Retirement Accounts and Net Worth: How to Count Your 401(k) and IRA

Your 401(k), IRA, and HSA balances are real wealth that belong on your net worth statement. But not all retirement dollars are equal: a $100,000 Roth IRA is worth more than a $100,000 traditional IRA after taxes, and both are less accessible than a $100,000 brokerage account. Here's how to count them honestly.

The simple approach: full balance

For monthly tracking, use the full current balance of every retirement account: 401(k), 403(b), traditional IRA, Roth IRA, SEP-IRA, SIMPLE IRA, HSA. This is the simplest and most consistent approach, and it's what most financial calculators expect. It's slightly optimistic for traditional accounts because future withdrawals will be taxed.

The tax-adjusted approach: more honest

Some planners discount traditional 401(k) and IRA balances by their expected withdrawal tax rate (often 15–25%). A $400,000 traditional IRA becomes $300,000–$340,000 in 'after-tax' net worth. Roth and HSA balances are not discounted because their withdrawals are tax-free. This approach is more conservative but more honest.

How to handle the access penalty

Traditional 401(k)/IRA withdrawals before 59½ trigger a 10% penalty plus income tax. This doesn't reduce your net worth — the money is yours — but it does affect your liquid net worth. For people decades from retirement, the difference between 'I have $300k' and 'I can spend $300k tomorrow' is significant.

Employer match: don't double-count

Your current 401(k) balance includes employer match contributions and their growth. Don't add a separate 'employer match' asset — it's already in the balance. Track 'contributions this year' separately if you want to know your savings rate.

Vested vs. unvested

Only count vested amounts. If your employer match has a 3-year vesting schedule and you're 18 months in, you legally only own 50% (or whatever the vesting schedule says). Unvested money isn't yours until it's yours.

529 plans

529 college savings plans are typically owned by the parent but earmarked for a child. They count on your net worth statement, but with an asterisk: the money is restricted to education or comes with tax penalties for non-qualified withdrawals. Some trackers list them in a separate 'restricted' category.