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    Tax / Asset location

    Asset Location Calculator

    Whether an asset belongs in the taxable account or the tax-deferred one. The answer depends on the asset’s tax drag and the holding period, and the gap compounds — a bond in the wrong account costs far more over thirty years than in one.

    Taxable account$195,169Tax-deferred$180,424Difference$14,745
    Taxable account
    $195,169
    3.40% after tax
    Tax-deferred
    $180,424
    Taxed on withdrawal
    Difference
    $14,745
    Taxable wins
    Annual tax drag
    1.60%
    Compounded cost
    After-tax value
    Taxable accounts are taxed annually; deferred accounts are taxed once at withdrawal.
    After-tax value
    YearsTaxableDeferred
    5$118,196$86,787
    10$139,703$110,765
    20$195,169$180,424
    30$272,657$293,892
    40$380,909$478,719
    Inspect the model
    Choose a quick result view, a scaled comparison, or the complete diagnostic set.
    After-tax value against holding period
    The shelter advantage widens every year the tax drag compounds.
    After-tax value against holding period-3.457e+4-2.214e+4-9719.412704.621.513e+42.755e+45y5y10y10y15y15y20y20y30y30yAsset Location Calculator
    Canonical equations
    The exact relationships implemented by this engine.

    FV = P·(1 + r(1 − t))^n · Tax paid every year.

    FV = P·(1 + r)^n·(1 − t) · Tax paid once, at the end.

    finance methodology

    A clear path from inputs to results.

    Whether an asset belongs in the taxable account or the tax-deferred one. The answer depends on the asset’s tax drag and the holding period, and the gap compounds — a bond in the wrong account costs far more over thirty years than in one.

    Step-by-step methodWorked exampleAssumptions explained

    How to use

    1. Set amount invested ($).
    2. Set pre-tax return (%).
    3. Set share taxed annually (%).
    4. Set tax rate (%).
    5. Read the headline metrics, then check the table for the detail.

    The formula

    FV=P⋅(1+r(1−t))nFV = P·(1 + r(1 − t))^n

    Reference: After-tax future value in a taxable versus a tax-deferred account, applying the IRC §1 and §408 treatment of contributions and growth.

    Worked example

    At the default inputs

    Inputs
    • Amount invested ($): 100000; Pre-tax return (%): 5; Share taxed annually (%): 100; Tax rate (%): 32; Years: 20
    Calculation path
    1. 1

      Taxable account: $195,169 · Tax-deferred: $180,424 · Difference: $14,745 · Annual tax drag: 1.60%

    Result

    Taxable account: $195,169 · Tax-deferred: $180,424 · Difference: $14,745

    Interpreting the result

    Sheltering this asset is worth $14,745 over 20 years.

    Assumptions & limitations

    • The tax rate is the same in both accounts.
    • No capital gains preference or step-up at death.

    Frequently asked questions

    Why does the shelter win for bonds?

    Interest is taxed every year, so the drag compounds; equities defer their gain and lose less to annual tax.

    Does the answer change with the holding period?

    Yes — the longer the period, the more the annual drag costs.

    Methodology last reviewed 2026-10-22. Results are informational and not financial or engineering advice — see our disclaimer.