Taxable vs. Tax-Deferred Savings
For years, people have been told to take advantage of company-sponsored plans when saving for retirement. And while that’s generally good guidance, especially if the company does some form of matching contribution, it can get tricky the closer you get to retirement. This calculator can help you start to see the pros and cons of taxable and tax-deferred accounts.
Tax-Deferred Account
Enter your expected contributions and returns for a tax-deferred retirement account (like a Traditional IRA or 401(k)).
These are example values. Update them to reflect your personal situation.
Taxable Account
Enter your expected contributions and returns for a taxable investment account (like a brokerage account).
Your Results
Compare the potential after-tax value of saving through a tax-deferred account versus a taxable account.
Tax-Deferred Account Results
Taxable Account Results
The Annual Rate of Return is a hypothetical example used for illustrative purposes only. It is not representative of any specific investment or combination of investments. This calculator provides estimates based on assumptions including expected tax brackets. Please work with your tax, legal, or accounting professional for tax bracket information. Actual investment returns will fluctuate over time.
Once you reach age 73, you must begin taking required minimum distributions (RMDs) from your 401(k), traditional IRA or other defined contribution plan in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.