401(k) Contribution Calculator
Maximize your retirement savings with our comprehensive 401(k) contribution calculator. Determine the optimal contribution amount, understand employer matching benefits, and compare traditional vs. Roth 401(k) options. Calculate your immediate tax savings, project long-term account growth, and ensure you're getting the most from your employer's retirement benefits while staying within IRS contribution limits.
Calculate Your 401(k) Strategy
How to Use This Calculator
- Enter Income Information: Input your current salary, age, and expected salary growth to establish your baseline financial situation.
- Set Contribution Strategy: Choose your contribution percentage and decide how to split between traditional and Roth 401(k) options.
- Configure Employer Matching: Enter your employer's matching formula to calculate the free money available from your company.
- Review Analysis: Examine your tax savings, employer match, and projected retirement account balance to optimize your strategy.
Maximizing Your 401(k) Benefits
Your 401(k) is one of the most powerful retirement savings tools available, offering both immediate tax benefits and long-term wealth building potential. The key to maximizing your 401(k) is understanding the interplay between contribution limits, employer matching, tax implications, and investment growth over time.
Always contribute enough to receive your full employer match - it's an immediate 100% return on your investment. For 2025, you can contribute up to $23,500 (or $31,000 if you're 50 or older), but the right contribution amount depends on your financial situation, tax bracket, and retirement timeline. Traditional contributions reduce your current taxable income, while Roth contributions provide tax-free growth and withdrawals in retirement.
Frequently Asked Questions (FAQ)
FAQ Index
- What are the 2025 401(k) contribution limits?
- Should I contribute to traditional or Roth 401(k)?
- How does employer matching work?
- Can I contribute to both 401(k) and IRA?
- What happens to my 401(k) if I change jobs?
- When can I withdraw from my 401(k) without penalties?
- How do vesting schedules affect employer contributions?
- What are the tax implications of 401(k) loans?
- Can I roll over my 401(k) to an IRA?
- How do 401(k) catch-up contributions work for those 50+?
For 2025, the 401(k) contribution limit is $23,500 for employees under 50. Those aged 50+ can make additional catch-up contributions of $7,500, for a total of $31,000. The total contribution limit (employee + employer) is $70,000, or $77,500 with catch-up contributions.
Traditional 401(k) contributions reduce your current taxable income but are taxed in retirement. Roth 401(k) contributions are made with after-tax dollars but grow and are withdrawn tax-free. Choose traditional if you expect lower tax rates in retirement, Roth if you expect higher rates.
Employer matching is free money added to your 401(k) based on your contributions. Common formulas include 50% match on the first 6% you contribute, or 100% match on the first 3%. Always contribute enough to get the full employer match - it's an immediate 100% return on investment.
Yes, you can contribute to both a 401(k) and IRA in the same year. However, if you have a workplace retirement plan, your IRA deduction may be reduced or eliminated based on your income level. The contribution limits are separate for each account type.
When you change jobs, you have several options: leave the money in your former employer's plan (if allowed), roll it over to your new employer's 401(k), roll it over to an IRA, or cash out (not recommended due to taxes and penalties). Rolling over to an IRA typically provides more investment options and control.
Generally, you can withdraw from your 401(k) without the 10% early withdrawal penalty after age 59½. However, you'll still owe income taxes on traditional 401(k) withdrawals. Some exceptions allow penalty-free early withdrawals, such as financial hardships, first-time home purchases, or certain medical expenses, depending on your plan's rules.
Vesting schedules determine when you own 100% of your employer's contributions to your 401(k). Common schedules include immediate vesting (100% right away), cliff vesting (100% after a certain period, like 3 years), or graded vesting (increasing percentages over time). Your own contributions are always 100% vested.
401(k) loans aren't taxed as income if you repay them according to the plan's terms (typically within 5 years). However, you repay the loan with after-tax dollars, and those funds will be taxed again when withdrawn in retirement. If you default or leave your job, the outstanding balance becomes a taxable distribution with potential penalties.
Yes, you can roll over your 401(k) to an IRA when you leave your job or sometimes while still employed (in-service withdrawals). A direct rollover avoids taxes and penalties. IRAs typically offer more investment choices and may have lower fees than employer plans. Consider your specific situation, including loan options and fee structures.
If you're 50 or older, you can make additional "catch-up" contributions beyond the standard limit. For 2025, this means an extra $7,500 on top of the $23,500 regular limit, for a total of $31,000. These contributions follow the same traditional/Roth rules as regular contributions and can help accelerate retirement savings in your later working years.