Annual contribution, employer match, tax savings and projected balance at retirement.
Pre-tax (Traditional) — Roth contributions are post-tax (use the Roth-vs-Traditional calc to compare). 2025 employee-deferral limit is $23,500. Catch-up over 50: +$7,500.
For most US workers, the 401(k) is the single largest retirement vehicle they will ever touch. The plan combines three structural advantages — pre-tax contribution (your taxable income drops by the amount you defer), employer match (a guaranteed return on the dollars that fall under the cap), and tax-deferred compounding for decades. Each of those levers individually moves the needle; together they compound multiplicatively. The hard part is that the interaction between them is not intuitive: contributing 4 % when the cap is 6 % does not just lose two percentage points of salary, it forfeits half the match, an immediate 100 %+ return on capital that you cannot recover later. A retirement calculator that surfaces the tax saving, the match captured, the match lost, and the projected balance side by side turns abstract percentages into euros and dollars and makes those interactions visible at a glance.
Three numbers feed off your salary and contribution percent. Annual contribution = salary × employee_pct ÷ 100. Employer match is conditional on a cap: matched_pct = min(employee_pct, match_cap), then employer_match = salary × matched_pct ÷ 100 × match_pct ÷ 100. The double percentage is correct — match_pct is the rate at which the employer matches each dollar (50 % means $0.50 per $1 contributed) and match_cap is the slice of salary up to which the rate applies. Tax saved this year = annual_contribution × marginal_rate ÷ 100, valid only for pre-tax (Traditional) deferrals; Roth contributions are post-tax and save taxes only at withdrawal. Projected balance at retirement uses the future value of an ordinary annuity at constant total contribution: FV = total_annual × ((1 + r)^years − 1) ÷ r, where total_annual = annual_contribution + employer_match and r = expected_return ÷ 100. When r = 0 the formula collapses to total_annual × years. Match left on the table equals salary × (match_cap − employee_pct) × match_pct ÷ 100 ÷ 100 when employee_pct < match_cap and zero otherwise — the exact dollar amount you would gain by raising your contribution to the cap.
Start with your annual gross salary. Set your contribution as a percentage of salary; if your plan deducts a flat dollar amount per paycheck, divide the annual total by salary. Set the employer match rate (the dollar-for-dollar percentage on each dollar you contribute) and the match cap (the percent of salary up to which the match applies). Most US plans publish the match as "100 % of the first 3 %, then 50 % up to 5 %" — for a single-tier approximation, use the dollar-equivalent flat match: a 100 %/3 % + 50 %/2 % schedule is equivalent to a 80 % match capped at 5 %. Add your combined federal + state marginal rate (the bracket your last dollar of income falls in, not the average), the expected annual return before fees and inflation (US large-cap historical average around 9 % nominal; conservative defaults sit at 6 – 7 %), and the years until retirement. The chart redraws the projected balance year by year so you can see the inflection point where compounding overtakes contributions — typically around year 18 to 25 for a typical earner.
A 35-year-old earning $80,000 with a 6 % contribution and a 50 % match capped at 6 % of salary, 28 % marginal rate, 7 % expected return, 30 years to retirement. Annual contribution = 80,000 × 0.06 = $4,800. Matched percent = min(6, 6) = 6, so employer match = 80,000 × 0.06 × 0.50 = $2,400. Total annual deposit = $7,200. Tax saved this year = 4,800 × 0.28 = $1,344, returned via reduced withholding or a larger refund. Future value at 7 % over 30 years: 7,200 × ((1.07)^30 − 1) ÷ 0.07 = 7,200 × 94.46 ≈ $680,000. Of that, $216,000 came from contributions and the other $464,000 is pure compounded growth — over twice the principal. Drop the rate to 6 % and the same inputs project ~$569,000; bump it to 8 % and the ending balance climbs to about $815,000. The lesson is not to chase return; it is that small differences compound enormously over thirty-year horizons, which is why low-cost index funds beat actively managed funds with higher fees so reliably over multi-decade horizons.
Vesting schedules on the match. The employer match is contingent until you vest. Cliff vesting forfeits 100 % of the match if you leave before the cliff date (typically three years); graded vesting hands over a fraction per year (commonly 20 % per year over five years). If you change jobs frequently, an unvested match is not the free money the calculator shows — model only the vested portion as actual compensation.
Per-paycheck cap vs annual true-up. Some employers match per paycheck only, capped at a per-paycheck percentage. If you front-load contributions in the first half of the year (say to free up cash flow later), you may exceed the per-paycheck cap and forfeit match dollars on those paychecks. Plans with a year-end true-up fix this automatically; plans without it do not. Read the summary plan description carefully.
Leaving the company before vesting. Closely related: an offer with a slightly higher salary at a competitor may be a worse total compensation deal if it forfeits an unvested 401(k) match worth $5,000 to $20,000. Add the unvested match to the cost of switching.
2025 IRS limits and over-50 catch-up. The 2025 employee deferral limit is $23,500 (it adjusts annually for inflation). Workers age 50 or older may add a $7,500 catch-up contribution, and SECURE 2.0 introduced a higher catch-up of $11,250 for those age 60 to 63. Going over the limit triggers double taxation on the excess unless withdrawn by April 15 of the following year. The total 415(c) limit (employee + employer combined) is $70,000 in 2025.
Mega-backdoor Roth. A subset of plans permit after-tax non-Roth contributions up to the 415(c) limit, which can then be in-service-converted to Roth. This is the "mega-backdoor" strategy — it lets a high earner park six-figure sums into Roth annually. It only works if (a) the plan permits after-tax contributions and (b) it permits in-service distributions or in-plan Roth conversions; many plans have one but not the other.
In-service distributions and rollovers. Once you leave the employer, you can roll the balance into an IRA — this opens up a wider universe of investment options and avoids high plan fees. Some plans permit in-service rollovers after age 59½ even if you are still employed.
Cliff vs graded vesting. Cliff is binary; graded is linear. Calc the present value of the unvested match as a deferred bonus when negotiating a new job — it is real compensation you have already earned that is contingent on staying.
US 401(k) vs 403(b) vs Thrift Savings Plan. The 401(k) is private-sector employer-sponsored; the 403(b) is the same vehicle for non-profit and education employees; the Thrift Savings Plan (TSP) is the federal employees' equivalent and offers some of the lowest expense ratios in the industry (single-digit basis points on the index funds). All three share the same IRS deferral limits and similar tax mechanics.
France's PER (Plan d'Epargne Retraite). Pre-tax contributions reduce taxable income up to roughly 10 % of professional income, capped at eight times the annual social-security ceiling. Funds are blocked until retirement except for limited unlocks (primary-residence purchase, severe disability, death of a spouse, end of unemployment benefits, over-indebtedness). At retirement the holder may choose between a lump sum (taxed as income on the contributions, capital-gains tax on the growth) or an annuity. The PER replaced the older PERP and Madelin contracts in 2019.
UK pension contributions. Personal contributions receive a government tax top-up at the basic rate (20 %) automatically; higher-rate taxpayers reclaim the additional 20 % via self-assessment. Many employers run salary sacrifice schemes that bypass employee National Insurance contributions, adding another 8 to 12 % efficiency. At retirement, 25 % of the pot may be taken tax-free as a lump sum; the remainder is taxed as income.
Canada RRSP. Pre-tax contributions deductible against income up to 18 % of prior-year earned income (annual cap CAD 32,490 in 2025). Tax-deferred growth, fully taxed as income at withdrawal. The Home Buyers' Plan permits up to CAD 60,000 to be borrowed from the RRSP for a first home, repaid over 15 years.