What is a 401(k) Calculator?
A 401(k) calculator projects your retirement account balance based on your annual contribution, employer match, expected investment return, and years until retirement. The 401(k) is the primary employer-sponsored retirement savings plan in the US, offering powerful tax advantages through pre-tax contributions (traditional) or post-tax contributions (Roth).
401(k) Key Rules for 2025
Employee contribution limit: $23,500/year (2025) · Catch-up (50+): additional $7,500
Total limit (employee + employer): $70,000/year · Employer match: typically 50–100% of first 3–6% of salary
- Always get the full match: Employer match is free money — 100% instant return on matched dollars. Contribute at minimum enough to capture the full employer match before any other investment.
- Traditional vs Roth 401(k): Traditional contributions reduce today's taxable income (pre-tax). Roth contributions use after-tax dollars but withdrawals in retirement are completely tax-free. Choose traditional if you expect lower taxes in retirement; Roth if you expect higher.
- Vesting schedule: Employer match funds may have a 2–6 year vesting schedule. Leaving before fully vested means forfeiting some employer contributions.
What is the employer match and why does it matter so much?
A common employer match is 50% of your contribution up to 6% of salary. For a $80,000 salary, contributing 6% ($4,800/year) earns $2,400 in free employer match — a 50% instant return on those dollars before any investment gains. This "free money" makes 401(k) contributions the first priority in any financial plan, ahead of paying down low-interest debt or taxable investing. Not capturing the full match is leaving compensation on the table.
What happens to my 401(k) when I change jobs?
You have four options: (1) Roll over to new employer's 401(k) plan — simplest if new plan has good investment options. (2) Roll over to a Traditional IRA — gives access to wider investment universe. (3) Leave in former employer's plan — allowed if balance exceeds $5,000, but you lose the ability to make new contributions. (4) Cash out — triggers income tax on the full amount plus a 10% early withdrawal penalty if under age 59½. Option 4 is almost always the worst choice.
What is the RMD (Required Minimum Distribution)?
Starting at age 73 (per SECURE Act 2.0), the IRS requires you to withdraw a minimum amount annually from your traditional 401(k) and traditional IRA — the Required Minimum Distribution (RMD). The amount is calculated by dividing your account balance by a life expectancy factor from IRS tables. Failing to take the RMD results in a 25% excise tax on the amount not withdrawn. Roth 401(k) accounts are also now exempt from RMDs during the owner's lifetime (SECURE Act 2.0 change).
Last Updated: March 2026 · For US audiences