💼 401k Calculator

401k Calculator - How to Get the Most Out of Your Retirement Plan

A 401k is the single most powerful retirement savings tool available to American workers - yet most people never use it to its full potential. The difference between someone who just contributes "something" and someone who actually optimizes their 401k can easily be $300,000 to $500,000 by retirement. This calculator shows you the real numbers so you can make that difference.

The 2025 401k Contribution Limits

The IRS adjusts 401k limits most years. For 2025, here's what you're allowed to contribute:

• Under age 50: $23,500 per year
• Age 50–59 and age 64+: $31,000 (standard $7,500 catch-up)
• Age 60–63: $34,750 - a new higher catch-up under the SECURE 2.0 Act
• Total including employer contributions: $70,000 per year

The age 60–63 enhanced catch-up is new as of 2025. If you're in that window, it's one of the most valuable planning opportunities you have right now - an extra $3,750/year in tax-advantaged savings compared to the standard catch-up.

Why the Employer Match Is the Most Important Number

Before thinking about anything else - Roth vs Traditional, fund selection, contribution percentage - make sure you're capturing your full employer match. It's the highest guaranteed return available in personal finance, full stop.

The most common match structure is "50% up to 6% of salary." On a $80,000 salary, that means contributing 6% ($4,800) triggers $2,400 of free employer money. That's a 50% instant return before any investment growth. Not capturing it is the retirement equivalent of turning down a raise.

Traditional 401k vs Roth 401k - Which One Wins for You?

The honest answer: it depends entirely on whether your tax rate in retirement will be higher or lower than it is today.

The safest strategy for most people - especially with 20+ years until retirement - is to split contributions between both. Some Traditional, some Roth. This gives you tax diversification and the flexibility to draw from whichever account is most efficient in any given retirement year, regardless of how tax law changes between now and then.

How Much Should You Actually Contribute?

The most commonly cited target is 15% of gross income for retirement savings, including your employer's contribution. But the order of operations matters more than the total percentage:

1. Contribute enough to your 401k to get the full employer match - this comes first, always
2. Max out a Roth IRA ($7,000 in 2025) - more investment options, same tax advantages
3. Go back and max out your 401k ($23,500 in 2025)
4. If you have more to invest, use a taxable brokerage account

What Happens to Your 401k When You Leave a Job?

Your 401k balance belongs to you. When you leave, you have four options. Rolling to an IRA is usually the best move - you get broader investment choices, the same tax treatment, and you consolidate your retirement accounts. Rolling to your new employer's 401k is also good if the new plan has solid, low-cost options. Leaving it with your old employer works if the balance is above $5,000 and the plan is decent. The one option to avoid unless absolutely necessary: cashing out. You'll owe income tax on the full amount plus a 10% early withdrawal penalty if you're under 59½.

Vesting: When Is the Employer Match Actually Yours?

Your own 401k contributions are yours immediately, always. The employer match, however, may be subject to a vesting schedule - meaning you have to stay for a set period before those funds are truly yours to take if you leave.

Common schedules: immediate (all match is yours from day one), cliff vesting (0% until year 2–3, then 100%), and graded vesting (ownership accrues 20% per year). Always check your vesting schedule before resigning - leaving before you're fully vested means leaving employer money behind.