401(k) Growth Calculator
A 401(k) is an employer-sponsored plan, and that word "employer" is where most of its value comes from. The match is not a bonus feature — for many savers it is the largest single return in their portfolio.
The Match Is a 50–100% Instant Return
A typical formula is "100% of the first 3%, then 50% of the next 2%" — contribute 5% of salary and the employer adds 4%.
| Salary | You contribute 5% | Employer adds | First-year total |
|---|---|---|---|
| $60,000 | $3,000 | $2,400 | $5,400 |
| $90,000 | $4,500 | $3,600 | $8,100 |
| $120,000 | $6,000 | $4,800 | $10,800 |
Contribution Limits Are Per Person, Not Per Plan
The employee deferral limit applies across every 401(k) you hold in a year, so changing jobs mid-year does not reset it. The employer contribution sits under a separate, much higher combined cap, which is why a match does not eat into your own limit.
Savers over 50 get an additional catch-up amount, and the limits are indexed to inflation annually — check the current year's figures rather than assuming last year's.
Vesting Decides What You Keep
Your own contributions are always yours. The employer's may not be:
| Schedule | What you keep if you leave at year 2 |
|---|---|
| Immediate | 100% |
| 3-year cliff | 0% |
| 6-year graded | 40% |
Traditional or Roth
A traditional 401(k) deducts now and taxes withdrawals; a Roth 401(k) does the reverse. The deciding question is whether your tax rate in retirement will be higher or lower than today. Early-career savers with decades of growth ahead usually favour Roth; high earners near peak income usually favour traditional. Many plans allow splitting between both.
The Costs to Check
Plan administration and fund expense ratios come out of your balance whether or not returns are positive. A 1% annual fee difference costs roughly a quarter of the final balance over forty years. Look up your plan's fund lineup and pick the low-cost index options where they exist — it is the highest-value ten minutes available in personal finance.
Leaving a Job
Options are: leave it, roll it into the new employer's plan, or roll it into an IRA. A direct trustee-to-trustee rollover avoids withholding; taking the cash triggers income tax and, before 59½, an early-withdrawal penalty on top.
The Projection Behind This Page
Starting from $10,000, adding $200 a month at 7%:
| Year | Deposited | Balance | Growth | Growth on deposits |
|---|---|---|---|---|
| 1 | $12,400 | $13,201 | $801 | 6% |
| 5 | $22,000 | $28,495 | $6,495 | 30% |
| 10 | $34,000 | $54,714 | $20,714 | 61% |
| 20 | $58,000 | $144,573 | $86,573 | 149% |
The Formula
``
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) ÷ (r/n)]
└── initial principal ──┘ └────── regular contributions ──────┘
``
The second term usually dominates. On these numbers the $200 monthly contribution accounts for the larger share of the final balance, which is the practical lesson: how much you add matters more than the rate, right up until the balance gets large.