401K calculator

Using this 401K calculator, estimate a 401(k) balance at retirement, the cost of an early withdrawal, or the contribution range that captures an employer match.

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What is a 401(k)?

A 401(k) is an employer-sponsored retirement savings plan established under Section 401(k) of the U.S. Internal Revenue Code. It is classified as a defined contribution plan because the amount contributed is specified, but the final retirement balance depends on contributions and investment performance.

Employees generally contribute a portion of their salary, while employers may contribute additional money according to the terms of the plan.

The money is invested in options available through the employer’s retirement program. Depending on the plan, these options may include stock funds, bond funds, index funds, target-date funds, and other investments.

A 401(k) is designed primarily for long-term retirement savings. Although money may sometimes be accessed before retirement, withdrawals can involve taxes, penalties, or restrictions.

Traditional 401(k) vs. Roth 401(k)

There are two main tax arrangements for employee contributions.

Traditional 401(k): Contributions are generally made before federal income taxes are applied. This can reduce the employee’s taxable income in the year of contribution. Investment earnings accumulate without current taxation, but withdrawals are generally taxed as ordinary income.

Roth 401(k): Contributions are made with after-tax income. They generally do not reduce current taxable income, but qualified withdrawals can be tax-free, including investment earnings. The main difference is when taxes are paid. A traditional 401(k) generally provides a tax benefit while contributing, whereas a Roth 401(k) provides its primary tax benefit when qualified distributions are taken. The better option depends on factors such as current income, expected retirement income, tax rates, and personal financial circumstances.

How does a 401(k) work?

A typical 401(k) operates through payroll deductions. An employee chooses how much of their salary to contribute, subject to the plan’s rules and applicable IRS limits. The employer deducts the contribution from the employee’s paycheck and deposits it into the retirement account. The participant then invests the money using the available investment options. As the account grows, investment earnings remain invested unless money is withdrawn. Over many years, contributions and earnings can accumulate into a substantial retirement balance.

For example, suppose an employee earns $75,000 annually and contributes 8% of salary.

The annual employee contribution would be:

$75,000 × 8% = $6,000

If the employer also contributes $2,000 during the year, the total annual amount entering the account would be:

$6,000 + $2,000 = $8,000

The account’s future value would depend on how these contributions are invested and how long they remain in the plan.

401(k) contribution limits

The IRS establishes annual limits on how much employees can contribute to their retirement plans. These limits can change from year to year, generally reflecting adjustments for inflation and changes in retirement savings rules. For 2026, the employee elective deferral limit for a 401(k) is $24,500. Additional catch-up contributions may be available to eligible participants based on age. The applicable limits depend on the tax year, age, and other circumstances. Employer contributions are subject to additional rules. When using a retirement calculator, make sure your contribution assumptions are consistent with the applicable limits and your employer’s plan. A calculator that assumes contributions remain unchanged for several decades may produce an estimate that does not account for future changes in contribution limits.

How much should you contribute to a 401(k)?

The appropriate contribution rate depends on your retirement goals, income, expenses, existing savings, and employer matching arrangement. Some employees contribute a fixed percentage of their salary, while others choose a dollar amount from each paycheck.

For example, consider an employee earning $80,000 annually.

Increasing the contribution rate generally increases the amount invested each year. However, the effect on retirement savings is not limited to the additional contributions. The money also has an opportunity to earn investment returns over the remaining savings period. Someone who increases contributions early in their career may benefit from having those additional deposits invested for many years. The calculator can help compare different contribution percentages and estimate their potential effect on retirement savings.

Employer matching contributions

An employer match is an additional contribution made by a company when an employee contributes to a 401(k). Matching arrangements differ between employers. Some companies match a percentage of employee contributions, while others use multiple matching levels or different contribution formulas.

For example, suppose an employer matches 50% of employee contributions up to 6% of salary.

An employee earning $80,000 who contributes 6% would receive:

Employee contribution:

$80,000 × 6% = $4,800

Employer contribution:

$4,800 × 50% = $2,400

Total annual contribution:

$4,800 + $2,400 = $7,200

The employer contribution increases the amount invested without requiring the employee to contribute that additional money personally.

