Finance
401(k) calculator
The employer match is the highest guaranteed return available to most people. This shows what yours is worth and whether you are capturing all of it.
Read your match formula carefully
The most common structure is "50% of the first 6%". That means if you contribute 6% of salary, your employer adds 3%. Contribute 3% and they add 1.5%. Contribute 10% and they still add only 3%, because the match is capped at the first 6%.
Some employers use a dollar-for-dollar match on a smaller band — 100% of the first 3% — and a few use tiered formulas. The number that matters is the percentage of salary at which the match stops growing. Contributing less than that is declining part of your compensation.
What the match is actually worth
A 50% match is an immediate 50% return on the matched portion, before the investment does anything at all. No fund, strategy or asset class offers that. It is the reason "contribute at least to the match" appears in essentially every piece of financial guidance regardless of what else it recommends.
On a $70,000 salary with a 50%-of-6% match, the employer adds $2,100 a year. Left to compound at 7% for 30 years, that stream alone becomes about $198,000 — money that cost you nothing beyond making the contribution.
Vesting decides whether you keep it
Your own contributions are always yours. The employer's are subject to a vesting schedule. Cliff vesting gives you nothing until a set date — typically three years — then everything at once. Graded vesting releases a percentage each year, often 20% annually over five years.
This is worth checking before you resign. Leaving two months before a cliff can forfeit several thousand dollars, and a start date can sometimes be negotiated.
Watch the annual limits and the fees
Contributions are capped each year by the IRS, with an additional catch-up allowance for those aged 50 and over, and the limits are adjusted for inflation periodically — check the current figure rather than relying on a remembered one. Very high earners can also be limited by nondiscrimination testing.
Fees deserve equal attention. Plans vary enormously, and the difference between a 0.05% index fund and a 1.2% actively managed option compounds into a substantial share of the final balance. The fund lineup is usually the one part of a 401(k) you fully control.
Common questions
Traditional or Roth 401(k)?
Traditional reduces taxable income now and is taxed on withdrawal. Roth is funded with after-tax money and withdrawn tax-free. The choice hinges on whether your tax rate in retirement will be higher or lower than today. Early-career workers often favour Roth; high earners near peak income often favour traditional. Splitting between the two hedges the uncertainty.
Should I contribute more than the match?
Usually yes, once high-interest debt is cleared and an emergency fund exists — the tax treatment is valuable on its own. But compare the plan’s fund fees against an IRA. A common sequence is: contribute to the match, then max an IRA, then return to the 401(k).
What happens to my 401(k) when I change jobs?
You can leave it, roll it into the new employer’s plan, or roll it into an IRA. A direct trustee-to-trustee rollover avoids withholding and penalties. Cashing out is the expensive option — income tax plus a 10% early withdrawal penalty in most cases, and the loss of decades of compounding.
Does the employer match count toward my contribution limit?
Not toward the employee deferral limit, which applies to your own contributions. There is a separate, much higher combined limit covering employee plus employer contributions together, so the match does not reduce how much you can personally defer.