401(k) Calculator

Key 401(k) definitions

• 401(k) plan: A defined contribution plan that allows employees to invest a portion of their salary for retirement. Some employers match employee contributions up to a certain percentage.

• 401(k) fees: These are charged by 401(k) plan administrators to cover administrative costs, plan management and more. These fees vary by plan and will reduce your expected rate of return. Our calculator defaults to fees of 0%.

• Annual income: The amount of money earned this year from your employer. For the purposes of this calculator, include only this income source to best calculate your 401(k) plan balance by retirement.

• Annual income growth: Our calculator assumes 2% annual income growth.

• Cash out: This refers to withdrawing the money from your 401(k) before age 59 ½. If you want to cash out your 401(k) early, in most cases, there are additional taxes and penalties.

• Contribution: The IRS sets a limit on how much can be put into this plan every year, also known as an annual 401(k) contribution limit. In 2025, that limit is $23,500 in 2025 for people under age 50, while those over age 50 can contribute an extra $7,500 as a catch-up contribution. Due to the Secure 2.0 Act, those age 60 to 63 get a higher catch-up contribution of $11,250.

• Current age: The age you are turning this calendar year.

• Starting balance: The amount currently in your 401(k) plan.

• Employer match: This refers to the amount your employer puts in your 401(k) in addition to your contribution. It can range from 0% to 100% and typically depends on how much you contribute. In 2025, for those under 50, the combined limit both you and your employer can contribute to your plan cannot exceed $70,000 or 100% of employee compensation, whichever is less.

• Employer match limit: This refers to the maximum amount of your salary that your employer will match as part of their 401(k) matching contribution.

• Estimated rate of return: A return is the money you earn or lose from an investment. The estimated annual return expected from your 401(k) investments defaults to 6%, but this can be adjusted.

• Rollover: Some people roll over old 401(k)s into Roth or traditional IRAs when they switch jobs. That’s often in part because IRAs typically have more investment choices. For details on how to rollover a workplace plan, read our 401(k) rollover guide.

• Retirement age: The age you retire. Full Social Security benefits begin at age 67 for people born in 1960 and later. Early retirement benefits are available at 62, but at a lower monthly amount.

Pros and Cons of a 401(k) plan

Pros

• Tax-advantaged growth. Traditional 401(k) plans take pretax contributions, reducing taxable income for the year. Depending on your employer, you might also have access to a Roth 401(k), which takes after-tax contributions but allows for tax-free withdrawals in retirement.

• Employer match. Your employer might match your contribution up to a certain amount, providing an extra boost to your retirement savings.

• Higher contribution limits. You can contribute a larger amount to workplace retirement plans each year compared with individual retirement plans (IRAs).

Cons

• Limited investment options. Investment choices are limited to the options provided by the plan.

• Potential vesting period. Some 401(k) plans may require that you work at your employer for a certain number of years before you can be fully vested in your 401(k) plan.

• Rules for early withdrawals. An early withdrawal from your 401(k) plan might incur taxes and penalties, depending on the reason.

» Want to convert your 401(k) to an IRA? See NerdWallet’s list of the best rollover IRA providers