401(k) Calculator

An employer match is when your company contributes additional money to your 401(k) account based on how much you contribute. It's called "free money" because it's compensation beyond your salary that you only receive if you participate in the plan. Not contributing enough to get the full match is literally leaving part of your pay on the table.

Common match formulas:

• 100% match up to 6% of salary — The most generous common formula. If you earn $80,000 and contribute 6% ($4,800), your employer adds another $4,800. That's an instant 100% return on your contribution before any investment gains.
• 50% match up to 6% of salary — Very common. Same scenario: you contribute $4,800, employer adds $2,400. Still a 50% instant return.
• Dollar-for-dollar up to 3%, then 50% on next 2% — A tiered structure. You need to contribute at least 5% to maximize the match (3% + 2% = 4% total employer contribution on a $80,000 salary = $3,200).
• No match — Some employers don't match at all. The 401(k) is still worth using for the tax benefits and automatic deductions.

The math on why you should never leave match money behind:

If your employer offers a 100% match up to 6% and you contribute 0%, you're forfeiting $4,800/year (on an $80,000 salary). Over a 35-year career at 7% returns, that unclaimed match alone would grow to approximately $690,000. Even a 50% match on 6% costs you roughly $345,000 in lost retirement wealth.

Important nuance — vesting schedules: Some employers require you to work a certain number of years before you fully "own" the matched funds. Common vesting schedules are 3-year cliff (0% until year 3, then 100%) or 6-year graded (20% per year starting in year 2). Your own contributions are always 100% vested immediately.

The IRS sets annual limits on how much you can contribute to your 401(k). For 2025, the limits reflect changes from the SECURE 2.0 Act, which introduced a new "super catch-up" provision for participants ages 60–63.

2025 Employee Contribution Limits:

• Under age 50: $23,500 — This is the standard elective deferral limit for most workers. It applies to the total of your traditional and Roth 401(k) contributions combined.
• Ages 50–59 and 64+: $31,000 ($23,500 base + $7,500 standard catch-up) — The catch-up contribution allows older workers to accelerate their savings as retirement approaches.
• Ages 60–63: $34,750 ($23,500 base + $11,250 super catch-up) — This is the new SECURE 2.0 provision. It provides a higher catch-up limit for the four-year window before standard retirement age, recognizing that these are peak earning years when people can save the most aggressively.

Total annual addition limit (Section 415): The combined total of employee contributions + employer match + any other employer contributions cannot exceed $70,000 for 2025 (or 100% of compensation, whichever is less). This limit is separate from the employee deferral limits above.

Practical strategy: If you're in the catch-up window (50+), take full advantage of the higher limits. An extra $7,500/year invested over 15 years at 7% grows to roughly $188,000. The super catch-up window (60–63) provides an additional $3,750/year on top of that for four years.

Note on Roth catch-up changes: Starting in 2026, employees earning over $145,000 must make catch-up contributions as Roth (after-tax) only. For 2025, you can still make catch-up contributions as either traditional or Roth regardless of income.

The difference comes down to when you pay taxes. With a traditional 401(k), you contribute pre-tax dollars (reducing your taxable income now) and pay income tax when you withdraw in retirement. With a Roth 401(k), you contribute after-tax dollars (no tax break now) but withdrawals in retirement are completely tax-free, including all investment gains.

When a traditional 401(k) makes more sense:

• You're in a high tax bracket now and expect to be in a lower bracket in retirement. The tax deduction today is worth more than the tax you'll pay later.
• You need to maximize current cash flow. Pre-tax contributions reduce your paycheck less than equivalent after-tax Roth contributions. Contributing 10% pre-tax on a $100,000 salary costs you roughly $7,500 in take-home pay (assuming 25% marginal rate), while 10% Roth costs you the full $10,000.
• You're close to retirement and don't have enough years for tax-free growth to overcome the upfront tax cost.

When a Roth 401(k) makes more sense:

• You're early in your career with a lower income and expect to earn more later. You're paying taxes at a low rate now and locking in tax-free growth for decades.
• You believe tax rates will increase in the future. If rates rise, you'll be glad you already paid taxes at today's rates.
• You want tax diversification. Having both pre-tax and Roth assets in retirement gives you flexibility to manage your tax bracket year by year.
• You plan to leave money to heirs. Inherited Roth accounts are income-tax-free for beneficiaries (though they must still follow the 10-year distribution rule under SECURE Act).

Important note: Employer match contributions always go into a traditional (pre-tax) account, even if your own contributions are Roth. This means you'll always have some pre-tax money in retirement regardless of your election.

The best strategy for most people: If you're unsure, split contributions 50/50 between traditional and Roth. This hedges against future tax rate uncertainty and gives you maximum flexibility when you start withdrawing.

The conventional wisdom is to follow a priority waterfall for retirement savings. This framework ensures you capture every available tax advantage and employer benefit before investing in taxable accounts.

The recommended order:

• Step 1: Contribute enough to get the full employer match. This is non-negotiable. A 100% match on 6% is an instant 100% return — no investment can beat that. Even a 50% match is a guaranteed 50% return.
• Step 2: Max out a Roth IRA ($7,000 in 2025, $8,000 if 50+). A Roth IRA offers more investment options than most 401(k) plans, no RMDs during your lifetime, and tax-free withdrawals. If your income exceeds the Roth IRA limit ($150,000 single / $236,000 married in 2025), consider a backdoor Roth.
• Step 3: Go back and max out the 401(k). Now fill the rest of your 401(k) limit ($23,500 or higher if catch-up eligible). The tax deferral is valuable even if your plan's fund options aren't great.
• Step 4: HSA if eligible ($4,300 individual / $8,550 family in 2025). The Health Savings Account is the only account with a triple tax advantage: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. After age 65, it works like a traditional IRA for non-medical expenses.
• Step 5: Taxable brokerage account. After exhausting all tax-advantaged space, invest in a regular brokerage account. You'll pay capital gains taxes, but there are no contribution limits or withdrawal restrictions.

