Tool · Illustrative placement
Asset Location Architect
You may own the same investments in several accounts. Asset location means choosing which account holds each investment. This tool sketches one arrangement and estimates its yearly tax on distributions—not your lifetime tax bill or the best portfolio for you.
Corrected September 4, 2026: Placement assumptions and tax comparisons clarified. View correction history.
All calculations run locally in your browser. Your inputs are never transmitted or stored.
Step 1
Your investment mix
Enter each investment category’s share across all your accounts combined. The total must be 100%. The fixed profiles below are illustrations, not forecasts.
Step 2
Account balances
Total dollars in each tax wrapper. Group any workplace plan with IRAs of the same tax treatment.
Total portfolio
Step 3
Tax context
Marginal rates applied to yearly yield while held in taxable.
Illustrated distribution-tax difference
Year-one tax reduction
basis points of portfolio (100 = 1%)
-year illustration
constant yearly difference reinvested at 5%; no future tax included
Total account balances
% in Roth · % in Trad · % in taxable
One illustrative placement
This rule puts higher after-tax-return scores in Roth first, then higher-tax-yield investments in Traditional, with the rest in taxable. It is a starting sketch, not an optimization. It ignores Traditional withdrawal tax and tax on selling existing holdings. A negative reduction means this sketch has more annual tax than the comparison mix.
Roth IRA
(Empty — no Roth balance)
Traditional IRA / 401(k)
(Empty — no Traditional balance)
Taxable brokerage
(Empty — no taxable balance)
Each sleeve's tax profile
“Drag in taxable” estimates yearly tax on assumed distributions. The Roth priority score is assumed return minus that drag; it is not the benefit from choosing Roth. The state rate is added to both federal rates.
| Sleeve | Expected return | Ord-income yield | Qualified yield | Drag in taxable | Roth priority score |
|---|---|---|---|---|---|
Methodology & citations
What the sketch calculates
“Tax drag” means the part of a return lost to tax each year. This illustration counts only assumed ordinary-income and qualified-dividend distributions in the taxable account.
taxable drag = ordinary yield × (federal ordinary rate + state rate) + qualified yield × (federal qualified-dividend rate + state rate) Roth priority score = assumed total return − taxable drag year-one tax reduction = tax in comparison mix − tax in placement sketchThe comparison mix holds the same overall percentages in every account. It is a neutral reference—not the worst case and not your actual current holdings. Roth is filled by priority score, then Traditional by highest taxable drag, then taxable with the rest. This is a rule of thumb, not a search for maximum after-tax wealth.
The long-horizon number assumes the same dollar difference repeats at each year-end and earns 5%: annual difference × [1.05years − 1] ÷ 0.05. It is not a portfolio simulation and includes no later tax on the savings.
A small example
Imagine a $10,000 taxable bond fund pays $400 of ordinary interest. At an assumed 25% combined rate, that is $100 of tax. Holding it in an IRA avoids that current tax, but a Traditional IRA generally has tax when money comes out. Qualified Roth withdrawals are tax-free. Saving $100 this year does not establish which account is best over a lifetime.
Important limits before you move anything
- Traditional withdrawal tax, Roth withdrawal eligibility, cost basis, tax on sales, fees, capital-gain distributions, foreign tax credits and tax at death are not calculated.
- Pre-tax Traditional dollars are not equal to spendable Roth dollars. This sketch preserves gross percentages, not after-tax risk exposure.
- The state rate is uniform. Treasury-interest exemptions, different state dividend rules, NIIT and REIT-specific deductions are not modeled.
- Profiles are fixed hypothetical inputs, not verified historical averages or forecasts. Real funds differ. There are no editable return profiles or efficient-frontier calculations.
- Changing investments inside an account is not the same as moving money between accounts. Contributions require eligibility and room; conversions can create tax. This sketch does not direct either transaction.
Primary sources
IRS Publication 550 explains investment income. IRS Publication 590-B explains Traditional and qualified Roth distributions. These sources establish tax treatment, not the illustrative returns or placement rule.
User Guide
How to use the Asset Location Architect
Start with the investment mix you already want. This tool does not choose how much stock or how many bonds you should own. It asks a narrower question: what might the yearly tax on that mix look like if different accounts held different pieces?
Three steps
- Enter your mix. Use percentages across all included accounts. “Sleeve” simply means an investment category. The total needs to be 100%.
- Enter current balances. Combine accounts with the same tax treatment. Do not include an HSA; its withdrawal conditions differ from an IRA’s.
- Enter tax assumptions. Use the ordinary-income rate for interest and the qualified-dividend rate for eligible dividends. The state entry is applied to both.
Read the first number before the large projection
A positive year-one reduction means less modeled annual distribution tax; a negative number means more. The tool does not know your current fund-by-fund holdings, so this is not your personal saving from a change.
The longer-term figure simply compounds that constant yearly difference at 5%. It omits eventual Traditional withdrawal tax. Treat the account cards as a discussion aid—not a trade list.
Before acting
Check taxable gains, transaction costs, workplace-plan investment choices and after-tax risk. Moving existing investments can cost more than the illustrated annual reduction. See the asset-placement guide and Roth vs. Traditional comparison for related considerations.
Corrections and updates
September 4, 2026: Clarified that this tool illustrates one placement rule rather than optimizing lifetime after-tax wealth. Corrected the score explanation to include both kinds of dividend and interest tax drag, and preserved negative annual tax differences that were previously shown as zero. The guide now matches the available controls and clearly identifies taxes and account differences that are not modeled.