401k Calculator

A 401(k) is a US tax-advantaged employer-sponsored retirement account. Employee contributions reduce current taxable income; growth compounds tax-deferred; withdrawals after age 59½ are taxed as ordinary income. Many employers match part of contributions up to a stated percentage of salary.

Given salary, contribution rate, employer match terms, expected return, and years to retirement, the calculator projects ending balance and breaks out personal contributions, employer contributions, and growth. Future-value math: FV = PMT × (((1+r)^n - 1) / r), applied annually.

The core projection compounds annual contributions at the assumed return rate. Each year, the prior balance grows by (1 + r), then new contributions (employee + employer) are added. The closed-form formula above gives the same answer for level annual contributions; iterating year by year is needed for variable contributions or salary growth. The IRS caps employee contributions ($23,000 in 2024, indexed annually; an additional $7,500 catch-up at age 50+). Employer match doesn't count against the employee cap but is subject to the combined Section 415 limit ($69,000 in 2024). High earners contributing 15+ percent of a six-figure salary will hit caps; the calculator should respect them or it'll project unachievable balances.

A worked example. Age 30, salary $80,000, contributing 10 percent ($8,000/year), employer matches 50 percent up to 6 percent of salary ($2,400/year), expected return 7 percent (real, inflation-adjusted), 35 years to age 65. Annual contribution: $10,400. FV = 10,400 × (((1.07)^35 - 1) / 0.07) = 10,400 × ((10.677 - 1) / 0.07) = 10,400 × 138.24 = $1,437,696. Of that, employee contributed $280K, employer contributed $84K, and $1.07M came from compounding. The compounding share is enormous — 75 percent of the ending balance — which is why starting early matters far more than the contribution rate. Delay starting by 10 years and the same 10 percent contribution produces about $620K, less than half.

Limitations to flag. The 7 percent return is a long-run real average for diversified equity portfolios; the actual sequence of returns affects retirement outcomes more than the average for someone drawing down the balance. Sequence-of-returns risk (a bad market in early retirement years) can reduce sustainable withdrawals significantly even if average return matches assumptions. The calculator handles accumulation, not decumulation. Roth 401(k) inverts the tax treatment: contributions are post-tax, withdrawals are tax-free. Comparing traditional and Roth requires modeling marginal tax rates at retirement versus today, which most projections oversimplify. The Mega Backdoor Roth strategy (after-tax contributions converted to Roth) can push annual deferrals above $40K for high earners with cooperative plans — a major lever the basic calculator ignores.