401k Calculator

A 401k is an employer-sponsored retirement savings plan that allows you to contribute pre-tax dollars from your paycheck. The money grows tax-deferred until you withdraw it in retirement, and many employers offer matching contributions.

At minimum, contribute enough to get your full employer match - it's free money! Financial advisors often recommend saving 10-15% of your income for retirement. For 2025, the maximum is $23,500 (under 50) or $31,000 (50+).

You have several options: (1) Leave it with your old employer, (2) Roll it over to your new employer's 401k, (3) Roll it into an IRA, or (4) Cash it out (not recommended due to taxes and penalties).

Yes, but withdrawals before age 59½ typically incur a 10% penalty plus income tax. Exceptions exist for hardship, disability, medical expenses, first-time home purchase, or separation from service after age 55.

Traditional 401k: Pre-tax contributions, taxed on withdrawal. Roth 401k: After-tax contributions, tax-free withdrawals in retirement. Traditional is better if you expect lower taxes in retirement; Roth is better if you expect higher taxes.

Required Minimum Distributions (RMDs) must begin at age 73 (72 if you reached 72 before Dec. 31, 2022). The penalty for not taking RMDs is 50% of the amount you should have withdrawn.

Common matching formulas: "50% match up to 6%" means if you contribute 6% of your salary, your employer adds 3%. "Dollar-for-dollar up to 3%" means they match 100% of your first 3% contributed.

Many plans allow loans of up to 50% of your vested balance or $50,000, whichever is less. You typically must repay within 5 years with interest. If you leave your job, the loan may become due immediately.