401K Retirement Calculator
This calculator helps you estimate your 401K balance at retirement and potential monthly withdrawals. Enter your current information, retirement goals, and investment expectations to see how your savings could grow over time.
Basic Information
Employer Match
Retirement Projections
Your 401K Projection
401(k) Calculator Guide
What Is a 401(k)?
A 401(k) is a retirement savings plan named after section 401(k) of the IRS tax code. Employers typically set up this plan, but individuals can also open a self-directed 401(k). Contributions to a 401(k) come directly from your paycheck before taxes.
How Does a 401(k) Work?
Employers may offer a 401(k) as an employment benefit, sometimes matching employee contributions. Contributions to your 401(k) are tax-deferred, meaning you pay taxes only when withdrawing funds.
Employer Matching and Vesting Period
Employers often match employee contributions up to a certain percentage. For example:
100% Matching: Your employer contributes a dollar for each dollar you contribute, up to a specified limit (often around 6% of your salary).
Partial Matching: Your employer contributes a percentage of your contribution. For instance, a 50% match means your employer adds 50 cents for every dollar you contribute.
The vesting period is the duration you must stay employed to fully own your employer’s matching contributions. Leaving early may forfeit part of these contributions.
As of 2021, IRS limits annual employee contributions to $19,500, with a combined employer-employee contribution cap of $58,000. Employees aged 50 and older may contribute an additional $6,500 annually.
Self-Directed 401(k)
This plan allows self-employed individuals greater investment freedom, including real estate, precious metals, loans, and private placements. While offering more control, it also involves higher risks and responsibilities.
Deciding Your Contribution Level
Your ideal contribution depends on your financial situation, retirement goals, and employer matching incentives. Financial advisors typically recommend contributing at least enough to maximize employer matching.
Withdrawal Rules and Penalties
You can withdraw from a 401(k) without penalty after age 59.5. Early withdrawals typically incur a 10% penalty unless qualifying for hardship distributions, such as medical or funeral expenses. Mandatory withdrawals (Required Minimum Distributions) begin at age 72.
Disclaimer
This calculator provides estimated figures for educational purposes only. Actual results may vary based on market performance and personal financial situations. Please consult a financial advisor for personalized advice.