401(k) Contribution Impact Calculator

How 401(k) Contributions Work A 401(k) is a pre-tax retirement account offered by employers. Contributions reduce your taxable income, so you pay less in federal income tax today. Your money then grows tax-deferred until retirement.

The Tax Advantage If you earn $75,000 and contribute 10% ($7,500), your taxable income becomes $67,500. At a 22% marginal rate, you save $1,650 in federal taxes. Your take-home only drops by $7,500 - $1,650 = $5,850, not the full $7,500.

The Employer Match Is Free Money If your employer matches 50% of your contributions up to 6% of salary:

• Contribute 6% ($4,500) → employer adds $2,250 per year
• That is a 50% instant return on your contribution
• Always contribute at least enough to capture the full employer match

Translating your match into the box above. The Employer Match field wants the match as a percentage of your salary, not the percentage of your contribution that your employer matches. The plan above pays 50% on the first 6% you contribute, which works out to 3% of salary once you are contributing 6% or more. So you would enter 3. If your employer matches dollar for dollar up to 4%, enter 4. The calculator caps the match at your own contribution rate, because that is how a match works: contribute nothing and you get nothing.

Future Value Formula (Annual Contributions) FV = Annual Contribution × ((1 + r)^n - 1) / r Where r = annual return rate, n = years to retirement

Both projections run that formula on your contribution plus the employer match. Comparing a matched balance against an unmatched one would credit the whole match to a decision you did not make, and would show a gain even when the two rates are identical.

2026 Contribution Limits Employee limit: $24,500 ($32,500 if age 50 or older, using the $8,000 catch-up) Total combined limit including the employer match: $72,000

These are adjusted for inflation most years, so check the current figure with the IRS before you set your rate for a new tax year. If the rate you enter would take you past the employee limit, the calculator says so and then projects the limit rather than the rate, because that is what payroll will actually deposit. The catch-up is not modelled here, so if you are 50 or over your real ceiling is $8,000 higher than the one this page applies.

One thing the numbers below will not tell you Vesting. The match is your employer’s money until you have worked there long enough to keep it, and a five- or six-year graded schedule is common. Everything on this page counts the match as yours from day one. If you are eighteen months into a six-year schedule and thinking about leaving, the match figure here is optimistic by a long way. Your plan’s Summary Plan Description has the actual schedule, and it is worth ten minutes to read before you decide anything on the strength of a match.