How an employer match works
Many employers add money to your 401(k) when you contribute. A common formula is “50% of what you put in, up to 6% of your salary.” If you earn $70,000 and contribute 6%, you put in $4,200 and your employer adds $2,100. Contribute less than the cap and you leave part of that match unclaimed. It's often called free money because it's an instant return on your contribution.
2026 contribution limits
- $24,500: the most you can contribute from your pay in 2026.
- $8,000 extra catch-up if you're 50 or older.
- $11,250 catch-up instead of $8,000 if you're 60 to 63.
Employer contributions don't count toward the $24,500. The calculator caps your contributions at these limits and holds them at 2026 levels, so later years may allow more as the IRS raises limits with inflation.
Example
Earning $70,000 and contributing 4% with a 50% match up to 6%, you're missing $700 of employer money this year. Raising your contribution to 6% captures the full $2,100 match.
Frequently asked questions
Traditional or Roth 401(k)?
Traditional contributions lower your taxes now and are taxed when withdrawn. Roth contributions are taxed now and come out tax-free in retirement. The growth projected here is the same for both; only the tax timing differs.
What if I'm not vested?
Employer match may vest over several years. If you leave before you're vested, you could lose some of it. Check your plan's vesting schedule.