This calculator is designed for investors looking to compare the outcomes of taxable versus tax-advantaged investments. It helps to understand potential returns and tax implications, guiding users in making informed financial decisions.
All calculations are based on standard financial formulas for compounding interest and tax adjustments, as outlined by the IRS guidelines. Investopedia. All calculations rely strictly on the formulas and data provided by this source.
Future Value: FV = PV × (1 + r)^n - Taxes
Consider an initial investment of $10,000, an annual return of 5%, and a tax rate of 20%. The calculator will project the future value over a specified period with and without tax implications.
These accounts offer tax benefits either at the time of contribution (e.g., 401(k)) or withdrawal (e.g., Roth IRA), helping to maximize your savings.
Taxes can significantly impact your investment returns, hence optimizing for tax efficiency can enhance your overall financial strategy.
Withdrawals from tax-advantaged accounts often have restrictions and may incur penalties if not done according to guidelines.
Common accounts include 401(k), IRA, Roth IRA, and Health Savings Accounts (HSA).
Your tax rate depends on your income bracket and local tax regulations. Consult with a tax professional for accurate calculations.