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Retirement Contribution Effects on Your Paycheck Calculator

An employer-sponsored retirement savings account could be one of your best tools for creating a secure retirement. It provides two important advantages. First, all contributions and earnings are tax-deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to your account, which can range from 0% to 100% of your contributions. Use this calculator to see how increasing your contributions to a 401(k), 403(b) or 457 plan can affect your paycheck as well as your retirement savings. This calculator uses the withholding schedules, rules and rates from IRS Publication 15.

Retirement Contribution Effects on Your Paycheck Calculator Definitions

Retirement savings current
This is the percentage of your annual salary you contribute to your retirement plan each year. While your plan may not have a deferral percentage limit, this calculator limits deferrals to 75% to account for FICA (Social Security and Medicare) taxes. This rule may not apply to all plans.
Retirement savings new
This is the new percentage of your annual salary you would like to compare your current contributions to. While your plan may not have a deferral percentage limit, this calculator limits deferrals to 75% to account for FICA (Social Security and Medicare) taxes. This rule may not apply to all plans.
Gross pay
This is your gross pay, before any deductions, for the pay period. Please enter a dollar amount from $1 to $1,000,000.
Pay period
This is how often you are paid. Your selections are:
  • Weekly (52 paychecks per year)
  • Every other week (26 paychecks per year)
  • Twice a month (24 paychecks per year)
  • Monthly (12 paychecks per year)
  • Annually (1 paycheck per year).
Filing status
This is your income tax filing status. The choices are "Single" and "Married." Choose "Married" if you are married or file as "head of household." Choose "Single" if you file your taxes as a single person or if you are married but file separately.
Number of allowances
When your Federal income tax withholding is calculated, you are allowed to claim allowances to reduce the amount of the Federal income tax withholding. The number of allowances you should claim depends largely on the number of dependents you have and your itemized deductions. This calculator allows from 0 to 99 allowances.
State and local taxes
This is the percentage that will be deducted for state and local taxes. **TAX_STATE_ALLOWANCE_DEFINITION** Please note, this calculator can only estimate your state and local tax withholding. The tax rate displayed is an assumption that may or may not be relevant to your situation.
Pre-tax deductions
Enter any payroll deductions made by your employer that are made with pre-tax income. This might include your health insurance, life insurance among other pre-tax deductions.
Post-tax deductions
Enter any payroll deductions made by your employer that are made with after-tax income.
Post-tax reimbursements
Enter any reimbursements made by your employer that are after-tax.
Expected annual salary change
The expected annual increase in your salary. We use this to project future contributions and matches to your savings plan.
Year-to-date income
Your current year gross earnings that were subject to FICA taxes (Social Security tax and Medicare tax). This total should not include the current payroll period or any income from other sources or employers. We use this amount to determine if you are required to have Social Security tax or additional Medicare tax withheld for the current payroll period. Typically, this is your gross earnings minus employer paid health insurance and any Flexible Spending Account (FSA) contributions. In 2019, year-to-date earnings is not required or used for incomes under $132,900 per year, or if your current year-to-date earnings plus your current payroll does not exceed $132,900.
Social Security tax
**TAX_SOCIAL_SECURITY_MAX** Please note that if you have other wages or employers this calculator does not make any assumptions as to the total Social Security tax withheld for the current year other than the actual inputs for this calculator. This tax is also referred to as the Federal Insurance Contributions Act Old Age Survivors and Disability Insurance (FICA OASDI).
Medicare tax
Medicare tax is calculated as your gross earnings times 1.45%. Unlike the Social Security tax, there is no annual limit to the Medicare tax. Starting in 2013, an additional Medicare tax of 0.9% is withheld on all gross earnings paid in excess of $200,000 in a calendar year. If you enter an amount for the year-to-date gross earnings, this additional Medicare tax will be calculated based on the current period's gross earnings that exceed the annual $200,000 threshold. If no year-to-date amount is entered, any additional Medicare tax withholding will be calculated only for any gross earnings in excess of $200,000 for the current payroll period. If year-to-date wages prior to the current payroll period have exceeded $200,000, the year-to-date wages must be entered to calculate an accurate additional Medicare tax.
Federal tax withholding calculations
**TAX_CALCULATION_DEFINITION**
Plan type
Choose the type of plan your employer sponsors. The choices are 401(k), 403(b) or government 457. Each choice includes an option for pre-tax ("traditional" contributions) and after-tax ("Roth" contributions). Except for the differences between a pre-tax contribution and an after-tax contribution, your plan type will not affect the calculations, it is only used to label the generated results.
Current balance
The current balance of your retirement plan.
Current age
Your current age.
Age at retirement
Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions. So if you retire at age 65, your last contribution occurs when you are actually 64.
Annual rate of return
Your expected long term annual rate of return. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2018, had an annual compounded rate of return of 12.1%, including reinvestment of dividends. From January 1, 1970 to December 31st 2018, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.2% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Annual contribution limits
Your total contribution for one year is based on your annual salary times the percent you contribute. However, your annual contribution is also subject to certain maximum total contributions per year. **PLAN_CONTRIBUTION_MAX** It is also important to note that employer contributions do not affect an employee's maximum annual contribution limit. The catch-up amount is indexed for inflation in increments of $500.

It is important to note that some employees are subject to another form of contribution limitations. Employees classified as "Highly Compensated" may be subject to contribution limits based on their employer's overall participation. **PLAN_HIGHLY_COMPENSATED**

Employer match
An employer match is in addition to your annual contributions. It is based on a percentage of your annual contributions. This range can be anywhere from 0% to 100%.

For example, let's assume the employer matches 50% of the employee's contributions up to 6% of their salary. The employee earns $100,000 per year and contributes 10%. The results would be:

  • $10,000 from the employee
  • $3,000 from the employer (which is 50% of $6,000 or 6% of the annual salary)
  • Total: $13,000

Please read the definition for "Employer maximum" for a detailed description of maximum employer matching contributions. It is also important to note employer contributions do not affect the maximum amount allowed to be contributed by an employee. Matching contributions can be subject to a vesting schedule. See your plan information for details.

Employer maximum
This is the maximum percent of your salary matched by your employer regardless of the amount you decide to contribute. For example, let's assume your employer has a 50% match, up to a maximum of 6% of your annual salary. If you have an annual salary of $25,000 and contribute 6%, your annual contribution is $1,500. With a 50% match, your employer will add another $750 to your 401(k) account. If you increase your contribution to 10%, your annual contribution is $2,500 per year. Your employer match, however, is limited to the first 6% of your salary and remains at $750.