401(k) Calculator

A 401(k) is an employer-sponsored retirement savings plan that lets you contribute a portion of your paycheck on a pre-tax (or after-tax, for Roth 401(k)) basis. Investment earnings grow tax-deferred until withdrawal in retirement.

When your employer matches a percentage of your contributions, that match is additional money added to your account at no cost to you. For example, a 4% match on a $75,000 salary means $3,000 per year deposited by your employer. Many plans also have a vesting schedule, meaning the match becomes fully yours after a certain number of years.

A 7% annual return is a commonly used long-term average for a diversified stock portfolio after adjusting for inflation. The historical nominal return of the S&P 500 is closer to 10%. Your actual returns will vary depending on asset allocation, market conditions, and fees.

For 2025, the employee elective deferral limit is $23,500. If you are aged 50 or older, you can contribute an additional $7,500 in catch-up contributions, bringing the total to $31,000. The total combined contribution (employee + employer) is capped at $70,000.

Withdrawals before age 59½ are generally subject to a 10% early withdrawal penalty plus ordinary income tax. There are some exceptions, including the Rule of 55 (separation from service at 55+), substantially equal periodic payments (SEPP), and hardship withdrawals — though each has specific rules.

With a traditional 401(k), contributions are pre-tax, reducing your taxable income now, but withdrawals in retirement are taxed as income. With a Roth 401(k), contributions are after-tax (no upfront deduction), but qualified withdrawals in retirement are completely tax-free.