An interesting request. And a valuable tool. But tough to make accurate
without a lot of user input. For cap gains, are you in the zero long
term gain rate? For taxable income from the IRA, where to start, zero,
10%.... ? Is the social security phantom tax mixed in?
Mutual funds have been offering an approximation of this in prospectus
for a while.
For example, from one of Vanguard's, they provide Average Annual Total
Returns in the
following ways:
Return before taxes
Return after taxes on distributions
Return after taxes on distributions and sale of fund.
To come up with these approximations, however, they use the following
rules to figure taxes:
Actual after-tax returns depend on your tax situation and may differ
from those shown in the preceding table. When after-tax returns are
calculated, it is assumed that the shareholder was in the highest
individual federal marginal income tax bracket at the time of each
distribution of income or capital gains or upon redemption. State and
local income taxes are not reflected in the calculations.
So, of course, those don't look like actual numbers for anyone in
particular. At most, they give you an idea of how tax-efficient a
given fund is (i.e., if return after taxes on distributions but before
sale of fund is close to return before taxes, it's efficient).
What would a broker's motivation be to offer such a tool?
The same as their motivations were for providing cost basis data to
clients before it was required by law - if the clients find it
convenient and helpful enough, and ask for it, and they feel like
providing it.
However, unlike the tax-adjusted returns for mutual funds, I don't
think "tax adjusted wealth" is going to be very useful, and don't think
many folks have asked for it.
[And, of course, the example above doesn't take into consideration a
variety of additional tax issues, such as the new ObamaCare net
investment income tax - 3.8% addition - nor things like phaseouts of
exemptions. It's simply too messy to be very accurate.]
--
David S. Meyers, CFP®
http://www.MeyersMoney.com
disclaimer: discussions in misc.invest.financial-plan are for
educational purposes only and should not be construed as financial
advice. For personal financial advice, please consult directly with a
professional.