This calculator gives estimates for education and planning. It is not investment, tax or legal advice; for decisions about your own situation, talk to a qualified financial professional.
Free money in your 401(k)
Many employers add money to their workers’ 401(k) or 403(b) accounts when the workers contribute themselves. This employer match is part of your pay, and not contributing enough to get all of it is like turning down a raise. A match of 50% gives you an instant 50% return on every matched dollar, before any investment growth.
How matches are calculated
A match formula has a rate and a limit:
- 50% up to 6%: your employer adds 50 cents for every dollar you contribute, on contributions up to 6% of your salary.
- 100% up to 4%: dollar for dollar, up to 4% of salary.
- Safe harbor: 100% of the first 3% plus 50% of the next 2%, enter it as two tiers.
To get the full match, contribute at least the share of salary the formula covers.
Example
With a salary of $80,000, contributing 4% under a 50% match up to 6%:
- Your contribution: $3,200 a year
- Employer match: 50% × 4% × $80,000 = $1,600
- Full match available at 6%: $2,400, so you miss $800 a year
- Contributing 6% would cost you $1,600 more and bring $800 more from your employer
Over 30 years at a 6% return, $800 a year grows to more than $60,000.
Things to check in your plan
- Vesting: your contributions are always yours, but employer money may vest over 2 to 6 years. Leaving early can mean losing part of it.
- True-up: if you hit the annual limit early in the year, some plans stop matching for the remaining pay periods unless they make a true-up contribution.
- Limits: the employee contribution limit is $24,500 in 2026, plus catch-up contributions from age 50. Employer contributions count toward a higher overall limit.
- Roth or traditional: matches go into the pre-tax side of the plan by default, although plans may now allow Roth matches.
Priorities
A common order is: contribute enough to get the full match, pay off high-interest debt, build an emergency fund, then increase retirement contributions toward 15% of income.