401(k) calculator with employer match

How the formula works

A 401(k) with an employer match has two engines: your own contributions, and the free money your employer adds on top. Both compound at the same return until you retire. The match is quoted as a rate up to a limit — "100% up to 4%" means the employer adds a dollar for every dollar you contribute, but only on the first 4% of your salary. Written out, the employer's yearly contribution is the match rate applied to the smaller of your contribution rate and that limit:

where \(c\) is the percent of salary you contribute, \(\ell\) the match limit as a percent of salary, and \(m\) the match rate. The \(\min\) is the whole point: contribute below the limit and the employer matches only what you put in; contribute above it and the extra is unmatched — the employer still stops at \(\ell\). Your own contribution each year is simply \(c \times \text{salary}\).

Both streams are deposited monthly and compound at the effective monthly rate \(i\), with deposits landing at the end of each month, over the \(n\) years to retirement:

Salary grows a little each year, so the dollar amounts of both contributions rise with it, but the shape does not change. The number worth staring at is the match: it is an immediate, guaranteed return on your own contribution — a 100% match is a 100% return the day it lands, before the market does anything. Capture the full match first. No investment inside the plan beats the instant return of the match you are leaving on the table by contributing below the limit.

What each input means

Current age and retirement age

Their difference \(n\) is the years of compounding left. Every year in the plan is a year the match — and the growth on it — gets to compound.

Annual salary

Your gross pay, which both contributions are a percent of. It grows each year at the salary-growth rate below, so later contributions are larger.

Your contribution — \(c\)

The percent of salary you defer into the plan. This is the one lever you control directly, and the first thing to check is whether it clears the match limit — below it, you are turning down free money.

Employer match rate — \(m\)

How many cents the employer adds per dollar you contribute, within the limit. 100% is dollar-for-dollar; 50% is fifty cents on the dollar. A 50% match is still a guaranteed 50% return on the matched portion.

Match limit — \(\ell\)

The percent of salary the match applies to. "100% up to 4%" caps the employer's help at 4% of salary; contributing more than 4% is fine, but the extra earns no match.

Current 401(k) balance — \(B_0\)

What is already in the account. It compounds from day one alongside every new contribution.

Expected annual return — \(r\)

The nominal yearly growth assumption for the investments in the plan. A diversified stock-heavy fund has returned somewhere near 7–10% nominal over long US history; nothing guarantees it.

Annual salary growth — \(g\)

How fast your pay rises each year. It lifts both contributions over time. A smooth 2–3% is a common assumption; real raises come in lumps.

A worked example

The worksheet's defaults: age 30, retiring at 65, a $70,000 salary, contributing 6% with a 100% match up to 4% of salary, $25,000 already in the account, a 7% return and 2% annual raises.

In year one you contribute 6% of $70,000 = $4,200. Your employer matches 100% of the first 4% of salary — and since you contribute 6%, more than the 4% limit, you capture all of it: 4% × $70,000 × 100% = $2,800 of free money. That is $7,000 going in the first year before any growth, and both raises and compounding lift it from there.

Over 35 years to age 65, at a 7% return with the effective monthly rate \(i = 1.07^{1/12} - 1 = 0.005654\), the account reaches $1,520,148. That splits into $209,977 of your own contributions, $139,985 of employer match, and $1,145,187 of investment growth on top of the $25,000 you started with. Of the final balance, $501,293 traces back to the match and its compounding — money that cost you nothing beyond showing up to the limit.

What contributing below the limit costs. Suppose you cut back to 3% instead of 6%. Now you clear only 3% of the 4% limit, so you forfeit $700 of match in the first year alone — and every year after. Left uncaptured over the whole run, that forgone match would have compounded to about $125,323 by retirement: a mid-six-figure sum handed back to the employer for the sake of a 1-point difference in contribution rate. The lesson the arithmetic keeps making: reach the match limit before anything else.

Assumptions and limits

• The return is constant. Real markets deliver volatility around the average, and the order of returns matters — a smooth 7% line models neither. Treat the output as a projection of an assumption, not a promise.
• Salary growth is smooth and steady. Real raises arrive in lumps, stall, or come with job changes that reset the match formula entirely.
• The tool does not cap contributions at the IRS limit. The 2026 employee deferral limit is $24,500 (plus catch-up contributions from age 50); very high salaries or contribution rates here may exceed it, and the tool will not stop you — check the current limit before assuming a high contribution is allowed.
• The match is assumed fully vested. Many plans vest the employer's contributions on a schedule, and leaving before you are fully vested can claw back the unvested match — the questions below explain how.
• Taxes are ignored. A traditional 401(k) dollar is taxed on withdrawal and a Roth dollar is not; this model treats the balance as a single pre-tax pool.
• This is arithmetic, not advice. It shows what the inputs imply; it cannot know your plan's exact rules, your returns, or what Congress will change.

Questions people ask

What does “100% match up to 4%” mean?

It describes two numbers: a match rate and a limit. “100% up to 4%” means the employer adds a dollar for every dollar you contribute (a 100% rate), but only on the first 4% of your salary (the limit). Contribute 4% of salary and the employer contributes another 4%; contribute 6% and the employer still contributes only 4% — the extra 2% is unmatched. A “50% up to 6%” formula instead adds fifty cents per dollar on the first 6%, so the most the employer adds is 3% of salary. Always find the limit: it is the number that caps the free money.

Why should I capture the full match before anything else?

Because the match is an instant, guaranteed return that no investment can beat. A 100% match is a 100% return on your contribution the moment it lands — before the market moves at all. In the worked example, dropping from 6% to 3% forfeits $700 of match in the first year, which would have compounded to about $125,323 by retirement. Paying down high-interest debt aside, contributing at least up to the match limit is usually the highest-return move available to you.

What is a vesting schedule?

It is the timetable on which the employer's contributions actually become yours. Your own contributions are always 100% yours immediately. The match may vest gradually — say 20% per year over five years (graded vesting) — or all at once after a set period (cliff vesting). If you leave before you are fully vested, the unvested portion of the match is clawed back. This tool assumes the match is fully vested; if yours is not, discount the employer figures by how much you have actually earned the right to keep.

Traditional or Roth 401(k) — what's the difference?

It is about when you pay tax. Traditional contributions are pre-tax: they lower your taxable income now, grow untaxed, and are taxed as ordinary income when withdrawn in retirement. Roth contributions are after-tax: no deduction today, but qualified withdrawals in retirement are tax-free. The employer match is generally made pre-tax regardless and lands in a traditional bucket. Roth tends to favor those who expect a higher tax rate in retirement than today; traditional favors the reverse. This calculator does not model the tax difference — it projects the raw balance either way.

What's the 2026 401(k) contribution limit?

For 2026 the employee deferral limit is $24,500. If you are 50 or older you can add a catch-up contribution ($8,000, with a higher catch-up in your early 60s under recent rules), and the employer match sits on top of your deferral under a separate, much higher combined limit. This tool does not enforce any of these caps — it will happily project a contribution rate that exceeds the deferral limit, so check the current figure if your contributions run high.