Account Type Comparison

Where should I put my savings?

Analyze long-term after-tax outcomes across Traditional, Roth, and taxable brokerage accounts.

Compare Side by Side

Compare three tax buckets using the same pre-tax contribution and growth assumptions.

Typical comparisons

Decide between Traditional and Roth contributions
Model taxable brokerage tax drag
Stress-test future tax-rate assumptions

Decision-ready output

After-tax ending wealth by account type
Total tax paid estimate
Winning strategy under selected inputs

Quick Result

Projected winner

Traditional

Best projected net value: $64,704.17

Based on

• Pre-tax contribution: $10,000.00
• Current tax rate: 24%
• Retirement tax rate: 15%
• Return rate and horizon: 7% for 30 years

Contribution

Pre-Tax Amount to Invest

This amount is reduced by taxes for Roth/Brokerage.

Tax Variables

Current Tax Rate (%)

Retirement Tax Rate (%)

Capital Gains Rate (%)

Growth Assumptions

Annual Return (%)

Time Horizon (Years)

Winning Strategy

Traditional Account

Based on your inputs, the Traditional structure provides the highest after-tax wealth.

Final After-Tax Value

$64,704.17Traditional

$57,853.14Roth

$50,315.17Brokerage

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The Tax Bucket Strategy

Key Insights & Concepts

In the US tax code, you have three main "buckets" for your money. Understanding how each is taxed is the key to optimizing retirement income.

Tax-Deferred

Traditional 401k/IRA

You get a tax break now. Money grows tax-free. You pay income tax when you withdraw in retirement. Best if your tax rate will be lower in retirement.

Tax-Exempt

Roth 401k/IRA

You pay tax now. Money grows tax-free. Withdrawals are tax-free. Best if your tax rate will be higher in retirement or you want certainty.

Taxable

Brokerage

You pay tax now. Dividends taxed annually. Capital gains taxed on withdrawal. No contribution limits and total flexibility (no age restrictions).

The "Tax Diversification" Advantage

Since no one knows future tax rates, many advisors recommend filling all three buckets. Having diverse sources allows you to manipulate your taxable income in retirement.
Example: Withdraw $50k from Traditional (filling the low tax brackets) and pull the rest of your spending needs from Roth (tax-free) to keep your effective tax rate low.

Frequently Asked Questions

No. Required Minimum Distributions (RMDs) force you to withdraw from Traditional accounts starting at age 73, which can spike your taxes. Roth IRAs have no RMDs during your lifetime.

Yes, via a 'Roth Conversion'. You will pay income tax on the amount converted in the year you do it. This is often done in low-income years (e.g., early retirement before Social Security kicks in).

Usually yes. Long-term capital gains rates are 0%, 15%, or 20%, depending on income. Ordinary income tax rates go up to 37%. This gives Brokerage accounts an advantage over Traditional IRAs for high earners.

This tool is for illustrative purposes only and does not constitute professional financial, tax, or legal advice. Calculations are estimates and may not reflect real-world variables or local regulations. Always consult with a qualified professional before making financial decisions.

Methodology and Trust

How this was calculated

Formulas

Traditional net

Traditional Net = [Contribution × (1+r)^n] × (1 - Retirement Tax Rate)

Roth net

Roth Net = [Contribution × (1 - Current Tax Rate)] × (1+r)^n

Brokerage net

Brokerage Net = Gross Value - Capital Gains Tax on Gains