When to deviate from this order:

• If your 401(k) has terrible fund options with high expense ratios (above 0.50%), you might prioritize IRA and taxable accounts after capturing the match.
• If you need liquidity for a down payment or other medium-term goal, skip Step 3 and use a taxable account instead.
• If you plan to retire early (before 59.5), you'll need accessible funds. A Roth IRA (contributions withdrawable anytime) and taxable accounts should be prioritized alongside the 401(k).

A vesting schedule determines how much of your employer's 401(k) match you get to keep if you leave the company before a certain period. Your own contributions are always 100% vested immediately — you can never lose money you put in yourself. But employer contributions may be subject to a vesting schedule that requires you to stay employed for a certain number of years.

Common vesting types:

• Immediate vesting: You own 100% of employer contributions from day one. This is the most employee-friendly option and increasingly common, especially at tech companies competing for talent.
• Cliff vesting (typically 3 years): You own 0% of employer contributions until you've worked for the required period (usually 3 years), then jump to 100%. Leave at 2 years and 11 months? You forfeit the entire employer match.
• Graded vesting (typically 6 years): You gradually earn ownership over time. A common schedule is 20% after year 2, 40% after year 3, 60% after year 4, 80% after year 5, and 100% after year 6. This is the maximum schedule allowed by law.

Why vesting matters for career decisions:

If you're considering leaving a job and you're close to a vesting milestone, the unvested match might be worth tens of thousands of dollars. For example, if your employer contributed $5,000/year in match over 2 years and you're on a 3-year cliff schedule, you'd forfeit $10,000 (plus growth) by leaving just months early. On the other hand, don't stay at a bad job solely for vesting — a higher salary at a new employer could quickly make up the difference.

How to check your vesting: Look at your 401(k) plan's Summary Plan Description (SPD), available from your HR department or plan administrator. Your account statement should also show both your "vested balance" and "total balance."

The SECURE 2.0 Act, signed into law in December 2022, introduced several changes to retirement accounts. One of the most impactful for workers nearing retirement is the enhanced catch-up contribution for participants ages 60 through 63, often called the "super catch-up."

How the super catch-up works:

• Standard catch-up (ages 50-59, 64+): $7,500 above the base $23,500 limit = $31,000 total in 2025.
• Super catch-up (ages 60-63 only): $11,250 above the base $23,500 limit = $34,750 total in 2025. That's $3,750 more per year than the standard catch-up.
• The window is exactly four years. At age 64, you revert to the standard $7,500 catch-up amount. This creates a short but powerful savings window.

The math on maximizing the super catch-up:

If you contribute the full super catch-up amount for all four eligible years (ages 60–63), you'll put in an additional $15,000 ($3,750 x 4) compared to someone who only uses the standard catch-up. At 7% returns, that extra $15,000 invested grows to approximately $17,500 by age 65 — and continues compounding throughout retirement.

Other key SECURE 2.0 changes:

• RMD age pushed to 73 (and 75 starting in 2033), giving your money more time to grow tax-deferred.
• Employer match can go into Roth accounts (optional, plan must adopt this feature).
• Student loan payments can trigger employer match — even if you're not contributing to your 401(k), qualifying student loan payments may count as "contributions" for match purposes.
• Emergency savings accounts linked to 401(k) plans (up to $2,500, Roth treatment, penalty-free withdrawals).

Most 401(k) plans offer a menu of 15–30 investment options, typically mutual funds and target-date funds. The right choice depends on your age, risk tolerance, and how actively you want to manage your investments. Here's a framework for picking the right allocation.

Option 1: Target-date fund (simplest):

• Pick the fund closest to your expected retirement year (e.g., "Target 2055 Fund" if you plan to retire around 2055). The fund automatically adjusts its stock/bond mix as you age, starting aggressive (more stocks) and becoming conservative (more bonds) over time.
• Pros: Completely hands-off, automatic rebalancing, professionally managed glide path.
• Cons: Expense ratios can be higher than index funds (check if your plan uses Vanguard, Fidelity, or Schwab target-date funds, which tend to be low-cost). You also give up control over the exact allocation.

Option 2: Three-fund portfolio (DIY):

• U.S. total stock market index (or S&P 500 index) — 50-70% of your allocation
• International stock index — 15-30% of your allocation
• Bond index — 0-20% of your allocation (lower when young, higher as you near retirement)
• Pros: Lowest possible expense ratios, full control, broad diversification.
• Cons: Requires annual rebalancing and more engagement.

Rules of thumb:

• Always check expense ratios. A fund charging 0.80% instead of 0.04% costs you tens of thousands over a career. This calculator assumes a gross return — fees come out of that.
• Avoid company stock beyond 5–10% of your portfolio. Your income already depends on your employer — don't double down by holding their stock too.
• Rebalance annually. If stocks soar and your allocation drifts from 80/20 to 90/10, sell some stock funds and buy bond funds to return to your target. Most plans let you set automatic rebalancing.