Why employer matching matters

Employer matching can significantly affect retirement savings because it increases the amount deposited into the account. Consider two employees with the same salary and investment assumptions. One employee receives employer matching contributions, while the other contributes only their own money. If both save for the same number of years, the employee receiving matching contributions may accumulate a larger balance because additional money enters the account and has time to earn investment returns. However, employer matching is not available in every plan. Some employers do not provide a match, and others require employees to meet certain contribution or eligibility conditions. Review your plan documents to understand the matching formula and whether employer contributions are subject to vesting.

401(k) investment options

A 401(k) account is generally invested in financial assets rather than simply holding cash. The available investments depend on the employer’s plan. Common investment choices include:

Stock funds: Stock funds invest in shares of publicly traded companies. They can provide opportunities for long-term growth but may experience substantial fluctuations in value.

Bond funds: Bond funds invest in debt securities issued by governments, companies, or other organizations. They can provide income and may help diversify a retirement portfolio, although bond investments also involve risks.

Index funds: Index funds aim to track the performance of a particular market index. They may provide broad market exposure and can have relatively low investment expenses.

Target-date funds: Target-date funds are designed around an approximate retirement year. Their investment allocation generally changes over time, often becoming more conservative as the target date approaches.

Other investment options :Some plans provide additional investment choices, such as stable-value funds or specialized investment portfolios.

The best investment allocation depends on factors including time until retirement, risk tolerance, financial goals, and the options available through the plan.

A 401(k) calculator typically uses an assumed annual investment return to estimate future growth. That assumption should be treated as a planning input rather than a prediction of actual performance.

How investment returns affect your 401(k)

Investment returns influence how quickly retirement savings accumulate. When an account earns a positive return, the earnings remain invested and can generate additional earnings in subsequent years. This process is called compound growth.

Suppose an account begins with $30,000 and earns an average annual return of 6%.

After one year, the balance would be approximately:

$30,000 × 1.06 = $31,800

If the same return continued for another year, the account would grow to:

$31,800 × 1.06 = $33,708

The second year’s return is calculated on the larger balance, including the previous year’s investment gain.

Over a long savings period, this effect can become substantial.

However, investment returns are not guaranteed. Actual markets experience both positive and negative periods, and the timing of those returns can affect retirement outcomes. A constant-return calculator simplifies this uncertainty by assuming an average annual rate.

401(k) calculator formula

The calculator estimates the future value of your retirement account using your current balance, future contributions, and expected investment return.

A simplified formula for the projected balance is:

where:

• (FV) = Future account balance
• (B) = Current 401(k) balance
• (r) = Annual investment return
• (n) = Number of years until retirement
• (C) = Annual contribution

This simplified formula assumes contributions are made at the end of each year, the contribution amount remains constant, and the investment return is the same every year. If employer matching contributions are included, the annual contribution can be represented as:

where:

• (E) = Annual employee contribution
• (M) = Annual employer contribution

For a more detailed projection, salary growth, contribution limits, changing employer matches, and contribution timing can also be incorporated. The calculator’s result is an estimate of the account’s future value under the assumptions entered.

Example: projecting a 401(k) balance

Suppose an employee has the following retirement savings information:

The employee contributes:

$80,000 × 8% = $6,400

The employer contributes:

$80,000 × 3% = $2,400

The combined first-year contribution is:

$6,400 + $2,400 = $8,800

The employee has 30 years until retirement.

If salary increases by 2% annually, the dollar amount contributed may also increase over time, assuming the contribution percentages remain unchanged. With a 6% annual investment return, the account could grow to approximately $1.1 million by age 65 under a simplified annual contribution model. This estimate assumes contributions are made at the end of each year, salary increases occur annually, and the investment return remains constant. Actual results could differ considerably because investment returns, contributions, fees, and plan rules may change.

Factors that affect your 401(k) balance

Several factors determine how much you may accumulate by retirement.

Current 401(k) balance

Your existing retirement savings provide the starting point for future investment growth. A larger starting balance generally results in a higher projected retirement account value, assuming the same investment return and savings period.

Annual salary

Salary affects the amount of money available for retirement contributions. If your contribution is based on a percentage of salary, higher earnings generally result in larger contributions.

Contribution percentage

The percentage of salary contributed determines how much money enters the account from each paycheck. Increasing the contribution rate can improve the projected balance, particularly when the additional contributions have many years to grow.

