401k vs Taxable Account Calculator

About this calculator

A traditional 401k lets contributions grow tax-deferred, with taxes owed only on withdrawal in retirement, while a taxable brokerage account is funded with after-tax money and is subject to capital gains and dividend taxes along the way. Because 401k contributions reduce taxable income today and grow without annual drag from dividend or capital gains taxes, they typically compound to a larger after-tax balance than an equivalent taxable account, especially over long horizons — though withdrawals are eventually taxed as ordinary income.

Financial planners and individual investors use this comparison to decide how to prioritize retirement savings, particularly when choosing between maxing out a tax-advantaged 401k versus investing in a flexible taxable account that offers penalty-free access before retirement age, and the answer often depends on current versus expected future tax brackets.

This calculator compares the after-tax final value of contributing to a 401k against investing the same money in a taxable account, so you can see which leaves you with more spendable money at retirement under your assumptions.