Use the 401(k) Calculator to project retirement savings, employer matching, investment growth, or the contribution rate needed to reach a goal at retirement.
401(k) Calculator Formula
The calculator compounds the current account and adds employee and employer contributions as salary changes over time.
For each year:
B_{t+1}=B_t(1+r)+(C_t+M_t)(1+r/2)
Contributions are:
C_t=S_t*c\quad\text{and}\quad M_t=S_t*min(c,m)*q
Variables:
- B is the account balance
- r is annual return
- S is salary
- c is employee contribution rate
- m is the match cap
- q is the employer match per dollar
Projected-balance mode uses a known contribution rate. Contribution-needed mode searches from 0 to 100 percent for the rate that reaches the target.
A 50 percent match capped at 6 percent of salary contributes at most 3 percent of salary.
The projection is a planning model and does not enforce changing annual contribution limits.
Common 401(k) Match Formulas
The maximum employer contribution depends on both the match rate and the cap.
| Match formula | Employee rate for full match | Maximum employer amount |
|---|---|---|
| 50% up to 6% | 6% | 3% of salary |
| 100% up to 3% | 3% | 3% of salary |
| 100% up to 4% | 4% | 4% of salary |
| 50% up to 8% | 8% | 4% of salary |
Example Problems
Example 1: Project a retirement balance.
A 35-year-old with $85,000, a $90,000 salary, a 10 percent contribution, and a 50 percent match up to 6 percent can project the balance at age 67.
Example 2: Solve for a contribution rate.
Enter a $1.5 million target and the calculator iterates until it finds the rate that approximately reaches that balance.
Frequently Asked Questions
Does the calculator include employer matching?
Yes. Enter the match percentage per dollar and the contribution cap eligible for matching.
Are contribution limits enforced?
No. Compare the result with current plan and IRS limits, including any catch-up contribution rules.
Should the return be nominal or real?
Use a nominal return with future-dollar salary and targets, or a real return when every amount is stated in today's purchasing power.
