How a 401(k) actually builds wealth
Three forces grow a 401(k): the money you defer from each paycheck, the money your employer adds on top, and decades of compounding investment growth on both. The match is the highest-return part — an immediate, guaranteed bonus — yet it is capped, and your own contributions are capped by the IRS. Getting those two limits right is the difference between a realistic projection and a fantasy.
The yearly mechanics
balance × (1 + return) + your deferral + employer match
Your deferral is capped at the 2025 IRS limit of $23,500 ($31,000 with the age-50 catch-up). The match is the lesser of your percent and the match limit, times the match rate — and it never counts toward your deferral limit.
What makes this calculator different
- Match left on the table. Contribute below your employer's match limit and we show the exact free money you forgo over your whole career — and how to capture it.
- Real IRS contribution limits. We enforce the 2025 elective-deferral cap and the age-50 catch-up, flagging any year your chosen percent would exceed it, so projections stay honest.
- Three-way breakdown. Your final balance is split into your contributions, the employer match, and pure investment growth — stacked across every year on the chart.
- Shareable. Every input lives in the URL, so you can bookmark or send a scenario.
Frequently asked questions
What is an employer 401(k) match and why does it matter so much?+
A match is your employer adding money to your 401(k) based on what you contribute — a common formula is 50% of your contributions up to 6% of your salary. That is an instant, guaranteed return on your money: contribute 6% and your employer hands you another 3% of salary for free. Failing to contribute enough to earn the full match is one of the most expensive mistakes in personal finance — this calculator surfaces exactly how much match you are leaving on the table.
How much can I contribute to a 401(k) in 2025?+
The IRS 2025 elective-deferral limit — the most you can put in from your own paycheck — is $23,500. If you are 50 or older you can add a $7,500 catch-up contribution, for $31,000 total. The employer match does not count against these limits. This calculator enforces the real limit: if your chosen percent would exceed it, your contribution is capped and the year is flagged so your projection stays realistic.
Traditional vs Roth 401(k) — which should I choose?+
A traditional 401(k) is funded with pre-tax dollars: you get a deduction now and pay income tax on withdrawals in retirement. A Roth 401(k) is funded with after-tax dollars: no deduction now, but qualified withdrawals are tax-free. The rule of thumb is to favor traditional if you expect a lower tax rate in retirement, and Roth if you expect a higher one (or want tax diversification). The contribution limits and employer match work the same way for both — the match itself always lands in a pre-tax bucket.
What is 401(k) vesting?+
Vesting determines how much of the employer match you actually keep if you leave. Your own contributions are always 100% yours. Employer contributions may vest immediately, gradually (graded vesting, e.g. 20% per year), or all at once after a few years (cliff vesting). If you leave before you are fully vested, you forfeit the unvested match. Check your plan document — this projection assumes you stay long enough to keep the full match.
What percentage of my salary should I contribute?+
At minimum, contribute enough to earn the full employer match — leaving that on the table is turning down free money. Beyond that, a common target is 15% of gross salary (including the match) toward retirement. If you cannot hit that today, start at the match threshold and raise your contribution by 1% each year or with every raise. Use the calculator to see how a few extra percentage points compounds over your career.
Disclaimer: This calculator is for educational purposes only. IRS limits, employer match formulas, vesting schedules, and investment returns vary and change over time. Projections assume a constant return and are not a guarantee. This is not financial, tax, or investment advice.