Tax deferral can work in your favor in certain situations. Many a time what you sacrifice in liquidity, you may gain by postponing the tax consequences. In this calculation, we assume that you will be saving until your age 60, and that at the end of the term the entire tax deferred investment will be subject to taxation. As for your taxable account, we assume all 100% return is subject to short term taxation, which in reality is a stretch. Of course, all we are trying to give you are some aproximations and benchmarks. In practice, most people withdraw their tax deferred savings over a period of time after attaining age 59 ½ and hence the amount that remains will grow tax deferred. There are several laws that govern the withdrawal of qualified tax deferred investments including minimum age of 59 ½ and required minimum distributions at age 70 ½.