401k Calculator

What is a 401(k) Account?

A 401(k) is a retirement savings plan sponsored by an employer in the United States. It allows workers to save and invest a portion of their paycheck before taxes are taken out. The money in a traditional 401(k) grows tax-deferred, meaning you do not pay taxes on the investment earnings until you withdraw the funds in retirement.

This 401k Calculator helps you estimate how your account balance will grow over time. By adjusting variables like your contribution rate, salary growth, annual return, and employer match details, you can see how much retirement corpus you will accumulate and see the real purchasing power of your money adjusted for future inflation.

How Employer Matching Works

One of the biggest advantages of a 401(k) is the employer match. Many companies offer to match a portion of your contributions as a form of employee benefit. This match is essentially free money and should always be maximized.

Employer match rules are usually defined by two numbers:

• Match Percentage: The percentage of your contribution the employer will match (e.g., 50% or 100%).
• Match Limit: The maximum amount the employer will match, expressed as a percentage of your total salary (e.g., up to 6% of your salary).

For example, if your salary is $80,000, you contribute 8% ($6,400), and your employer matches 50% up to 6%: The employer matches 50% of your contribution, which would be $3,200. However, the match is capped at 6% of your salary ($4,800). Since $3,200 is below the $4,800 cap, the employer will contribute the full $3,200, bringing your total annual savings to $9,600.

The Power of Compounding

Retirement accounts rely on compound interest to grow. The sooner you start saving, the more time your interest has to earn interest of its own. Over a 30-year career, the compound returns on your investments can make up the vast majority of your final retirement balance.

For example, a $25,000 starting balance with annual additions of $6,400 and a 7.00% return can grow to over $780,000 in 35 years. In this scenario, your personal contributions make up only about $224,000, while the remaining balance comes entirely from employer matches and accumulated compound growth!

IRS Contribution Limits

Because of the tax advantages, the IRS limits how much money you can contribute to a 401(k) each year. For 2026, the individual employee contribution limit is $23,500. For employees age 50 and older, an additional catch-up contribution is allowed.