401(K) Calculator

401(K) Calculator Input Fields

Here are the 401(k) growth calculator input fields you must know:

Current 401(k) balance: The starting balance or current amount that you invested or saved in your 401(k). 

Annual Salary: Enter your annual salary before taxes and other benefit deductions. Avoid including any income you received from other sources, as your contribution rate and company match are based on the salary paid to you by your employer. 

Annual Salary Increase: The percentage you expect your salary to increase annually. The 401(k) calculator will assume that your salary will keep increasing at this rate until your retirement. 

Retirement Age: The 401(k) calculator assumes your final 401(k) contribution occurs the year before your planned retirement age. For example, if you retire at the age of 60, your last contribution occurs when you are 59.

Annual Rate of Return: The tool assumes that your return compounds annually while deposits are made on a monthly basis. The actual return rate you recieve greatly depends on the types of investments selected within your plan. 

For example, the S&P stock index has historically returned around 10% over the long term. However, stock market returns can fluctuate significantly over shorter periods. In contrast, fixed-income investments like bonds usually experience less volatility, but also generally yield lower returns compared to stocks. It's important to remember that future return rates cannot be predicted with certainty, and investments that offer higher return rates typically carry greater risks and volatility. The actual return on investments can vary greatly over time and may involve loss of principal. 

Contribution Percentage (Annual Contribution Limits): It is the percentage of your annual salary that you contribute to your 401(k) annually. Most employers permit employees to contribute up to 100% of their salary to a 401(k). However, the IRS has limits on annual 401(k) contributions.

• In 2026, the maximum employee contribution has increased from $23,500 (2025) to $24,500. Also, an additional catch-up contribution of $8,000 in 2026 can be made by individuals aged 50 or above, up from $7,500 in 2025. 
• Those aged 60 to 63 can make a catch-up contribution of $11,250 in 2026 and in 2025 (apart from the $8,000 extra contribution available to people aged 50+). 
• Employer contributions are not counted in the employee's maximum annual contribution limit. Employees classified as 'highly compensated' may get contribution limits depending on their employer's overall 401(k) participation. 
• Contact your employer if your expected salary is $160,000 or more to verify whether these additional contribution limits apply to you. 

Employer Match: An employer match is in addition to your annual contributions and doesn't count toward the maximum annual contribution limit for the employee. This match is based on a percentage of the employee's contributions. For instance, if an employer matches 50% of an employee's contributions up to 6% of their salary, and the employee has an annual salary of $100,000 and contributes 10% to their 401(k), the results would be:

• $10,000 from the employee
• $3,000 from the employer (which is 50% of $6,000 or 6% of the annual salary)
• Total $13,000

Employer Maximum: It refers to the highest percentage of your salary that your employer will match, regardless of your contribution amount. For example, if your employer has a 50% match, capped at a maximum of 6% of your annual salary, and you earn $25,000 with a contribution rate of 6%, your annual contribution would be $1,500. With a 50% match, the employer would contribute $750 to your 401(k). If you decide to increase your contribution to 10%, your annual contribution would then be $2,500. Nonetheless, the employer match is limited to 50% of the first 6% your salary and would remain at $750. 

General Pros and Cons of a 401(k)

Here are some general pros and cons of a 401(k):

Pros 

• Tax-deductible: Contributions to traditional IRAs and various retirement plans may be tax-deductible, depending on factors such as tax brackets and the presence of other retirement plans. In contrast, contributions to a 401(k) from both employees and employers are always tax-deductible because they lower taxable income, thereby reducing the overall tax liability. 
• Protecting Creditor: Generally, 401(k) funds are safe from bankruptcy, which is why using these funds for purposes like avoiding foreclosure, settling debts, or starting a business is typically not advised. 
• Employer Matching: A notable feature of 401(k) plans is the potential for employer-matching contributions. Surveys indicate that 43% of employees would rather accept a salary reduction in exchange for increased contributions to their 401(k) from their employers, highlighting the value of these matching contributions, often referred to as "free money" or "pay raises" that should not be overlooked. Employers may implement different matching strategies, such as matching a percentage of salary up to specific limits or matching a portion of employee contributions until a set threshold. 
• Tax-Deferred Growth: Similar to traditional IRAs and deferred annuities, investments in a 401(k) grow tax-deferred. This means that earnings from interest, dividends, or capital gains get collected without being taxed. This characteristic provides 401(k) plans with a benefit over other retirement savings plan methods, including cash savings, active investment accounts, and real estate. 
• High Limit for Contribution: 401(k) offers comparatively high annual contribution limits. For example, in 2026, the limits are set at $24,500 for individuals under 50, $32,500 for those aged 50 and older, and $35,750 for those aged 60 to 63. This stands in contrast to the combined annual IRA limit, which is $7,500 for individuals under 50 and $8,600 for those above 50. 

Cons 

• Illiquid: Accessing funds from a 401(k) without incurring penalties can only be done in rare circumstances before reaching age 59½, which includes both contributions and earnings accrued over time. 
• Few Options for Investment: Typically, 401(k) plans offer limited investment choices. Since these plans are generally introduced by employers, investors are restricted to the options available within their employers' 401(k) offerings, unlike the wide range of choices available in a standard taxable brokerage account. 
• Overpriced: Compared to alternative retirement savings vehicles, 401(k) plans can incur higher fees, often calculated as a percentage of the assets. This increase in costs is mainly due to administrative expenses. Participants usually have minimal control over these fees, apart from the option for lower-cost index funds or exchange-traded funds (ETFs) to reduce them.
• Waiting Periods: Certain employers may enforce a waiting period before employees can take part in their 401(k plans, typically to minimize turnover rates. Six-month waiting periods are common, while the longest waiting period allowed by law is one year. 
• Vesting Periods: Employers may implement vesting periods, which means that the employer's contributions do not fully belong to the employee until a specified time has passed. For instance, if an employee leaves a job with a 401(k) plan and is only 50% vested, they would only be entitled to half of the value related to the employer's contributions.