This example is shown for illustrative purposes only and should not be considered representative of the returns of any specific security. Money in the tax-deferred account is taxed when it is withdrawn. Lower maximum tax rates on capital gains and dividends will make the investment return for the taxable account more favorable, thereby reducing the difference in the dollar amounts between the two accounts. Changes in tax rates and the tax treatment of investment earnings may impact comparative results. You should consider your personal investment horizon and income tax brackets, both current and anticipated, when making an investment decision as these factors may further impact the results of the comparison.
1Note: Assumes an individual is under age 59½, in the 25% federal tax bracket, and that no exception to the 10% early withdrawal penalty tax applies. Your percentages may vary.
Feedback