An employer match is pay you only receive if you contribute. The formula is usually a percent of what you put in, up to a percent of your salary. Contribute less than that cap and the missing match is gone for the year. It does not come back.
How “50 percent up to 6 percent” actually works
The default formula adds fifty cents for each dollar you contribute, until your contribution reaches 6 percent of pay. Contribute 6 percent and the employer adds 3 percent of salary. Contribute 3 percent and the employer adds 1.5 percent. Contribute 10 percent and the match still stops at 3 percent of pay.
The “left on the table” figure is the match you miss this year by sitting below that cap. On a $95,000 salary, dropping from 6 percent to 3 percent cuts the employer’s addition from $2,850 to $1,425. That is the cost of the lower deferral, before any investment return.
The employee cap is not the match
This calculator uses the 2024 employee deferral limit of $23,000. Catch-up contributions after age 50 are not included. Employer money does not count toward that employee cap. At ordinary salaries the overall limit on employer plus employee contributions is not what stops the match.
If your plan matches a flat dollar amount rather than a percent of pay, set the match percent and the “up to” percent so this year’s employer dollar amount matches your plan statement. The formula here is a percent of pay.
The full match is the minimum, not the plan
Collect the match before you send extra money to a taxable account. It is an immediate return that the market does not have to deliver. Whether the match alone is enough for retirement is a different question. The retirement planner is the place to test that.
A Roth 401(k) option changes the tax treatment of your deferral, not the match math. The match itself is usually pre-tax. Salary growth raises both your contribution and the match if you keep the same percent of pay. A flat dollar deferral falls behind as pay rises.
How to use the 401(k) match calculator
The employer match is part of your pay. The “left on the table” figure is the match you miss this year by contributing less than the percent the plan will match. The projected balance includes your deferrals, the match, and growth, with salary rising each year. Employee deferrals stop at the annual cap even if the percent of pay would be higher.
- Enter your salary and the percent you defer into the 401(k).
- Enter the match the way the plan states it: a percent of your contribution, up to a percent of pay.
- Add the current balance, a return, and how long you will keep contributing.
- Check the match left on the table before you look at the 25-year balance.
How the math works
How a match is calculated
A typical formula, and the default here, is 50% of what you contribute, on the first 6% of salary. Contribute 6% and the employer adds 3% of pay. Contribute 3% and the employer adds 1.5%. Contribute 10% and the match still stops at 3% of pay.
The employee cap
The calculator uses the 2024 employee deferral limit of $23,000. Catch-up contributions after age 50 are not included. Employer money does not count toward that employee cap.
Growth
Both your contribution and the match are invested monthly. Salary, and therefore both contributions, rise by the growth rate you set. The return compounds monthly.
A $95,000 salary and a 50% match up to 6%
The defaults defer 6% of pay, start from a $42,000 balance, earn 7%, and grow the salary 3% a year for 25 years.
This year you put in $5,700 and your employer adds $2,850. Nothing is left on the table. Over 25 years you contribute about $208,000, your employer adds about $104,000, and the balance grows to about $999,000.
Terms worth knowing
- Elective deferral
- The part of your paycheck you choose to put in the 401(k).
- Match
- Money the employer adds, usually based on how much you defer.
- Left on the table
- Match dollars available this year that you do not receive because your deferral is below the matched percent.
- Deferral limit
- The annual cap on employee contributions. This tool uses $23,000 for 2024.
What to do with the number
Contribute at least enough to get the full match before you send extra money to a taxable account.
If you drop from 6% to 3% on the default salary, the employer adds $1,425 instead of $2,850. That $1,425 is gone for the year.
Raise the deferral when you get a raise so the dollar amount does not stall.
A Roth 401(k) option changes the tax treatment, not the match math. The match itself is usually pre-tax.
Questions people ask
What this leaves out
The 2024 employee deferral limit is $23,000. Catch-up contributions are not included.
The match formula is a percent of your contribution, capped at a percent of salary.
Salary rises once a year at a constant rate.
The return is constant, and the money stays invested for the full period.
These figures are estimates to help you understand the tradeoff. They are not tax, legal, insurance, or investment advice. A fiduciary can look at the same numbers in the context of the rest of your plan.