Tax Deferred Savings

What Are the Advantages of Tax-Deferred Accumulation?

This calculator is designed to help you estimate the potential future value of tax-deferred investments vs. taxable investments using an identical hypothetical annual rate of return.

The results below show the hypothetical values of a taxable investment vs. a tax-deferred investment, and the hypothetical value of the tax-deferred investment after taxes are paid. The growth of the tax-deferred investment exceeds that of the taxable investment because you keep more of your money working for you. If you increase the number of years you plan to save, you’ll see that the longer your time frame, the greater the difference becomes.

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Your Results
Description Amount
In a taxable account, your savings would grow to: $0
In a tax-deferred account, your savings would grow to: $0
Even after taxes, the tax-deferred account would grow to: $0

The chart below illustrates the difference tax-deferred accumulation can make. The highest line on the chart shows the tax-deferred amount accumulated assuming the values you entered. The middle line on the chart demonstrates the tax-deferred amount accumulated after taxes have been paid according to the tax rate you selected. The lowest line on the chart shows the amount accumulated assuming the same values, but with earnings taxed annually.

If you are investing for long-term goals, such as retirement, you may want to consider tax-deferred alternatives. We can help you sort through the various investment options to determine what may be appropriate for your situation.

Advantage of Tax-Deferred Accumulation

The information provided is not specific investment advice, a guarantee of performance, or a recommendation. Typically withdrawals from tax-deferred investments are taxed as ordinary income and any withdrawals taken prior to age 59½ may be subject to an additional 10 percent federal tax penalty. A plan of continuous or systematic investing does not ensure a profit and does not protect against loss in declining markets. Certain tax-deferred investments include mortality and expense charges, sales charges, and administrative fees which would reduce the performance shown if they were accounted for. Lower maximum tax rates for capital gains and dividends, as well as the tax treatment of investment losses, could make the investment return for the taxable investment more favorable, thereby reducing the difference in performance between the accounts shown. One's timeframe and income tax brackets, both current and anticipated, should be considered when making financial decisions. Rates of return will vary over time, particularly for long-term investments. Investments offering the potential for higher rates of return also involve a higher degree of risk.

This information is intended for use only by residents of (AZ, CA, CO, CT, DC, DE, FL, GA, IN, MA, MD, ME, MI, MO, NC, NH, NJ, NM, NY, PA, RI, SC, TN, TX, VA, VT, WI). Securities-related services may not be provided to individuals residing in any state not listed above.

For parties residing outside of the U.S., this information is: (i) provided for informational purposes only, (ii) not and should not be construed in any manner as an offer to participate in any investment or to buy or sell any securities or related financial instruments, and (iii) not and should not be construed in any manner as a public offering of any financial services, securities or related financial instruments. Products and services listed may not be available, or may have restrictions, depending on client country of residence.

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