401(k) Calculator

A 401(k) is a workplace retirement plan, so the central question is different from a generic investment account: how much do employee salary deferrals, employer match dollars, and tax-deferred growth combine by the time you retire? This calculator is designed around that employer-plan structure. It projects a traditional 401(k) balance from your current salary, the percentage of pay you defer, the employer’s match rate and match limit, your current balance, and your expected annual return. It also estimates the value after a retirement tax rate is applied, which matters because traditional 401(k) withdrawals are usually taxable.

This is informational, not financial, tax, or legal advice. Contribution limits, catch-up rules, plan eligibility, vesting schedules, Roth 401(k) availability, loan rules, and withdrawal rules change and can vary by employer. Use the projection to understand the mechanics, then check current IRS guidance and your plan’s summary plan description before making decisions.

What makes this 401(k) projection different

The calculator separates three drivers that are easy to blur together. First, your employee contribution is a percentage of salary. Second, the employer match is not simply another percentage of salary; it is limited by the plan’s matching formula. Third, both employee and employer dollars compound every month until retirement. A saver contributing 5 percent of salary to a plan with a 50 percent match up to 6 percent does not receive a 50 percent of salary match. The employer adds 50 percent of the eligible 5 percent deferral, or 2.5 percent of salary, because the employee contribution is below the 6 percent match ceiling.

That match logic is why this page is distinct from the compound interest calculator. Compound interest alone can grow any account balance. A 401(k) projection needs payroll deferrals, match terms, a retirement age, and an estimated tax rate. To compare account types, use the IRA calculator for pre-tax individual account modeling or the Roth IRA calculator for after-tax contributions and potentially tax-free qualified withdrawals. If the contribution strains monthly cash flow, the budget calculator can help identify what tradeoffs fund the deferral.

Formula used by the calculator

The employee contribution is based on annual salary and your deferral rate:

$\text{employee monthly} = \frac{\text{salary} \times \text{employee contribution rate}}{12}$

The employer match uses the smaller of your contribution rate and the plan’s match limit:

$\text{employer monthly} = \frac{\text{salary} \times \min(\text{employee contribution rate}, \text{match limit}) \times \text{match rate}}{12}$

The projected balance grows the current balance and the combined monthly contributions:

$\text{balance} = \text{current balance}(1 + \text{monthly return})^{\text{months}} + \text{monthly contributions} \times \frac{(1 + \text{monthly return})^{\text{months}} - 1}{\text{monthly return}}$

If the expected annual return is zero, the calculator uses total monthly contributions multiplied by months instead of the annuity factor. It then estimates traditional after-tax value as:

$\text{after tax value} = \text{projected balance} \times (1 - \text{retirement tax rate})$

Example

Use the default entries: $75,000 salary, age 35, retirement age 67, $25,000 current 401(k) balance, 5 percent employee contribution, 50 percent employer match, 6 percent match limit, 7 percent expected annual return, and 22 percent retirement tax rate. There are 32 years to invest, or 384 months. The employee contributes 5 percent of $75,000, which is $3,750 per year or $312.50 per month.

The match is 50 percent of the eligible 5 percent salary deferral because 5 percent is below the 6 percent match limit. That makes employer contributions $1,875 per year, or $156.25 per month. The total monthly deposit is $468.75. With a monthly return of 7 percent divided by 12, the current $25,000 grows and the monthly deposits compound to a projected balance of $902,877.61 at age 67. Total employee contributions are $120,000. Total employer contributions are $60,000. Investment growth is $697,877.61. Applying a 22 percent retirement tax rate gives an estimated after-tax withdrawal value of $704,244.53.

The example illustrates why match dollars are powerful. The employee saves $120,000, but the employer adds another $60,000 before investment growth. A higher contribution rate can increase employee savings, but the employer match stops growing once the contribution rate is above the match limit entered in the form.

Tax treatment and plan details to check

Traditional 401(k) salary deferrals are generally made before federal income tax, and employer contributions are pre-tax. Investment earnings are tax-deferred. Later withdrawals are commonly taxed as ordinary income, and withdrawals before allowed ages may involve tax and penalties unless an exception applies. This calculator does not model Roth 401(k) contributions, after-tax employee contributions, required minimum distributions, hardship withdrawals, plan loans, state taxes, early withdrawal penalties, or the tax effect of rolling money to an IRA.

Employer contributions can also be subject to vesting. If you leave a job before you are fully vested, some matching or profit-sharing dollars may be forfeited under the plan’s schedule. The calculator assumes the match shown belongs to you and compounds the full amount, so reduce the match assumption if vesting risk is material.

Practical tips for using the result

• Model at least three contribution rates: current deferral, the rate needed for the full match, and an aspirational rate that still fits your budget.
• Revisit the calculation after salary changes because both employee deferrals and matching dollars are salary-based.
• Use a return assumption that reflects your investment mix after fees, not a best-case market year.
• Compare the after-tax value with Roth or taxable account projections before assuming the largest pre-tax balance is the best result.
• Keep contribution limits and plan rules current. A dollar amount that is permitted one year may need adjustment in another year.

Sources

• IRS, 401(k) Plans — overview of 401(k) plan rules and contribution concepts.
• U.S. Department of Labor, Types of retirement plans — workplace retirement plan background.