Reinvesting a Maturing Principal-Protected Balance: What Do You Actually Earn?
When a stable value fund, CD, or guaranteed investment contract (GIC) inside your 401(k) or IRA matures, you have to decide whether to roll the larger balance into a similar principal-protected product or move it elsewhere. Reinvesting keeps your money safe and earns interest at the new crediting rate, but if that rate is lower than inflation, your real purchasing power can still shrink even as the account balance grows. This calculator takes your maturing balance, new rate, and term, then estimates the interest earned and your after-tax value at the end of the term.
How the Math Works
The calculator applies annual compounding at your entered rate to project the maturity value, then subtracts the principal to isolate the interest earned. Your estimated tax rate is then applied to that interest to show an after-tax figure. Growth inside a traditional 401(k) or IRA is actually tax-deferred until withdrawal — this tax rate is a placeholder for what you'd expect to owe eventually, useful for sizing up the after-tax outcome in today's terms.
Before rolling over, it's worth comparing the new rate against similar products from other providers within your plan's lineup, since rates can vary. Principal-protected options are safe but typically offer lower returns, so if you're still years from retirement, allocating part of the balance to a growth-oriented option alongside the stable value portion is worth considering. Just keep in mind that growth-oriented options carry the risk of losing principal, so size that allocation to match your own risk tolerance.
Frequently Asked Questions
It earns interest at the offered crediting rate. This calculator assumes annual compounding; some products credit interest differently.
No, it's tax-deferred until withdrawal, then taxed as ordinary income (Roth accounts are typically tax-free). The rate here is just a reference figure.
※ Actual crediting method and tax treatment vary by product and account type; this is an estimate for reference only.