401(k) Calculator

At minimum, contribute enough to get the full employer match since that is essentially free money. Ideally, aim for 15-20% of your gross income including employer contributions. The IRS contribution limit for 2024 is $23,000 for those under 50 and $30,500 for those 50 and older with catch-up contributions.

An employer match means your company contributes additional money to your 401(k) based on your own contributions. A common structure is 50% match on the first 6% of salary you contribute. So if you earn $80,000 and contribute 6% ($4,800), your employer adds $2,400. Not taking the full match is leaving compensation on the table.

Traditional 401(k) contributions are pre-tax, reducing your current taxable income, but withdrawals in retirement are taxed as ordinary income. Roth 401(k) contributions are after-tax, but qualified withdrawals in retirement are tax-free. If you expect to be in a higher tax bracket in retirement, Roth may be better. If you are in a high bracket now, Traditional may save more.

You have several options: leave it with your old employer, roll it over to your new employer 401(k), roll it into a Traditional IRA, or cash it out (not recommended due to taxes and penalties). Rolling over to an IRA often provides more investment choices and lower fees. Unvested employer contributions may be forfeited depending on your vesting schedule.