401(a) Calculator
A 401(a) calculator projects the retirement balance of a 401(a) defined contribution plan. These plans are common in government, public education, and non-profit workplaces, and typically combine a mandatory employee contribution with a generous employer contribution. Enter your salary, contribution percentages, expected return, and vesting schedule to see your projected balance at retirement.
What a 401(a) is
A 401(a) is an employer-sponsored defined contribution plan authorized under Section 401(a) of the Internal Revenue Code. Unlike a 401(k), which is primarily used in private sector companies, 401(a) plans are common in government agencies, public universities, hospitals, and non-profit organizations. The most distinctive features are that employee contributions are usually mandatory at a set percentage of salary, and employers frequently contribute a higher percentage than employees, sometimes 7-15% of salary.
How 401(a) contributions work
This 401(a) calculator models two contribution streams. The mandatory employee contribution is a fixed percentage of salary deducted from every paycheck, often pre-tax and sometimes post-tax depending on plan design. The employer contribution is set by the employer and may be a flat percent, a match, or a formula based on years of service. Together these often total 10-20% of salary per year, which is considerably more than most 401(k) employer matches.
2024 contribution limit
The combined employee plus employer contribution limit for a 401(a) is the lesser of 100% of compensation or $69,000 in 2024 ($66,000 for 2023). Because employee contributions are often required rather than elective, the bulk of the limit is typically absorbed by the employer side. Unlike a 401(k), employees generally cannot choose to contribute more than the plan mandates.
Vesting schedules
Employee contributions are always 100% vested immediately. Employer contributions vest according to the plan's schedule, which is typically either a cliff (0% vested until year X, 100% after) or graded (20% per year until year 5, for example). This calculator models a linear graded schedule. If you leave employment before full vesting, the unvested employer contributions are forfeited back to the plan.
A worked example
A 35-year-old government employee earning $70,000 with a 5% mandatory employee contribution and 7% employer contribution, assuming 7% annual return and 3% salary growth, accumulates about $1.2 million in a 401(a) by age 65. Of that, roughly $330,000 is personal contributions, $460,000 is employer contributions, and $410,000 is investment growth. Applying the 4% rule gives about $4,000/month of retirement income from the 401(a) alone.
401(a) vs 401(k) vs 403(b)
A 401(a) is mandatory in structure and employer-driven. A 401(k) is voluntary and employee-driven. A 403(b) is similar to a 401(k) but reserved for public schools, hospitals, and certain non-profits. Many public employees have access to both a 401(a) (mandatory) and a 457(b) or 403(b) (voluntary) in the same workplace, allowing them to stack tax-advantaged savings.