401(k) Calculator

An employer match is free money your employer adds to your 401(k) when you contribute. A common match is 50% or 100% of your contributions up to 3%–6% of your salary. Always contribute at least enough to get the full employer match — it is an immediate 50%–100% return on that portion of your savings.

For 2024, the employee contribution limit is $23,000 per year. If you are age 50 or older, you can make an additional catch-up contribution of $7,500, bringing the total to $30,500. These limits are adjusted annually by the IRS for inflation.

Traditional 401(k) contributions are pre-tax — you reduce taxable income now and pay taxes on withdrawals in retirement. Roth 401(k) contributions are post-tax — no tax deduction now, but qualified withdrawals in retirement are completely tax-free. If you expect to be in a higher tax bracket in retirement, Roth may be more beneficial.

You have four options: roll it over into your new employer's 401(k), roll it into an IRA, leave it with your old employer (if allowed), or cash it out (not recommended — you will owe income tax plus a 10% early withdrawal penalty if under 59½). A rollover to an IRA or new 401(k) is typically the best choice.

Vesting determines when employer match contributions become fully yours. Your own contributions are always 100% vested immediately. Employer match contributions may vest on a schedule — for example, 20% per year over 5 years (graded vesting) or 100% after 3 years (cliff vesting). If you leave before full vesting, you forfeit unvested employer contributions.