A 401(k) plan is a powerful retirement savings tool offered by many employers in the United States. It allows employees to contribute a portion of their salary on a pre-tax basis, meaning your taxable income is reduced in the current year. Employer matching contributions, if offered, further boost your retirement savings. Understanding the annual contribution limits is crucial for maximizing your retirement nest egg.
IRS Contribution Limits
The Internal Revenue Service (IRS) sets annual limits on how much individuals can contribute to their 401(k) plans. These limits are adjusted periodically for inflation. For 2024, the maximum employee contribution is $23,000. If you are age 50 or older, you can make an additional "catch-up" contribution of $7,500, bringing your total potential contribution to $30,500.
How the Calculator Works
This calculator helps you understand your potential contribution based on your salary and current contribution rate, while also highlighting the IRS maximums. It calculates:
Your Annual Contribution: Based on your salary and the percentage you currently contribute.
Your Potential Employer Match: If your employer offers a match (e.g., 50% of contributions up to 6% of your salary), this part estimates that additional amount. This calculator simplifies by assuming a direct percentage match of your salary up to a certain limit you provide.
Your Total Potential Contribution (Employee + Match): The sum of your contribution and the estimated employer match.
Remaining Room to Max Out: It shows how much more you could contribute to reach the IRS annual employee limit.
Note: The calculator focuses on the *employee* contribution limit. Employer contributions do not count towards this limit, but there is a separate overall limit for total contributions (employee + employer) to a single plan, which is higher.
Key Inputs Explained
Your Age: This determines if you are eligible for catch-up contributions.
Your Annual Salary: The basis for calculating your percentage-based contributions.
Your Current Contribution Rate (%): The percentage of your salary you are currently having deducted for your 401(k).
Employer Match (Max % of Salary): The maximum percentage of your salary your employer will match. For example, if your employer matches 50% of your contributions up to 6% of your salary, you would enter '6' here to represent the maximum salary percentage that qualifies for *any* match. The calculator will estimate the match based on your contribution.
Example Scenario
Let's say you are 40 years old, earn an annual salary of $80,000, and are currently contributing 10% of your salary. Your employer matches 50% of contributions up to 6% of your salary.
Your Annual Contribution: 10% of $80,000 = $8,000
Employer Match Calculation: Your employer matches up to 6% of your salary. Since you are contributing 10% (which is more than 6%), your employer will match 50% of the 6% limit. So, the match is 50% of (6% of $80,000) = 0.50 * (0.06 * $80,000) = 0.50 * $4,800 = $2,400.
Total Contribution: $8,000 (yours) + $2,400 (employer) = $10,400
IRS Max Contribution Limit (for under 50): $23,000 (as of 2024)
Remaining Room to Max Out: $23,000 – $8,000 = $15,000
This calculator helps visualize these numbers and encourages you to consider contributing more if you have the capacity, especially to take full advantage of employer matches and reach the IRS limits.
function calculate401kContribution() {
// Clear previous error messages
document.getElementById('errorMessage').innerText = ";
// Get input values
var currentAge = parseFloat(document.getElementById('currentAge').value);
var annualSalary = parseFloat(document.getElementById('annualSalary').value);
var contributionRate = parseFloat(document.getElementById('contributionRate').value);
var employerMatchLimitRate = parseFloat(document.getElementById('employerMatch').value);
// — IRS Contribution Limits (as of 2024) —
var IRS_EMPLOYEE_MAX_2024 = 23000;
var IRS_CATCHUP_MAX_2024 = 7500; // Additional amount for age 50+
// — Input Validation —
if (isNaN(currentAge) || currentAge <= 0) {
document.getElementById('errorMessage').innerText = 'Please enter a valid age.';
return;
}
if (isNaN(annualSalary) || annualSalary <= 0) {
document.getElementById('errorMessage').innerText = 'Please enter a valid annual salary.';
return;
}
if (isNaN(contributionRate) || contributionRate 100) {
document.getElementById('errorMessage').innerText = 'Please enter a valid contribution rate between 0 and 100%.';
return;
}
if (isNaN(employerMatchLimitRate) || employerMatchLimitRate 100) {
document.getElementById('errorMessage').innerText = 'Please enter a valid employer match limit rate between 0 and 100%.';
return;
}
// — Calculations —
var employeeContribution = annualSalary * (contributionRate / 100);
var maxEmployeeContribution = IRS_EMPLOYEE_MAX_2024;
// Add catch-up contribution if applicable
if (currentAge >= 50) {
maxEmployeeContribution += IRS_CATCHUP_MAX_2024;
}
// Calculate the maximum possible employer match based on the provided limit rate
// Employer match is typically calculated on the employee's contribution, up to a certain percentage of salary.
// A common structure is "X% match on contributions up to Y% of salary".
// We'll assume the 'employerMatch' input is Y (the percentage of salary that qualifies for the match).
// We'll also need to consider how the employee's contribution relates to this Y%.
// For simplicity in this calculator, we'll calculate the employer's match potential if the employee contributes AT LEAST the employerMatchLimitRate.
// A more complex calculator might ask for the match *percentage* (e.g., 50%, 100%).
// Let's assume a 100% match on contributions up to the employerMatchLimitRate for demonstration.
