401k Contribution Calculator
Find out how much goes into your 401(k) each year after factoring in your contribution, employer match, and tax bracket. Ideal for comparing contribution scenarios before open enrollment.
About this calculator
A 401(k) grows from two sources: your pre-tax employee contribution and any employer match. The employee contribution is simply annualSalary × (contributionPercent / 100). The employer match adds annualSalary × (min(contributionPercent, matchCap) / 100) × (employerMatch / 100) — the min() ensures the employer only matches up to the stated cap percentage of salary. Because traditional 401(k) contributions are pre-tax, your effective after-tax net cost is reduced by your marginal tax rate: net cost = employeeContribution × (1 − taxRate / 100). The full formula combining these into a total after-tax-adjusted annual contribution is: (annualSalary × contributionPercent / 100) + (annualSalary × min(contributionPercent, matchCap) / 100 × employerMatch / 100) × (1 − taxRate / 100). Maximizing contributions at least to the match cap is widely considered the highest-return 'investment' available to employees.
How to use
Assume a $75,000 salary, 6% employee contribution, 50% employer match, 6% match cap, and a 22% tax rate. Step 1 — Employee contribution: $75,000 × 0.06 = $4,500. Step 2 — Employer match: $75,000 × min(6,6)/100 × 0.50 = $75,000 × 0.06 × 0.50 = $2,250. Step 3 — Apply tax adjustment to match: $2,250 × (1 − 0.22) = $1,755. Step 4 — Total: $4,500 + $1,755 = $6,255 after-tax-adjusted annual 401(k) value. The raw dollars deposited (before tax adjustment) are $4,500 + $2,250 = $6,750 per year.
Frequently asked questions
How does an employer 401k match actually work?
An employer match is a percentage of your own contribution, up to a cap defined as a percentage of your salary. For example, a '50% match up to 6% of salary' means if you earn $80,000 and contribute at least 6% ($4,800), your employer adds 50% of that capped amount, or $2,400. If you contribute less than 6%, the employer only matches 50% of whatever you put in. Contributing at least enough to capture the full match is critical because it is essentially free compensation. Always confirm whether the match is immediate or vests over time, as vesting schedules affect how much you keep if you leave the company.
What is the 401k contribution limit for 2024?
For 2024, the IRS allows employees to contribute up to $23,000 to a 401(k) on a pre-tax or Roth basis, up from $22,500 in 2023. Workers aged 50 and older can make an additional $7,500 catch-up contribution, bringing their limit to $30,500. These limits apply only to the employee's elective deferrals; the combined employee-plus-employer total cannot exceed $69,000 (or $76,500 with catch-up). Exceeding the employee limit results in a tax penalty, so it is important to monitor contributions throughout the year. Limits are adjusted annually for inflation by the IRS.
How much do 401k contributions reduce my taxable income?
Traditional 401(k) contributions are deducted from your gross salary before federal income taxes are calculated, directly reducing your taxable income by the contributed amount. If you contribute $6,000 and are in the 22% bracket, you save roughly $1,320 in federal income taxes that year. State income taxes may also be reduced, depending on your state's rules. Note that 401(k) contributions do not reduce FICA taxes (Social Security and Medicare), so your Social Security benefit calculation is unaffected. Roth 401(k) contributions, by contrast, are made after tax and provide no immediate tax reduction.