|Kace Capital Advisors|
Kace Capital Advisors
2255 Glades Road
Boca Raton, FL 33431
|Saving for Retirement: Inside a Plan vs. Outside a Plan Calculator
|Saving for Retirement: Inside a Plan vs. Outside a Plan Calculator|
This calculator compares two scenarios: (1) making contributions each year to a tax-advantaged
retirement plan, and (2) making tax-equivalent alternative investments outside the retirement plan.
If your contributions to the retirement plan are pretax (i.e., tax deductible), the corresponding amounts
contributed to savings outside the plan equal the after-tax value of your retirement plan contributions
(e.g., if you contribute $1,000 pretax to the retirement plan, and you are subject to a 25% tax rate, the
calculator compares your $1,000 pretax contribution with a $750 savings contribution outside of the plan).
If your contributions to the retirement plan are not pretax, the same amounts are contributed to savings
outside the plan. Employer matching contributions are either pretax or Roth and, since these contributions are
made by the employer and not by you, corresponding contributions are not made outside the retirement
plan for employer matching contributions.
Contributions are assumed to be made at the beginning of each year and taxes paid or accrued at the end of each year.
Inside the retirement plan, tax is deferred and the accrued tax liability (used to determine the after-tax
value of the retirement plan in a given year) is calculated at the ordinary income tax rate. The penalty
tax on early distributions (if applicable) is equal to 10% of the taxable portion of the plan funds.
For savings outside of the retirement plan, tax (other than any accrued capital gains tax) is assumed to
be paid each year from savings. A percent (as specified by you) of previously untaxed capital gains is
assumed to be recognized each year; tax on the remaining nonrecognized capital gains is deferred.
All capital gains are assumed to be long term.
This calculator does not take into account the contribution limits that apply to retirement plans.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
This communication is strictly intended for individuals residing in the state(s) of FL and NY. No offers may be made or accepted from any resident outside the specific states referenced.
|Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2023.