401(k) Calculator
Estimate your 401(k) retirement savings, including employer match and projected balance over time.
Understanding 401(k) Plans
A 401(k) is a retirement savings plan sponsored by employers that allows employees to save and invest a portion of their paycheck before taxes are taken out. These plans are one of the most popular ways to save for retirement in the United States.
Key Features of 401(k) Plans
- Tax-Deferred Growth: Contributions are made with pre-tax dollars, and earnings grow tax-deferred until withdrawal.
- Employer Matching: Many employers match a portion of employee contributions, essentially providing free money for retirement.
- Automatic Payroll Deductions: Contributions are automatically deducted from your paycheck, making saving effortless.
- Investment Options: Plans typically offer a variety of investment options including mutual funds, target-date funds, and company stock.
- Portability: When changing jobs, you can roll over your 401(k) to a new employer's plan or an IRA.
Contribution Rules
- Annual Limits: For 2025, the maximum contribution is $23,000 ($30,500 if age 50 or older).
- Employer Contributions: Employer matching contributions don't count toward the employee contribution limit.
- Total Contribution Limits: Combined employer and employee contributions cannot exceed $69,000 in 2025 ($76,500 if age 50 or older).
- Vesting: Some employer contributions may be subject to a vesting schedule before you own them completely.
- Required Minimum Distributions (RMDs): You must start taking withdrawals by age 73 (for those who reach age 72 after December 31, 2022).
Withdrawal Rules
- Early Withdrawals: Withdrawals before age 59½ are subject to a 10% penalty plus income taxes, unless an exception applies.
- Exceptions: Penalty-free early withdrawals may be allowed for certain situations like disability, medical expenses, or first-time home purchase.
- Required Minimum Distributions: You must start taking withdrawals by age 73, with the amount based on your life expectancy.
- Rollovers: When changing jobs, you can roll over your 401(k) to avoid taxes and penalties.
- Roth 401(k) Options: Some plans offer Roth 401(k) contributions, which are made with after-tax dollars but offer tax-free withdrawals in retirement.