits and what happens at them
The IRS sets an annual limit on employee deferrals, adjusted periodically, with an additional catch-up amount permitted from a certain age. There is a separate, larger limit covering employee and employer contributions combined.
Because these change, the current figures live with the IRS rather than on this page — a number written here would still be here a year after it moved. Look them up for the year in question and enter your own contribution accordingly.
Highly paid employees may also find contributions capped by nondiscrimination testing, refunded after year end if the plan fails. Plans with a safe harbour design avoid this, which is worth knowing if a refund has ever arrived unexpectedly.
What to do with an old 401(k)
Leaving a job leaves the account behind, and forgotten accounts are extremely common — often in a default investment with higher fees than anything you would choose.
The options are generally to leave it, roll it into the new employer's plan, or roll it into an IRA. A rollover to an IRA usually widens the investment choice and lowers cost; keeping it in a workplace plan can preserve certain protections and the ability to borrow.
What to avoid is cashing out. It removes the balance from tax-advantaged growth permanently, triggers tax and generally an early-withdrawal penalty, and costs far more than the balance suggests once the forgone compounding is counted.
Frequently asked questions
At minimum, enough to capture the full employer match — anything below that ceiling forfeits money permanently. Beyond it the decision is about your own goals rather than about leaving free money behind.
Your employer adds fifty cents for every dollar you contribute, until your contributions reach six percent of your salary. Contribute six percent and the employer adds three; contribute more and no further match accrues.
The schedule that determines when employer contributions become yours to keep. Your own contributions always are. Leaving before a cliff or graded schedule completes forfeits the unvested employer portion.
Traditional lowers tax now and is taxed on withdrawal; Roth is the reverse. It turns on whether your tax rate is higher now or later, which most people cannot know — splitting between the two is a defensible response to that uncertainty.