401(k) Contribution Calculator
Project your 401(k) balance from contribution rate + employer match + assumed annual return. See the full-match minimum and IRS limit guidance. Free.
401(k) Contribution Calculator
Enter salary, your contribution rate, your employer's match formula (e.g. "100% of first 6%"), assumed return, and horizon. The tool returns projected balance plus the verdict on whether you're capturing the full employer match — the single highest-leverage check in 401(k) planning.
How to Use the 401(k) Calculator
Enter salary and current balance
Use gross annual salary (pre-tax). Current balance comes from your most recent statement (Fidelity, Vanguard, Empower, Schwab) or the company's HR portal.
Decode the employer match formula
"100% of first 6%" = match-pct 100, match-cap 6. "50% of first 8%" = match-pct 50, match-cap 8. Read your benefits summary plan description (SPD) carefully — match formulas are the second most-confused part of 401(k)s after the vesting schedule.
Pick a realistic return assumption
Historical S&P 500 nominal return is ~10%, real (after-inflation) is ~7%. For long horizons (20+ years) most planners use 6-7% real. Conservative: 5%. Aggressive: 8%. The tool returns nominal projection so adjust mentally for inflation when comparing to today's costs.
Read the verdict bar
If you're contributing below the full-match threshold, the verdict shows exactly how much employer match you're leaving on the table per year. This is the highest-leverage finding the tool can produce — capturing full match should be the #1 priority before any other investing.
401(k) — The US Retirement-Savings Default and Why Match Matters Most
The Three Numbers That Drive Everything
A 401(k) is a US employer-sponsored retirement plan with three numbers that drive 90% of the outcome: contribution rate (what % of salary you defer), employer match (free money the employer adds when you contribute), and investment return (whatever the underlying funds earn). The IRS caps the elective deferral at USD 24,500 in 2026 (with a USD 8,000 catch-up for workers 50+). Most workers never reach that cap — median US 401(k) deferral is about 7% of salary per Vanguard's 2024 How America Saves report.
Of those three, employer match is the only one with an instant 50-100% return. The classic "100% match on first 6%" formula doubles every contribution dollar up to 6% of salary — an immediate 100% return before any investment return. Failing to contribute up to the full-match threshold is the most common 401(k) mistake; Vanguard estimates 22% of eligible workers miss some or all of their match every year, collectively leaving USD 24 billion on the table annually.
Roth vs Traditional vs Mega-Backdoor
Traditional 401(k) contributions are pre-tax — they lower your current taxable income and grow tax-deferred; withdrawals in retirement are taxed as ordinary income. Roth 401(k) contributions are post-tax — they don't lower current income but withdrawals (contributions + growth) are tax-free in retirement. The choice depends on your current vs expected future marginal tax rate: lower-rate now favors Roth, higher-rate now favors Traditional. Workers in the 12% federal bracket should heavily lean Roth; workers in the 32%+ bracket should lean Traditional.
Mega-backdoor Roth is an advanced strategy: contribute up to the total 415(c) limit (USD 72,000 in 2026, less employer contributions) using after-tax non-Roth contributions, then in-plan convert to Roth. Only ~40% of 401(k) plans allow this. For high-income workers with capacity beyond the regular USD 24,500 elective limit, mega-backdoor is the highest-leverage tax-advantaged space available in US retirement planning.
"Vanguard's 2024 How America Saves: median 401(k) balance at retirement is USD 192,000; average is USD 333,000. The gap reflects the long-tail effect of compounding — small differences in early-career contribution rate produce enormous differences in final balance."
The Vesting Trap Most Workers Miss
Employer matching contributions are NOT yours immediately — most plans use a vesting schedule (cliff: 0% until year 3, then 100%; graded: 20% per year over 5 years). If you leave before fully vested, you forfeit the unvested portion. Your own contributions are always 100% vested immediately. Before accepting a competing offer, check your unvested employer-match balance via your 401(k) provider — leaving 1 month before a vesting cliff can cost USD 20-50K of future money. Check the Summary Plan Description (SPD) for your specific schedule.
Why Auto-Escalation Beats Heroic One-Time Decisions
Behavioral research from Shlomo Benartzi (UCLA) and Richard Thaler (Nobel 2017) showed that workers given a default contribution rate of 6% with annual auto-escalation of 1% end up with substantially higher lifetime savings than workers who pick their own rate once and never revisit. The trick is removing the decision friction — you commit once to "escalate 1% every January until I hit 15%" and the plan does the rest. Vanguard data shows participants in auto-escalation plans hit 10%+ deferral within 4 years vs 7 years for self-directed plans. Check your plan portal for "automatic increases" — most 2026 plans offer this for free but require opt-in.
10 Facts About US 401(k) Plans
IRS 2026 limits: USD 24,500 elective deferral + USD 8,000 catch-up (age 50+). Total 415(c) limit USD 72,000 (incl. employer + after-tax).
The 401(k) name comes from Section 401(k) of the Internal Revenue Code, added in 1978.
