How the 2026 IRS 401(k) contribution limit is applied
Each projected year the calculator works out what you asked to contribute, which is that year's salary multiplied by your employee contribution percentage, and compares it against the IRS elective deferral limit. The 2026 limit is 24,500 dollars for employees under 50. If your requested amount is higher, the year's contribution is reduced to the limit and the result panel tells you how many years were capped, so a high contribution percentage on a high salary does not silently overstate the projection.
Catch-up contributions are handled by age, not by a checkbox. From age 50 the limit rises by 8,000 dollars, and for the four years from age 60 to 63 the SECURE 2.0 higher catch-up of 11,250 dollars applies instead. The calculator reads the age you reach in each projected year and switches automatically, so a projection that starts at 45 steps up at 50, steps up again from 60 to 63, then returns to the 50 and over catch-up at 64.
Because the IRS adjusts these limits for cost of living, holding them at the 2026 figures for a thirty year projection would understate how much you can defer later on. The calculator indexes the limit forward using the inflation rate you enter. At 3 percent inflation the 24,500 dollar limit grows to roughly 32,900 dollars after ten years and roughly 44,200 dollars after twenty. Real IRS limits move in round increments and are announced one year at a time, so treat the indexed figure as an approximation rather than a published number.
A worked projection: 75,000 dollar salary, 10 percent contribution, 4 percent match
Take the default scenario: age 30 today, retiring at 65, a current 401(k) balance of 25,000 dollars, a salary of 75,000 dollars growing 3 percent a year, an employee contribution of 10 percent, an employer match of 100 percent capped at 4 percent of salary, an expected return of 7 percent, and inflation of 3 percent. In year one you contribute 7,500 dollars, the employer adds 3,000 dollars, and the starting balance grows to 37,250 dollars. Nothing is capped, because 7,500 dollars is well under the 24,500 dollar deferral limit.
By the final year the salary has grown to about 204,900 dollars, your own contribution is about 20,500 dollars, and the match is about 8,200 dollars. Across the full 35 years you put in about 453,500 dollars, the employer adds about 181,400 dollars, and with the 25,000 dollar opening balance the total money paid in is about 659,900 dollars. The projected balance at 65 is about 2,330,900 dollars, which means roughly 1,671,000 dollars of that total is investment growth rather than contributions.
The same panel shows the real purchasing power of that balance in today's money: about 828,400 dollars. The 4 percent rule figure is about 7,770 dollars a month, quoted from the nominal balance, which is worth about 2,760 dollars a month in today's terms. Both numbers describe the same portfolio, so read them together rather than picking whichever is more comfortable.
How the employer match is calculated
Two separate inputs describe a match. The match rate is how many cents the employer adds per dollar you contribute, and the match limit is the share of your salary they will match up to. The calculator takes the smaller of your own contribution and salary times the match limit, then multiplies that by the match rate. With 100 percent up to 4 percent of a 75,000 dollar salary, contributing 10 percent gives the full 3,000 dollars, and contributing only 3 percent would give 2,250 dollars, leaving 750 dollars unclaimed in year one alone.
Match formulas vary more than people expect, and the difference compounds. Switching the worked example from 100 percent up to 4 percent to 50 percent up to 6 percent, with your own contribution unchanged at 10 percent, drops the employer total from about 181,400 dollars to about 136,000 dollars and the balance at 65 from about 2,330,900 dollars to about 2,183,500 dollars. Removing the match entirely leaves about 1,741,200 dollars, roughly 590,000 dollars less than the matched projection.
The employer match is not counted against the elective deferral limit, because that limit applies only to your own salary deferrals. The calculator follows that rule, so a capped year caps your contribution and still adds the full match on top. It does not apply the section 415(c) cap on combined employee and employer contributions, so a deliberately extreme match rate will produce a total the IRS would not actually permit.
Nominal balance, real purchasing power, and the 4 percent rule
The nominal balance is the number of future dollars in the account. The real balance divides that by compounded inflation, answering a different question: what those dollars would buy at today's prices. In the worked example, 35 years at 3 percent inflation means a future dollar buys about 36 cents of what a dollar buys now, which is why 2,330,900 dollars becomes 828,400 dollars in real terms. The growth chart plots both lines so the gap is visible rather than hidden in one end figure.
The estimated monthly income line takes the nominal balance, multiplies it by 0.04, and divides by twelve. It summarises the guideline that a first year withdrawal of 4 percent, adjusted for inflation afterwards, gives a portfolio a reasonable chance of lasting three decades. It does not model sequence of returns, changing spending, or other income sources.
Two things about that figure are easy to misread. It is quoted from the nominal balance, so it is in future dollars and looks larger than its real spending power, and it is a pre-tax number. A traditional 401(k) withdrawal is taxed as ordinary income in the year you take it, so what you can actually spend depends on your retirement bracket.
Which input changes the outcome most
Contribution rate is the lever you control directly. Raising the worked example from 10 percent to 12 percent adds about 295,000 dollars to the nominal balance and about 105,000 dollars in real terms, for roughly 125 dollars a month more out of the first year's paycheck. The employer match does not move, because 10 percent already clears the 4 percent match cap, so every extra dollar is your own.
Time and return rate move the result more than contribution rate does. Starting the same plan at 40 instead of 30, with the same salary, contribution, and match, produces about 1,010,800 dollars rather than 2,330,900 dollars, less than half the balance for ten fewer years of compounding. Dropping the expected return from 7 percent to 5 percent, with everything else unchanged, gives about 1,556,500 dollars. The return rate is an assumption rather than a decision, which is a good reason to run the projection two or three times across a plausible range instead of trusting one number.
Every figure here is a projection built on the rates you enter. Actual outcomes depend on market returns, future contribution limits, plan fees, vesting, job changes, and taxes, none of which follow a smooth annual rate.