401k Calculator — Complete Guide ()
A 401k is an employer-sponsored retirement savings plan that lets you contribute pre-tax dollars, reducing your taxable income today while growing tax-deferred until retirement. For most Americans with access to an employer match, the 401k is the single best first step in retirement saving — the employer match is an instant 50–100% return on your contribution, unbeatable by any investment.
💡 Rule #1: Always contribute at least enough to get your full employer match. If your employer matches 100% up to 3% of salary, contributing 3% costs you $X but gives you $2X in your account — a guaranteed 100% return before any investment gains. Not doing this is the equivalent of turning down free salary.
Traditional vs Roth 401k
💡 Pro Tip: Increase your 401k contribution by 1% every time you get a raise. You'll never miss money you never saw in your paycheck, and it accelerates your balance exponentially over time.
Both have identical contribution limits. The difference is when you pay taxes. Traditional 401k: contributions are pre-tax, reducing your income now — you pay taxes when you withdraw in retirement. Roth 401k: contributions are after-tax — no tax break now, but all growth and withdrawals are completely tax-free in retirement.
The simple rule: if you expect to be in a higher tax bracket in retirement than now, choose Roth. If you expect to be in a lower bracket, choose Traditional. If you're young and early in your career (currently in a low bracket), Roth almost always wins because your money has decades to grow tax-free.
2026 Contribution Limits
| Age Group | Employee Limit | Catch-Up | Total Employee | Grand Total (+ Employer) |
|---|
| Under 50 | $23,500 | — | $23,500 | $70,000 |
| 50–59 | $23,500 | +$7,500 | $31,000 | $77,500 |
| 60–63 ✨ | $23,500 | +$11,250 | $34,750 | $81,250 |
| 64+ | $23,500 | +$7,500 | $31,000 | $77,500 |
The age 60–63 "super catch-up" was created by the SECURE 2.0 Act (2022) and took effect in 2025. It allows an additional $3,750 above the standard catch-up for those in the final stretch before the traditional retirement age of 65.
How much should I contribute to my 401k?
The baseline answer: at minimum, contribute enough to get your full employer match — this is free money with a guaranteed 100% return. Beyond that, a common rule of thumb is to save 15% of your gross income for retirement (including employer contributions). For example, if your employer matches 3%, contribute 12% yourself to hit 15% total. If you can't afford 15%, start with the match minimum and increase by 1% each year or each time you get a raise until you reach your target.
What is the 401k contribution limit for 2026?
The 2026 employee contribution limit is $23,500 — unchanged from 2025. Workers aged 50–59 and 64+ can contribute an additional $7,500 (catch-up), for a total of $31,000. Workers aged 60–63 benefit from the SECURE 2.0 "super catch-up" of $11,250, allowing a total of $34,750. The overall limit including employer contributions is $70,000 for those under 50 and $77,500–$81,250 for those with catch-up provisions.
How does employer 401k matching work?
Employer matching means your employer adds money to your 401k based on how much you contribute. The most common structure is "100% match up to 3–6% of salary" — meaning if you earn $75,000 and contribute 6%, your employer adds another $4,500 (6% × $75,000) for free. Some employers use a partial match — "50% match up to 6%" means they contribute $0.50 for every $1 you put in, up to 6% of salary. Always check your plan documents for the exact match formula. Vesting schedules may apply — you might need to stay 2–4 years before the match is fully yours.
Can I have both a traditional and Roth 401k?
Yes — if your employer's plan offers both options, you can split your contributions between traditional and Roth however you like. The combined total still can't exceed the annual limit ($23,500 for 2026). Many people split contributions to hedge their tax exposure — paying some taxes now (Roth) and deferring some (traditional) to diversify their tax situation in retirement. This strategy is sometimes called "tax diversification."
What happens to my 401k if I leave my job?
You have four options when leaving a job. You can leave the money in your former employer's plan (if allowed and the plan is good). You can roll it over to your new employer's 401k plan. You can roll it over to an IRA (often the best option for investment choice and fees). Or you can cash it out — which triggers income taxes plus a 10% early withdrawal penalty if you're under 59½. Rolling to an IRA preserves all tax benefits and gives you full control over your investments. Direct rollovers (institution to institution) avoid any withholding complications.