StubRate · Guides · 7 min read
How a 401(k) Contribution Changes Your Take-Home Pay
See how a 4%, 6%, or 10% 401(k) deferral shrinks this paycheck, lowers taxable income, and still faces FICA.
Pre-tax is not “free money” this month
A 6% deferral on $90,000 is $5,400 a year, about $450 a month, that never hits checking. You still pay Social Security and Medicare on traditional 401(k) wages. What you save is income tax on that $5,400.
If you are in the 22% federal bracket, the income-tax savings is meaningful—but you cannot spend the 401(k) dollars on rent. Cash stub rate falls; future-you stub rate rises.
Match first, then cash-flow reality
If your employer matches 4%, contributing less than 4% is leaving a raise on the table. After the match, the right percentage is the one that still lets you pay this month’s bills.
Run StubRate at 0%, at the match, and at your stretch percentage. The monthly take-home line tells you whether a 10% deferral is a goal or a squeeze.
Roth 401(k) feels different on the stub
Roth deferrals do not lower taxable wages today. The same 6% hurts the paycheck more than a traditional deferral. StubRate models a traditional (pre-tax) percentage because that is the common default on offers.
If your plan is Roth-only, treat the contribution more like a post-tax savings transfer when you interpret stub rate.
Compare offers with the same deferral
One company auto-enrolls at 6% and another at 3%. If you compare raw paystubs, the 6% job looks poorer. Normalize both to the contribution you actually want, then compare.
StubRate’s 401(k) field exists so you can hold benefits constant while salary and state change.
FAQ
Does a 401(k) reduce my paycheck dollar-for-dollar?
The deferral comes out of pay, but traditional 401(k) contributions also lower federal (and usually state) income tax, so cash take-home falls by less than the full contribution. FICA still applies to traditional 401(k) wages.