Project your 401(k) balance growth with annual contributions, employer match, and compounding returns.
Each year, your contribution plus your employer's match is added to your balance, and the whole balance grows at your expected annual return. This compounding effect is why starting early matters more than the exact contribution amount.
Illustrative estimate only, using simplified/rounded 2026 figures — not tax advice. Actual federal, state, and payroll tax rules are more detailed. Always confirm with the IRS or a licensed tax professional.
A 401(k) grows from two separate sources: what you contribute and what the market returns on it, compounded every year you stay invested. For 2026 the IRS raised the employee contribution limit to $24,500 (up from $23,500 in 2025), and workers age 50 and older can add a further $8,000 catch-up, for a total of $32,500. Employer matching sits on top of those limits and does not count against your personal cap, which is why leaving a match unclaimed is effectively turning down free salary.
Two levers matter more than people expect: starting early and not touching the account. Because growth compounds on prior growth, a decade of head start typically outweighs a much larger contribution made later. Cashing out or taking a loan against the balance interrupts that compounding and, for early withdrawals before age 59½, usually triggers income tax plus a 10% penalty on top.
Traditional 401(k) contributions reduce your taxable income for the year you make them; tax is paid later on withdrawal in retirement. A Roth 401(k) works the opposite way — contributions are taxed now, but qualified withdrawals in retirement are tax-free. Many employers let you split contributions between both.
A common structure is 50% of the first 6% of salary contributed, or a straight dollar-for-dollar match up to some percentage. Because the match is essentially an instant, guaranteed return, most advisors treat contributing at least enough to capture the full match as the first priority before other savings goals.
The balance is yours to keep. Typical options are leaving it with the former employer's plan if allowed, rolling it into the new employer's 401(k), or rolling it into an IRA. A direct rollover avoids triggering tax; cashing out instead does not.
It projects growth from your contribution rate, employer match, and an assumed annual return. Actual net growth is also affected by fund expense ratios and any plan administration fees, which vary by employer and fund choice and are worth checking in your plan's fee disclosure.