Benefit of Tax Deferral Calculator
Why consider a tax-deferred investment?
Estimate and compare the future value difference between a taxable product and a tax-deferred product.
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1 Taxes are assessed and paid on the gains each year.
2 Taxes deferred on gains.
* The federal tax rates in the drop-down box are scheduled to be in effect from 2018-2025. This calculator will use the rate you specify for all years of the calculation, including years after 2025.
The tax-deferred product future value has been calculated with no taxation of gains. Taxes on gains are paid only when the money is withdrawn. When a withdrawal or distribution is taken, the amount withdrawn would be reduced by income taxes on any gain, and if taken prior to age 59½, a 10% federal additional tax may apply. If the entire value was assumed to be withdrawn, the difference between the taxable product future value and the tax-deferred product future value would be less. If the tax-deferred product is an annuity contract, there may be differing fees, expenses, and charges associated with an annuity contract that are not reflected in this hypothetical calculation tool. If these fees, expenses, and charges had been included, the difference between the taxable product future value and the tax-deferred product future value would be less.
The taxable product future value has been calculated with taxation of gains each year as ordinary income at the marginal tax rate you entered. It is important to note that the lower maximum tax rates on capital gains and dividends could make the final result for the taxable product more favorable, thereby reducing the difference in performance between the taxable product and the tax-deferred product. Individuals should consider their time horizon, risk tolerance, and current and anticipated income tax brackets when making financial decisions. These factors, as well as changes in tax law, may have a significant impact on the results of this comparison.
Information and interactive calculators are made available as self-help tools for independent use. Allianz Life Insurance Company of North America (Allianz) cannot and does not guarantee their accuracy or their applicability to any individual circumstances. Allianz encourages you to seek personalized guidance from qualified professionals regarding all personal finance issues. This analysis is based solely on the information you provide. The results presented by this calculator are hypothetical and for illustrative purposes, and do not represent current or future performance of any specific financial product. No guarantees are made as to the accuracy of any projection. All financial products carry a degree of risk, and past performance is not a guarantee of future results. Generally, the greater the return, the greater the risk.