Employer matching

Employer contributions increase the total amount invested. The effect depends on the employer’s matching percentage, contribution limits, eligibility conditions, and vesting requirements.

Salary growth

Salary increases may lead to larger future contributions.

For example, an employee contributing 8% of salary will generally contribute more in dollars if their salary increases while the contribution percentage remains unchanged.

Investment return

The expected investment return affects the projected growth of the account. A higher assumed return generally produces a larger future balance, but investment performance is uncertain.

Years until retirement

The number of years remaining before retirement determines how long contributions and investment earnings can accumulate. Starting earlier can provide more time for compound growth.

Inflation

Inflation affects the purchasing power of retirement savings. A future account balance may appear large in nominal dollars but could purchase less than the same amount today. For this reason, it is useful to consider both the projected balance and its purchasing power.

401(k) advantages and disadvantages

A 401(k) can be an important part of retirement planning, but it also has limitations.

Advantages

Tax benefits: Traditional 401(k) contributions generally reduce current federal taxable income, while investment earnings accumulate without current taxation. Roth 401(k) accounts offer a different tax arrangement, with qualified withdrawals generally tax-free.

Employer contributions: Some employers provide matching contributions, increasing the amount invested for retirement.

Automatic savings: Payroll deductions make it easier to contribute consistently without manually transferring money each month.

Long-term investment growth: Retirement savings can remain invested over many years, allowing contributions and investment earnings to accumulate.

Higher contribution limits than IRAs: 401(k) plans generally allow larger annual employee contributions than individual retirement accounts, subject to the applicable limits.

Disadvantages

Investment restrictions: Participants generally choose from the investment options offered by their employer’s plan rather than having unrestricted access to every investment.

Plan fees: Administrative expenses, investment management fees, and other costs may reduce long-term returns.

Withdrawal restrictions: Accessing retirement savings before the permitted age may involve taxes, penalties, or plan restrictions.

Employer vesting: Some employer contributions may not become fully owned by the employee immediately.

Investment risk: The account balance can decline when investments lose value.

These considerations should be evaluated alongside the potential benefits of employer matching and long-term retirement savings.

401(k) vesting periods

Vesting determines when employer contributions become fully owned by an employee. Employee contributions are generally immediately vested. However, employer contributions may follow a vesting schedule. There are two common arrangements.

Graded vesting

Under graded vesting, ownership of employer contributions increases gradually over time. For example, an employer might use a schedule that increases the vested percentage each year until the employee becomes fully vested. An employee who leaves before completing the schedule may retain only the vested portion of employer contributions.

Cliff vesting

Under cliff vesting, employer contributions become fully vested after a specified period. Before that point, the employee may not own the employer-contributed portion. Once the vesting requirement is satisfied, the employee becomes fully vested according to the plan’s terms.

Why vesting matters

Vesting can affect how much retirement money you keep when leaving an employer.

Suppose an account contains:

• Employee contributions: $30,000
• Employer contributions: $10,000
• Vested percentage of employer contributions: 60%

The employee would generally retain:

$30,000 + ($10,000 × 60%) = $36,000

The remaining unvested employer contribution may be forfeited under the plan’s rules. Actual vesting schedules vary, so check your employer’s plan documents before making decisions about leaving a job.

What happens to a 401(k) when you change jobs?

Changing employers does not automatically mean you lose your 401(k) savings. Depending on your account balance and plan rules, you may have several options.

Leave the account with your former employer

Some plans allow former employees to keep their retirement savings in the existing account. The account may continue to be invested, but the available services and investment options can differ from those available to active employees.

Transfer the account to a new employer’s plan

If the new employer accepts rollovers, you may be able to move your existing retirement savings into the new 401(k). This can help consolidate retirement accounts.

Roll the account into an IRA

An eligible rollover to an individual retirement account may provide access to different investment options. The tax treatment depends on the type of account and how the rollover is completed.

Withdraw the money

Taking a distribution may result in taxes and, depending on the circumstances, an additional penalty. A withdrawal can also reduce the amount available for future retirement expenses. Before moving retirement funds, review the available options and consider the effect on taxes, fees, investment choices, and account protections.

