How this calculator works
A constant assumed return after fees projects the opening balance and growing contributions; actual variable-annuity returns fluctuate. Set the unknown balance, contribution, holding period or return. Known terms are derived from current and withdrawal ages. Contributions are treated as after-tax basis. A full-withdrawal tax scenario applies only to gains above that basis. Manual tax is the default for a CAD scenario. The optional USD scenario applies 2026 federal ordinary-income brackets incrementally to gains above projected other taxable income; entered other income must already reflect deductions. Brackets are held fixed and no state tax or credits are included. The optional US 10% additional tax is separate and assumes no exception. Contract guarantees, surrender charges, periodic annuitization and losses on surrender are excluded. The nominal return is converted to the selected payment interval before valuing cash flows. The first cash flow is the entered amount; later cash flows grow by the equivalent periodic growth rate. Choose beginning or end timing and yearly summaries or individual payment rows. Enter a whole number of payment periods. Time solving finds the first payment period reaching the goal, adjusting the last cash flow to finish there; this mode supports non-negative returns and cash flow growth up to a 100-year horizon. Rate solving searches nominal annual returns from -99% to 200%. Dates use a 365.25-day model year and are illustrative rather than bank settlement dates.
Formula
Let j be the nominal annual return, m the compounding count and q payments per year. i = (1 + j/m)^(m/q) - 1, or exp(j/q) - 1 for continuous compounding. g = (1 + annual cash flow growth)^(1/q) - 1. For n payments, A = ((1+i)^n - (1+g)^n)/(i-g), with A = n(1+i)^(n-1) when i=g. Multiply A by (1+i) for beginning payments. Closing balance = opening balance x (1+i)^n + signed first payment x A. Taxable gain = max(0, final balance - opening after-tax basis - contributions). Full-withdrawal net = final balance - tax on gain - applicable additional tax. US federal tax on gain = tax(other taxable income + gain) - tax(other taxable income).
Worked example
An opening $1,000 after-tax balance with $100 deposited at each year end for two years at 10% becomes $1,420. Basis is $1,200, so the gain is $220. At 25% tax the net is $1,365. At zero return, the same contributions build $1,200 with no taxable gain.
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Frequently asked questions
Is the assumed return a guarantee?
No. A variable annuity depends on its investments and charges. Enter a net return scenario and test several values.
Why is tax applied only to gains?
The full-surrender scenario treats contributions as after-tax cost basis. Tax treatment of periodic annuity payments or registered accounts can differ and is outside this model.
Does the US tax option forecast future law?
No. It holds the 2026 federal bracket thresholds fixed while other taxable income grows at the entered rate. This is a comparison scenario; future legislation, deductions, credits and state taxes can change the outcome.