AnnuityAdvisors - Where advisors go for advice
This table shows the yields necessary on taxable investments to accumulate the same amount of money as a tax-deferred annuity, per income tax bracket.

Formula for this table: Tax deferred yield divided by (100% - the tax bracket)
Example: The investor is a 15% taxpayer and the tax-deferred yield on an annuity is 7%.
.07 / (1.00 - .15) = 8.23%

15% Tax Bracket28% Tax Bracket31% Tax Bracket
Tax Deferred Yield6.00% 7.00% 8.00%6.00% 7.00% 8.00%6.00% 7.00% 8.00%
Taxable Equivalent Yield7.06% 8.24% 9.41%8.33% 9.72% 11.11%8.70% 10.14% 1.59%

If you want to know the equivalent tax-deferred yield of a taxable yield, the formula is:
(100% - the tax bracket) X the taxable yield

Example: An investor in the 28% tax bracket who has a taxable investment yielding 8%, an annuity yielding only 5.8% would generate the same amount of money:
(1.00 - .28) x .08 = .058 = 5.8%



Last Updated: 9/23/2012 10:05:00 PM