401(k) early withdrawals

A 401(k) is primarily intended for retirement, but some plans allow money to be withdrawn before retirement. Early withdrawals can have financial consequences. Traditional 401(k) distributions are generally subject to ordinary income tax. An additional 10% federal tax may apply to early distributions unless an exception is available. The rules depend on the account holder’s age, employment circumstances, distribution type, and other conditions.

Hardship withdrawals

Some employer plans permit hardship distributions when an employee has an eligible financial need. Examples of expenses that may qualify under applicable rules include:

• Certain medical expenses
• Costs associated with purchasing a principal residence
• Eligible education expenses
• Expenses related to preventing eviction or foreclosure
• Certain funeral expenses
• Eligible expenses for repairing damage to a principal residence

The plan must permit the distribution, and the employee must satisfy the applicable requirements. A hardship withdrawal is generally not a loan. Once the money is distributed, it cannot simply be returned to the account as though the withdrawal never occurred.

Other early withdrawal exceptions

Certain circumstances may qualify for an exception to the additional early withdrawal tax. Examples can include qualifying disability, certain distributions following separation from employment, and other situations recognized under federal tax rules. The conditions are specific, and not every early withdrawal qualifies.

Why early withdrawals can be costly

Taking money from a retirement account can reduce the balance available for future investment growth. For example, withdrawing $20,000 today means that the withdrawn amount is no longer invested in the account. If that money would otherwise have earned investment returns for another 20 years, the long-term effect could be considerably greater than the original withdrawal. Before taking an early distribution, consider the tax consequences, applicable penalties, lost investment growth, and alternative sources of funds.

401(k) distributions in retirement

When retirement begins, the account holder may start using accumulated savings to cover living expenses. The available distribution options depend on the employer’s plan.

Lump-sum distribution

A lump-sum distribution provides the account balance in a single payment. This can provide immediate access to retirement savings, but a large taxable distribution from a traditional 401(k) may increase taxable income substantially. Taking the entire balance at once also means that the money is no longer invested within the retirement account.

Periodic withdrawals

Some plans permit participants to withdraw money periodically. For example, a retiree may take monthly or annual distributions to help cover living expenses. The amount withdrawn should be considered alongside expected investment returns, retirement duration, other income sources, and spending needs.

Rollover

An eligible distribution may be rolled into another retirement account. A direct rollover can generally avoid immediate taxation when the applicable requirements are satisfied. The treatment depends on whether the funds are moved between traditional or Roth accounts and whether the transaction meets the rollover rules.

Annuity payments

Some retirement plans provide annuity options. An annuity may provide periodic payments for a specified period or for the lifetime of the recipient, depending on the contract. The available choices and payment terms vary by plan and provider.

Continuing to invest

Some retirees leave a portion of their retirement savings invested rather than withdrawing the entire account immediately. This can allow the remaining balance to continue earning investment returns. However, investments can lose value, and retirement withdrawals must be considered carefully.

Required minimum distributions (RMDs)

Required minimum distributions are withdrawals that the IRS generally requires from certain retirement accounts once the account holder reaches the applicable age. Traditional 401(k) accounts are generally subject to RMD rules. The amount depends on factors such as the account balance, age, and applicable IRS life expectancy table. For many account holders, the first RMD deadline is April 1 of the year following the year they reach age 73. Subsequent RMDs are generally due by December 31 each year. The rules may differ for individuals who are still working and participate in their current employer’s plan, depending on the plan and ownership circumstances. Roth 401(k) accounts are generally not subject to lifetime RMDs for the original account owner under current rules.

How an RMD is calculated

A simplified RMD calculation is:

The life expectancy factor comes from the relevant IRS table.

For example, suppose an account has a previous year-end balance of $400,000 and the applicable distribution factor is 25.

The estimated required distribution would be:

$400,000 ÷ 25 = $16,000

This is an illustration only. The correct factor depends on the account holder’s circumstances and the applicable IRS table. Failing to take the required distribution can result in an additional tax. The rules also provide circumstances in which a correction may reduce the penalty. Because RMD requirements can change and depend on individual circumstances, verify the applicable rules before taking a distribution.

