Purpose and steps
Employee contribution = min(eligible salary × contribution rate, entered annual limit). Employer match = min(actual employee contribution, salary × match cap) × match percentage. Project equal year-end totals forward. The calculation runs locally and keeps cash-flow timing consistent with the stated assumptions.
- Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
- Prepare Annual eligible compensation, Employee contribution rate, Employer match per contributed dollar, Matched compensation percentage cap, Employee annual limit (2026 base: $24,500), Current age, Retirement age, Current account balance, Expected annual return. Defaults demonstrate the model rather than your personal circumstances.
- Check the headline result and its components. A key interpretation for this tool is: The $24,500 default is the IRS 2026 base employee limit, not a limit for all ages or future years.
- Compare the baseline with a changed scenario: Matching uses actual capped deferrals; an unrealized contribution request earns no extra match.
Input reference and units
These values reproduce the model’s demonstration. Replace them with your own records or measurements; they are not recommended targets.
On a small screen, swipe the table horizontally to see all columns.
| Parameter | Demonstration value | How to enter it |
|---|---|---|
| Annual eligible compensation | 80000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Employee contribution rate | 10 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Employer match per contributed dollar | 50 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Matched compensation percentage cap | 6 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
| Employee annual limit (2026 base: $24,500) | 24500 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Current age | 30 age | Use completed years of age; this is not a duration field. |
| Retirement age | 65 age | Use completed years of age; this is not a duration field. |
| Current account balance | 20000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Expected annual return | 7 % | A scenario assumption, not a promised investment yield; also test a lower return. |
Model-specific method
How this calculator produces its result
Employee contribution = min(eligible salary × contribution rate, entered annual limit). Employer match = min(actual employee contribution, salary × match cap) × match percentage. Project equal year-end totals forward.
Geometric growth and a stream of contributions
Compound growth multiplies the previous balance, including earlier interest, by the next period’s growth factor. The contribution term is another geometric sum: the first deposit compounds for longer than the last. It applies only to equal deposits and a constant rate; growing contributions require a different sum or period-by-period simulation.
A nominal rate compounded m times per year has effective annual growth (1+j/m)^m−1. An already effective annual return converts to a monthly rate as (1+g)^(1/12)−1. These are different conventions, so use the one specified by the tool. A constant return model says nothing about volatility or sequence-of-returns risk.
FV = P(1+r)^n FV of end-period deposits = C × ((1+r)^n − 1)/r Beginning-period deposits multiply the deposit term by (1+r)
- P: initial amount
- C: equal contribution per period
- r: growth rate for that period
- n: periods, with contributions and growth on the same schedule
Worked example
On $80,000 eligible pay, contributing 10% gives $8,000. A 50% employer match on the first 6% of salary matches $2,400, for a combined $10,400 annual contribution before plan-specific restrictions.
Reproduce the default scenario
This is a separate example, calculated using the exact engine on the tool page and the defaults in the input reference above. Health examples use metric units. Displayed rounding may differ from intermediate precision.
- Annual employee + employer contribution
- 10,400 USD
- Capped employee contribution
- 8,000 USD
- Employer match estimate
- 2,400 USD
- Monthly employee contribution
- 666.67 USD
- Actual employee / salary rate
- 10%
- Projected retirement account balance
- 1,651,195.16 USD
- Projected growth
- 1,267,195.16 USD
- Extra employee contribution for full match
- 0 USD
Reading results without overstating them
- The $24,500 default is the IRS 2026 base employee limit, not a limit for all ages or future years.
- Matching uses actual capped deferrals; an unrealized contribution request earns no extra match.
Assumptions and exclusions
- Adjust the employee limit for applicable catch-up and plan rules. IRS 2026 catch-up is generally $8,000 at age 50+, with $11,250 for ages 60–63 in eligible plans. Combined contribution and compensation caps, vesting and Roth eligibility are not enforced; future limits and salary are held constant.
Sources and content notes
Toolify describes the implemented algorithm and its assumptions. Sources below support the topic or applicable rules; they do not endorse this calculator. Examples are illustrative, and published rules take precedence over simplified estimates.
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