What is the maximum 401(k) contribution limit for 2026?

For the 2026 tax year, the IRS employee elective deferral limit is $24,500 for workers under age 50 (IRS Notice 2025-84). Workers aged 50 and older can contribute an additional $8,000 standard catch-up contribution (totaling $32,500). Under SECURE 2.0 Act § 109, workers aged 60, 61, 62, and 63 qualify for an enhanced catch-up limit of $11,250 (totaling $35,750). The overall combined limit for both employee elective deferrals and employer matching contributions under IRC § 415(c) is $72,000.

How does an employer 401(k) match work?

An employer match is additional money contributed by your employer based on your elective contributions. A common structure is "50% of the first 6%." If you earn $100,000 and contribute 6% ($6,000), your employer contributes 50% of that amount ($3,000). If you contribute 10%, the employer match remains capped at 3% ($3,000). Employer matching contributions do not count against your $24,500 elective deferral limit, but they do count toward the overall $72,000 annual additions limit.

Does a 401(k) compound monthly or annually?

In practice, 401(k) accounts compound continuously or daily based on the underlying mutual funds, index funds, or ETFs held inside the plan. Because employee payroll contributions and employer matches occur each pay period (typically bi-weekly or monthly), standard retirement projection models assume monthly compounding of deposits and investment gains.

What happens to my employer match if I leave my job before vesting?

Your personal contributions always belong to you 100% immediately. However, employer matching dollars are subject to your company's vesting schedule (either cliff vesting where 100% vests after 1 to 3 years, or graded vesting where 20% vests per year over 2 to 6 years). Any unvested employer contributions are forfeited back to the company plan if you terminate employment before vesting requirements are met.

Can I contribute to both a 401(k) and a Roth IRA in the same year?

Yes. You can maximize both a 401(k) ($24,500 in 2026) and a Roth or Traditional IRA ($7,500 in 2026, or $8,600 if age 50+) simultaneously, assuming your modified adjusted gross income (MAGI) meets IRS Roth IRA eligibility thresholds. Contributions to a 401(k) do not reduce your allowable IRA contribution limit.

What is the penalty for withdrawing from a 401(k) before age 59½?

Early distributions taken before age 59½ are generally subject to ordinary federal and state income taxes plus a mandatory 10% IRS early withdrawal penalty. Statutory exceptions include IRS Rule of 55 (separating from service during or after the calendar year you turn 55), total and permanent disability, qualified domestic relations orders (QDRO), or qualified birth and adoption expenses.

2026 Statutory Rates Primary Source Verified Always 100% Free

401(k) Calculator (2026)

Project your retirement savings balance, employer match velocity, and compound investment returns with verified 2026 IRS elective deferral limits.

Quick Answer: A 401(k) retirement plan compounds wealth through pre-tax or Roth payroll deferrals and tax-deferred investment returns, often accelerated by an employer matching contribution. Under IRS Notice 2025-84 guidelines for 2026, the standard employee elective deferral limit is $24,500 (with an additional $8,000 catch-up for workers aged 50 and older, or $11,250 for workers aged 60 to 63 under SECURE 2.0 § 109). Total combined additions from employee and employer under IRC § 415(c) cannot exceed $72,000. Assuming an initial balance of $25,000, an $80,000 annual salary with a 6.0% employee contribution ($400.00/month) and a 50% employer match up to 6% of salary ($200.00/month), compounded monthly at a 7.0% annual return over a 35-year horizon, your total employee contributions equal $168,000.00, employer match equals $84,000.00, and compound investment growth generates $1,091,286.56, creating a total retirement portfolio of exactly $1,368,286.56.

Salary & Contribution Strategy

Current 401(k) Balance Existing invested balance

Annual Gross Salary Base gross compensation

Employee Contribution Rate Percentage of salary contributed

Employer Matching Formula e.g. Matches 50% up to 6% of salary

Match Rate

Salary Cap

Annual Expected Return Historical S&P 500 average is ~7–10%

Years Until Retirement Investment horizon

yrs

Annual Salary Increase (Optional) Expected annual pay raise

Projected 401(k) Nest Egg

2026 IRS Rules

Total Projected Balance at Retirement $0 Compounded monthly over your investment horizon

Your Contributions $0

Employer Match $0

Compound Growth $0

Annual Limit Status Within Limit

Portfolio Composition 0% from growth

Your Pay Company Match Investment Return

View Year-by-Year Growth Table

Year	Salary	You Contributed	Match Added	Annual Growth	Ending Balance

Primary Source Verified Last reviewed: October 2026

Calculation Methodology: 401(k) Calculator (2026)

Mathematical Formula

FV = PV · (1 + r)^n + PMT · [((1 + r)^n - 1) / r]

FV = Future retirement portfolio balance
PV = Initial existing 401(k) balance
PMT = Total monthly contribution (Employee elective deferral + Employer matching contribution)
r = Monthly periodic return rate (Annual expected return ÷ 12)
n = Total investment compounding periods (Years to retirement × 12)
Statutory Limits: Employee contributions capped at $24,500/year ($32,500 if age 50+, $35,750 if ages 60–63). Combined employee and employer contributions capped at $72,000/year (IRC § 415(c)).

Verified Worked Example (Benchmark)

Benchmark Parameters: Starting Balance = $25,000.00 · Annual Salary = $80,000.00 · Employee Contribution = 6.00% ($4,800.00/year or $400.00/month) · Employer Match = 50% match up to 6% of salary ($2,400.00/year or $200.00/month) · Annual Expected Return = 7.00% · Investment Horizon = 35 Years (420 months).

Monthly Periodic Interest Rate (r): 0.07 ÷ 12 = 0.0058333333.
Total Compounding Periods (n): 35 years × 12 = 420 months.
Total Employee Contributions: $4,800.00/year × 35 years = $168,000.00.
Total Employer Match: $2,400.00/year × 35 years = $84,000.00.
Total Portfolio Growth: Total ending balance minus starting balance and total contributions ($1,368,286.56 - $25,000.00 - $168,000.00 - $84,000.00) = $1,091,286.56.
Total Ending Portfolio Balance: Compounded initial balance ($25,000) + monthly contributions ($600.00/month) compounded over 420 months = $1,368,286.56.

Verification: Recomputed by running the deployed engine with $25k balance, $80k salary, 6% employee contribution, 50% employer match up to 6%, 7% annual return over 35 years. Yields employee $168,000.00, match $84,000.00, growth $1,091,286.56, total $1,368,286.56.