// If employerMatchLimitRate is 6%, and salary is 80000, the max salary eligible for match is 4800.
// If employee contributes AT LEAST 6% (4800), they get a match on that amount.
// If the match rate is 50%, they get 50% of 4800 = 2400.
// This calculator needs a way to infer the match *rate*. Since it's not provided,
// we will calculate the *potential* max match based on the limit rate provided,
// assuming the employee contributes enough to get the full match.
// Let's assume a standard 50% match rate for this example calculation if not explicitly given.
// However, the prompt did not give a match RATE, only a match LIMIT RATE.
// So, let's calculate based on the LIMIT RATE provided and assume the employee is contributing enough to get the maximum possible match.
// A common employer match is "50% of employee contributions up to 6% of salary".
// This means the employer contributes 50% * (6% of Salary).
// Since we don't have the match RATE, let's calculate the maximum possible employer contribution if the employee contributes at least `employerMatchLimitRate`.
// If employerMatchLimitRate = 6%, Salary = 80000. Max salary for match = 4800.
// If we assume a 50% match rate, Max Employer Match = 0.50 * 4800 = 2400.
// Let's simplify and say the 'employerMatch' input is the *percentage of salary* the employer contributes IF the employee contributes enough.
// For instance, if employer contributes 3% of salary if you contribute 6%, you'd put 6% as employerMatch.
// Then, the employer contribution is simply employerMatchLimitRate/100 * annualSalary.
var employerContribution = 0;
if (contributionRate >= employerMatchLimitRate) {
// This assumes the employer matches the *full amount* of the employee's contribution *up to* the employerMatchLimitRate.
// A more precise calculation would involve the match *percentage* (e.g., 50%).
// Given the input constraints, we'll calculate the maximum potential employer contribution assuming the employee contributes at least the limit rate.
// For instance, if employerMatchLimitRate is 6%, and salary is $80,000, the employer *might* contribute 6% of salary ($4,800) IF the match structure is 100% on the first 6%.
// OR, if it's 50% on the first 6%, they contribute 3% ($2,400).
// LET'S REINTERPRET: The user provided 'employerMatch' as "Employer Match (Max % of Salary)". This likely means the EMPLOYER'S contribution is capped at this percentage of salary.
// E.g., If employerMatch is 3%, the employer will contribute AT MOST 3% of your salary.
// To calculate this, we need to know HOW MUCH the employee contributes.
// Let's assume the employer match is a percentage of the *employee's* contribution, up to employerMatchLimitRate * salary.
// For example, 50% match on contributions up to 6% of salary.
// If employee contributes 10% ($8000), and employerMatchLimitRate is 6% ($4800).
// Employer match = 50% of MIN(employeeContribution, employerMatchLimitRate * annualSalary). This isn't quite right.
// It's usually: Employer matches X% of employee contributions, capped at Y% of employee's salary.
// Example: 50% match, capped at 6% of salary.
// Employee contributes $8000. 6% of $80000 = $4800.
// Employer matches 50% of employee contribution. So, 50% of $8000 = $4000.
// BUT this is capped at 6% of salary ($4800). $4000 is less than $4800, so employer contributes $4000.
// If employee contributed $12000: Employer matches 50% of $12000 = $6000.
// This is MORE than the cap of $4800. So employer contributes $4800.
// Okay, this requires more inputs (match rate).
// LET'S SIMPLIFY BASED ON THE INPUTS GIVEN:
// Assume 'employerMatch' is the percentage of SALARY the employer WILL CONTRIBUTE IF the employee contributes at least that much.
// So, if employerMatch = 3, and you contribute >= 3%, employer gives 3% of your salary.
employerContribution = annualSalary * (employerMatchLimitRate / 100);
// However, employer match is usually capped by what the employee actually contributes *and* the employer match rate.
// Let's make a REASONABLE assumption: The employer matches 50% of the employee's contributions, UP TO the percentage specified by employerMatchLimitRate.
var eligibleContributionForMatch = Math.min(employeeContribution, annualSalary * (employerMatchLimitRate / 100));
employerContribution = eligibleContributionForMatch * 0.50; // Assuming a 50% match rate
} else {
// If employee contributes less than the limit rate, calculate match based on their actual contribution.
// Example: Employee contributes 4%, employer matches 50% up to 6%. Employer matches 50% of 4% = 2% of salary.
var eligibleContributionForMatch = employeeContribution; // Employee contribution is already less than the limit
employerContribution = eligibleContributionForMatch * 0.50; // Assuming a 50% match rate
}
var totalContribution = employeeContribution + employerContribution;
var remainingToMax = maxEmployeeContribution – employeeContribution;
// — Display Results —
var resultText = '$' + employeeContribution.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
var message = ";
if (employeeContribution > maxEmployeeContribution) {
resultText += ' (Exceeds IRS Limit!)';
message = 'You are currently contributing more than the IRS employee limit. Consider reducing your contribution.';
} else if (remainingToMax === 0) {
message = 'You are currently contributing the maximum allowed by the IRS for your age group!';
} else if (remainingToMax 0) {
message += ' Estimated Employer Match: $' + employerContribution.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + '.';
}
document.getElementById('contributionResult').innerText = resultText;
document.getElementById('underlyingMessage').innerText = message;
}