Per Vanguard 2024: median US 401(k) deferral rate is 7.7% of salary; participation rate 82%.
The most common employer match: 100% of first 6% of salary. Some employers use 50% of first 6% (cheaper) or 100% of first 3% + 50% of next 2% (Safe Harbor formula).
Roughly 22% of eligible US workers miss some or all of their employer match each year — USD 24 billion annually left on the table.
Vesting can take up to 6 years (Safe Harbor: immediate; cliff: 3 years; graded: 6 years). Unvested employer match forfeited on departure.
The Roth 401(k) option was added in 2006. By 2024, ~80% of US plans offer Roth alongside Traditional.
Mega-backdoor Roth: 415(c) limit USD 72,000 minus employee + employer contributions = remaining after-tax space. Only ~40% of plans allow in-plan conversion.
RMDs on Traditional 401(k) start at age 73 (SECURE 2.0). Roth 401(k) RMDs eliminated as of 2024.
Average US 401(k) expense ratio is 0.42% (large plans) to 1.2% (small plans). Index funds typically 0.02-0.10%.
Frequently Asked Questions
- At minimum, enough to capture the full employer match. If the match is "100% of first 6%", contribute at least 6%. Anything less leaves free money on the table — typically the single most expensive mistake in 401(k) planning. After that, increase 1% per year (most plans support auto-escalation) until you hit 15% of salary or the IRS cap.
- Rule of thumb: lower current marginal tax rate (12% federal bracket and below) → favor Roth; higher current rate (32%+) → favor Traditional; middle (22-24%) → split or pick based on whether you expect higher or lower retirement income. Many workers split contributions across both for tax diversification. Roth 401(k) contributions don't reduce current taxable income but withdrawals are tax-free.
- Vesting controls when employer match becomes yours to keep on departure. Common schedules: immediate (Safe Harbor plans), 3-year cliff (0% then 100% at year 3), or 6-year graded (20% per year starting year 2). Your own contributions are always 100% vested. Before accepting a competing job offer, check your unvested balance — leaving 30 days before a vesting cliff is one of the most expensive timing mistakes possible.
- If your income allows and you have no higher-priority financial goals (debt at 7%+ interest, emergency fund < 3 months, kids' college savings), then yes — maxing the USD 24,500 limit accelerates retirement security significantly. For high earners, also explore the mega-backdoor Roth (if your plan allows) for an additional USD 30-50K of tax-advantaged space per year.
- Four options: (1) leave it with the old employer (allowed if balance > USD 5,000); (2) roll over to new employer's 401(k) if they accept incoming rollovers; (3) roll over to an IRA at a brokerage (Fidelity, Vanguard, Schwab) — this gives you the widest investment selection; (4) cash out (pays income tax + 10% early-withdrawal penalty if under 59½ — almost never the right answer). Most planners recommend option 3 for control and lower fees.
- Most plans allow loans up to 50% of vested balance (max USD 50,000), repaid via payroll deduction over 5 years (longer for home purchase). The loan interest goes back into your account — feels free but you're losing the market return on the borrowed amount. If you leave the job, the loan typically becomes due within 60 days or it's treated as a taxable distribution + 10% penalty. Use as last resort, not for routine cash needs.
- For most workers: a low-cost target-date fund matched to your expected retirement year (e.g. "2055 Fund" for ~30-year horizon) is the right default. It auto-adjusts stock/bond mix as you approach retirement. If your plan offers index funds with lower expense ratios (Vanguard 500 Index, Total Stock Market), those typically beat actively-managed funds over 20+ years per the SPIVA scorecards. Avoid funds with expense ratios above 0.5%.
- Required Minimum Distributions (RMDs) on Traditional 401(k)s start at age 73 (75 for those turning 74 after 2032, per SECURE 2.0). Amount is calculated annually by dividing prior-year-end balance by an IRS life-expectancy factor (~24-26 at age 73, falling with age). Roth 401(k) RMDs were eliminated as of 2024. Missing an RMD triggers a 25% excise tax on the missed amount (reducible to 10% if corrected promptly).
- 401(k) has higher contribution limit (USD 24,500 vs USD 7,000 in 2026) and is the only place to get employer match. Roth IRA has wider investment selection (any brokerage, no plan-imposed fund list), tax-free withdrawals, no RMDs, and no income limit on Roth conversions (the "backdoor Roth"). Optimal order for most US workers: (1) 401(k) up to full match; (2) Roth IRA up to USD 7,000; (3) back to 401(k) up to USD 24,500; (4) HSA / mega-backdoor / taxable brokerage.
- Generally yes, especially for the employer match. If you eventually leave the US permanently, you can roll the 401(k) to an IRA and either: (a) leave it invested and take distributions in retirement (subject to US tax + your home country's rules); or (b) take an early distribution paying 10% penalty + income tax. Many ASEAN expats keep US 401(k) balances invested long-term because US investment options are deeper and cheaper than home-country equivalents. Consult a cross-border tax CPA for your specific home-country treaty.
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