Deferred taxes on retirement accounts


D

Drawdy

Does anyone know how to get Money to track the deferred federal and state tax
liabilities for retirement accounts within the investments section?

I currently just have two liability accounts set up, but when I prepare my
balance sheet I would prefer the liability to show as a contra-asset account
within the investments section.
 
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M

Michael J. Blazin

The only taxable event with a retirement account is a distribution. Pre-Tax
Contributions, purchases, and redemptions mean nothing. The tax on the
distribution is a function of its size, other taxable income, and marginal
tax rates when you retire. That could be 20-30 years ahead: essentially
unknowable. After-Tax contributions reduce the taxable amount of
distributions, but other factors still keep actual taxes unknown.
 
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D

Drawdy

I keep my financial information basically on an accrual basis, so I do want a
deferred tax account. In accrual based accounting the matching principle
actually demands that expenses be recognized in the same period as the
revenue.

Although it is an estimate, it is better than nothing. I'm pretty confident
of my retirement tax bracket (it will be 35% federal and 6% state) if
Congress doesn't change it. However, I am sure it will be raised before I
retire as we are in a historically low tax rate period.

Regardless, not having a deferred tax account does distort my actual net
worth. I would think Money would have set something up for this.
 

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