401(k) Contribution Impact Calculator

See how 401(k) contributions affect your take-home pay and project your retirement savings. Understand your tax savings, employer match, and the real cost of contributing.

Paycheck Impact (Monthly)

Your 401(k) Contribution
$708
Employer Match(free money)
+$213
Tax Savings(lower taxes)
+$222
Net Take-Home Reduction(actual cost to you)
$487
Monthly Take-Home (with 401k)
$4,803
Monthly Take-Home (without)
$5,290

Retirement Projection

Years Until Retirement
35
Annual Contribution (you)
$8,500
Annual Employer Match
+$2,550
Annual Tax Savings
$2,661
Total Contributions(over 35 years)
$411,750
Investment Growth
$2,014,312
Projected Balance at Retirement
$2,426,062

401(k) Balance Growth Over Time

Total BalanceTotal Contributions

See your complete retirement picture

Contributing $708/month could grow to $2,426,062 by retirement. Model this alongside your full financial life in the simulator.

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How 401(k) Contributions Affect Your Paycheck

One of the most common misconceptions about 401(k) contributions is that they reduce your paycheck dollar-for-dollar. In reality, because traditional 401(k) contributions are pre-tax, every dollar you contribute reduces your taxable income, which means you pay less in federal and state income taxes.

For example, if you earn $85,000 and are in the 22% federal tax bracket with a 5% state income tax, each $100 you contribute to your 401(k) only reduces your take-home pay by about $73. The remaining $27 comes from tax savings. The higher your tax bracket, the less each dollar of contribution actually costs you.

Your Contribution100%
Actual Take-Home Reduction73%
Tax Savings27%

Understanding Employer Matching

Employer matching is the single biggest incentive to contribute to your 401(k). When your employer offers a match, they are literally giving you free money — but only if you contribute enough to receive it.

Common employer matching formulas include:

Dollar-for-Dollar Match

Your employer matches 100% of your contributions up to a certain percentage of your salary. For example, 100% match on the first 3% means if you contribute 3% of your salary, your employer contributes another 3%.

50 Cents on the Dollar

Your employer matches 50% of your contributions up to a certain percentage. For example, 50% match on the first 6% means if you contribute 6%, your employer adds 3%.

Tiered Matching

Some employers match at different rates for different contribution levels. For example, 100% on the first 3% and 50% on the next 2%.

At minimum, always contribute enough to capture your full employer match. Not doing so is equivalent to declining part of your compensation.

401(k) Contribution Limits for 2025

The IRS sets annual limits on 401(k) contributions. For 2025, the limits are:

$23,500

Under 50 limit

$7,500

Catch-up (50+)

$70,000

Total limit

These limits apply to the combined total of your traditional and Roth 401(k) contributions. Employer matching contributions do not count toward your employee limit but do count toward the total limit.

Roth 401(k) vs Traditional 401(k)

Traditional 401(k)

  • Pre-tax contributions reduce current taxable income
  • Pay income tax on withdrawals in retirement
  • Better if you expect a lower tax bracket in retirement
  • Employer match always goes here

Roth 401(k)

  • After-tax contributions — no upfront tax break
  • Withdrawals in retirement are completely tax-free
  • Better if you expect a higher tax bracket later
  • Tax diversification in retirement

Many financial advisors recommend a mix of both to provide tax diversification in retirement — giving you the flexibility to manage your taxable income by choosing which account to withdraw from.

See How Your 401(k) Fits Into Your Full Financial Plan

This calculator shows your 401(k) impact in isolation. Trajectoryy's full simulator models your 401(k) alongside your income, taxes, expenses, savings, investments, debt, and more — giving you the complete picture of your financial future.

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Frequently Asked Questions

How much does a 401(k) contribution actually reduce my paycheck?
A 401(k) contribution reduces your paycheck by less than the full contribution amount because it also lowers your taxable income. For example, if you contribute $500/month and you're in the 22% federal tax bracket with a 5% state tax, your actual take-home pay reduction is about $365/month — the remaining $135 comes from tax savings. The higher your tax bracket, the smaller the real cost of contributing.
What is the 401(k) contribution limit for 2025?
For 2025, the annual 401(k) employee contribution limit is $23,500 for those under 50. If you are 50 or older, you can contribute an additional $7,500 in catch-up contributions, bringing your total to $31,000. The total contribution limit (employee + employer) is $70,000 ($77,500 if 50+). These limits apply to traditional and Roth 401(k) contributions combined.
How does employer matching work?
Employer matching means your company contributes additional money to your 401(k) based on your own contributions. A common match formula is '50% of the first 6% of salary' — if you earn $80,000 and contribute 6% ($4,800), your employer adds 50% of that ($2,400). This is essentially free money. If you don't contribute enough to get the full match, you're leaving compensation on the table.
Should I max out my 401(k)?
Whether to max out your 401(k) depends on your financial situation. At minimum, contribute enough to get your full employer match — anything less is leaving free money on the table. Beyond that, maxing out your 401(k) is generally a good idea if: you're in a high tax bracket (bigger tax savings), you have no high-interest debt, you have an adequate emergency fund, and you can maintain your lifestyle. Use this calculator to see the actual paycheck impact.
What is the difference between Traditional and Roth 401(k)?
A Traditional 401(k) uses pre-tax dollars — contributions reduce your current taxable income, but withdrawals in retirement are taxed as ordinary income. A Roth 401(k) uses after-tax dollars — no upfront tax break, but withdrawals in retirement are completely tax-free. The Traditional 401(k) is generally better if you expect to be in a lower tax bracket in retirement. The Roth is better if you expect to be in a higher bracket later, or if you want tax-free income in retirement.
How much will my 401(k) be worth at retirement?
Your 401(k) balance at retirement depends on four factors: how much you contribute annually, your employer match, your investment returns, and how many years you have until retirement. With compound interest, time is the most powerful factor. For example, contributing $500/month with an 8% annual return from age 30 to 65 would grow to approximately $1.1 million — even though you only contributed $210,000. Use the calculator above for your personalized projection.
What happens to my employer match if I leave my job?
Employer matching contributions are often subject to a vesting schedule — a timeline that determines when you fully own the matched funds. Common vesting schedules include immediate vesting (you own matches right away), cliff vesting (0% until a certain date, then 100%), or graded vesting (gradual increase over 3-6 years). Your own contributions are always 100% vested immediately.

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