7702 Account vs 401(k): See the Difference in Your Retirement Income
A 7702 account is a tax-free retirement account, named after Section 7702 of the tax code, the same way the 401(k) is named after its own tax code section. In about a minute, see what each account could actually leave you to spend in retirement, after taxes.
Run My NumbersMost people never see this comparison until it is too late
You save on taxes today, but every dollar you withdraw in retirement is taxed as ordinary income, at a rate no one can predict.
A down market in the years just before retirement can undo decades of saving. A 7702 account has a floor, so a losing year does not subtract from your balance.
When money comes out tax-free instead of taxed as income, the amount you actually get to spend can look very different. Run your own numbers below.
Your Numbers
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Growth Assumptions
These defaults reflect long-run averages. Your actual 7702 account numbers come from a carrier illustration reviewed with your advisor.
What Each Account Could Leave You to Spend, After Taxes
The RMD Tax Trap
Starting at age 73, the IRS forces withdrawals from your 401(k) whether you need the money or not. These Required Minimum Distributions are taxed as ordinary income and can trigger a cascade of consequences. A 7702 account has no mandatory withdrawals.
How the Two Accounts Work
| Feature | 401(k) | 7702 Account |
|---|---|---|
| Tax on the money you take out | Taxed as ordinary income | Accessed tax-free |
| A losing market year | Your balance can drop | Floor holds, no loss from market |
| Contribution limit set by the government | Yes, capped each year | No government cap on funding |
| Required withdrawals starting at age 73 | Yes, the Required Minimum Distribution | None required |
| Money left to your family | Remaining balance, taxable to heirs | Includes a death benefit, generally income-tax-free |
Common Questions
What is a 7702 account?
A 7702 account is a tax-free retirement account named after Section 7702 of the tax code, the same way the 401(k) is named after its own tax code section. You fund it with after-tax dollars, it grows with a floor that protects it from market losses, and you can access the money tax-free in retirement.
How is a 7702 account different from a 401(k)?
A 401(k) is funded with pre-tax dollars and taxed as ordinary income when you withdraw. A 7702 account is funded with after-tax dollars and accessed tax-free. A 401(k) is fully exposed to market losses. A 7702 account has a floor, so a down market year does not reduce your balance.
Are these results a guarantee?
No. This calculator is an educational estimate, not a prediction or a guarantee. Your real 7702 account numbers come from a carrier illustration reviewed with a King Legacy Group advisor.
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See Your Real Numbers
This is an estimate to show the difference in approach. Your actual 7702 account is built around your goals and confirmed with a carrier illustration. Everyone wants to grow their money, protect it from loss, and pay less in taxes. King Legacy Group helps you do all three at the same time, your LivingLEGACY™ Designed.
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Important. This calculator is for education only. It is a simplified estimate, not a prediction, a guarantee, or personalized financial, tax, or legal advice. It does not reflect account fees, the internal costs of a 7702 account, contribution limits, health or age qualification, or specific carrier terms. A 401(k) return is not guaranteed and can be negative in any year. Figures for a 7702 account are illustrative and your actual results are shown in a carrier illustration reviewed with a King Legacy Group advisor. Consult a qualified tax professional regarding your situation.