401(k) Calculator

What You Should Know About 401(k) Plans

A 401(k) plan is a great way to save for retirement. While there are 401(k) plans for self-employed individuals — known as Self-Directed or Solo 401(k) — most plans are linked to an employer. If your employer offers a match on your contributions, this gives you an even greater incentive to contribute and max out your plan each year.

Here are a few facts to help you better understand your 401(k) contributions, distributions, and earnings:

• Contribution limits: Every year, the IRS sets contribution limits on 401(k) accounts. In 2023, the individual contribution limit is $22,500, while the combined contribution limit for employees and employers is $66,000.1
• Employer match: Employers may offer a “match” of up to 100% of your contributions. Employers typically set an annual limit on matching contributions based on your income.
• Vesting period: A vesting period allows an employer to retain ownership of matching contributions, typically over a period of four years. With each year of employment, the employee will gain a certain percentage of vested interest (i.e. ownership) in their employer’s contributions to the 401(k).
• Early withdrawal penalty fee: With a few exceptions, the IRS institutes a 10% early withdrawal penalty fee if you withdraw funds from your 401(k) account before the age of 59 ½.2
• Mandatory minimum distributions: Once you reach 72 years old, you’re required to begin taking the minimum annual distributions for your plan.
• Rollovers: 401(k) planholders can roll over their plans into a 401(k) with a different employer or an IRA account.

How to Use Our 401(k) Calculator

Our 401(k) calculator is free and easy to use. All you have to do is make some assumptions (or predictions) about your retirement and then input basic information about your plan.

What You Assume

• Years until retirement
• Average annual salary increase
• Annual return on savings

What You Know

• Current annual salary
• Pay period frequency
• Current 401(k) balance
• Employer match
• Maximum employer match
• Current pre-tax 401(k) contribution

There are several variables that can affect your 401(k) calculations. To get the most out of this calculator, consider the following:

• Estimating years until retirement: You may know when you’d like to retire, but nobody can predict the future. There’s a chance that you could lose your job, in which case you would need to roll over your 401(k) into another plan or account. You might also find that you need to work a little longer to meet your retirement savings goal. Either way, you can tinker around with multiple retirement ages to see how much your money would grow in different scenarios.
• Calculating salary increases: If your employer offers guaranteed salary bumps, this figure shouldn’t be hard to estimate. However, most workers don’t know exactly when they will get a raise or how much it will be. For this reason, it’s often safest to assume that your salary will at least keep up with inflation. Over the last 40 years, inflation has risen at an average rate of 3.43% per year.3
• Predicting 401(k) growth: The returns you see over time will depend on the type of portfolio you choose. Your plan may give you the option to invest in a variety of mutual funds, index funds, and ETFs, all of which can yield different returns. That said, most 401(k) plan holders can expect average annual growth somewhere between 5% and 8%, after accounting for inflation and administrative fees.