Frequently asked questions
How does employer matching work?
Your employer contributes additional money based on what you put in. A '50% match up to 6%' means if you contribute 6% of salary, they add 3% (half of your 6%). You should always contribute at least enough to get the full match. It's an immediate 50-100% return on that portion of your contribution.
What is the 401(k) equivalent outside the US?
Many countries have similar employer-sponsored retirement accounts: the UK has workplace pensions (with auto-enrolment), Canada has RRSPs and PRPPs, Australia has Superannuation (mandatory employer contributions), and India has EPF/PPF. The concept of tax-advantaged employer-matched retirement savings is widespread globally.
Should I contribute more than the employer match limit?
Usually yes. Contributing beyond the match still gives you tax-deferred growth. Many financial planners suggest 10-15% of salary total (including the match). Max out the match first (it's free money), then increase your rate as your budget allows.
What happens to my 401(k) if I change jobs?
You always keep your own contributions and their gains. Employer contributions may be subject to a vesting schedule (typically 3-6 years for full vesting). When you leave, you can roll the balance to an IRA or your new employer's plan without tax penalties.
How does salary growth affect my projections?
If your salary grows 3% yearly, your dollar contributions automatically increase even at the same percentage rate. Over 25 years, this compounds significantly. A 3% salary growth roughly doubles your annual contribution by the end, which can add 30-50% to your final balance versus flat contributions.
Does this account for contribution limits?
Yes. The calculator caps your annual employee contributions at the IRS limit you set (default $23,500 for 2024). Once you reach catch-up age (default 50), an additional catch-up amount is added to your limit. The calculator will warn you if your contributions hit the cap.