Self-directed 401(k)

A self-directed 401(k), often called a solo 401(k), is designed primarily for self-employed individuals and business owners who meet the plan’s eligibility requirements. It can allow an eligible individual to contribute in two capacities:

• As an employee
• As an employer

This arrangement can provide additional retirement savings opportunities for eligible business owners. A solo 401(k) generally follows many of the same contribution and distribution rules as other 401(k) plans. However, the exact contribution amount depends on compensation, employee deferrals, employer contributions, and applicable annual limits. Some self-directed plans provide broader investment options than conventional employer-sponsored plans. Depending on the plan, investments may include assets beyond publicly traded stocks and bonds. However, self-directed retirement accounts are still subject to federal tax rules and prohibited transaction restrictions. Not every investment is permitted, and certain transactions involving the account holder or related parties can create serious tax consequences. Self-employed individuals should review the plan requirements and consider professional advice when establishing or managing a solo 401(k).

Roth 401(k) vs. Roth IRA

A Roth 401(k) and a Roth IRA both use after-tax contributions, but they are different retirement savings arrangements.

A Roth 401(k) may be attractive to employees who want to save through payroll deductions and receive employer contributions. A Roth IRA may provide greater investment flexibility, depending on the provider. Some individuals use both accounts as part of their retirement strategy, subject to eligibility and contribution rules.

401(k) calculator FAQs

How much will my 401(k) be worth at retirement?

Your projected retirement balance depends on your current account value, annual contributions, employer matching contributions, investment return, and years until retirement. The calculator combines these inputs to estimate how much your account could accumulate. The result is based on assumptions and should not be interpreted as a guaranteed retirement balance.

How much should I contribute to my 401(k) each month?

The appropriate amount depends on your income, retirement goals, expenses, and employer matching arrangement. You can use the calculator to compare contribution rates and determine how increasing your savings may affect your projected balance.

Does employer matching count toward my contribution limit?

Employer matching contributions are generally treated differently from employee elective deferrals. However, employee and employer contributions are subject to additional combined plan limits. The applicable rules depend on the tax year, compensation, age, and plan circumstances.

Can I contribute to both a traditional and Roth 401(k)?

Yes. Some employer plans allow employees to divide their contributions between traditional and Roth 401(k) accounts. The combined employee contributions generally remain subject to the applicable annual elective deferral limit. The tax treatment differs between the two contribution types.

What happens if I stop contributing to my 401(k)?

If you stop contributing, future employee deposits will no longer increase the account. The existing balance may continue to earn investment returns, but the final result will depend on investment performance, fees, and withdrawals. Stopping contributions can also affect employer matching contributions if the match requires employee participation.

Can my 401(k) lose money?

Yes. A 401(k) account can lose value if its investments decline. The amount of risk depends on the investment allocation and market conditions. A calculator that assumes a fixed positive annual return does not capture the possibility of investment losses.

Is a 401(k) better than an IRA?

Neither account is automatically better for everyone. A 401(k) may provide employer matching contributions and higher employee contribution limits. An IRA may provide a broader range of investment choices. The appropriate account depends on employer benefits, tax circumstances, fees, eligibility, and retirement goals.

Can I withdraw my 401(k) before age 59½?

Some withdrawals are permitted before age 59½, but the distribution may be subject to ordinary income tax and an additional 10% federal tax unless an exception applies. The rules depend on the account holder’s circumstances and the type of distribution.

What happens to my 401(k) after retirement?

You may be able to leave the money invested, take periodic withdrawals, receive a lump-sum distribution, or use an eligible rollover option. The available choices depend on your employer’s plan. Traditional 401(k) distributions are generally taxable, while qualified Roth distributions are generally tax-free.

Does the calculator account for inflation?

The calculator’s inflation assumption can help estimate how rising prices affect the purchasing power of retirement savings. A projected balance expressed in future dollars may not have the same purchasing power as an equivalent amount today. Consider inflation when deciding whether your retirement savings will be sufficient.

What investment return should I use?

The appropriate assumption depends on your investment allocation, time horizon, and risk tolerance. You can test different annual returns to compare possible outcomes. Remember that investment returns fluctuate, and a constant annual return is a simplified assumption.

Use our 401(k) calculator

This calculator is intended for educational and planning purposes and should not be considered financial, investment, or tax advice.