Loss to Taxes Defined

The amount Lost to Taxes is the percentage of the gross value of a financial instrument that will effectively be lost to taxes. Since gross values are commonly used in the Asset-Map and financial statements (like the Household Balance Sheet), a reduction of that gross value is necessary to account for the embedded tax obligation that is due upon consumption for planning purposes.

This figure is not necessarily equal to the marginal tax rate but rather an intelligent accommodation to the amount of unpaid taxes embedded in the gross value that should be discounted for purposes of consumption.

Target-Maps do not define nor can they predict a client's "tax brackets".

Target-Map templates are preset with default tax percentages and can be modified to new defaults by the advisor within the Target-Map Preferences. Or, the tax amount can be changed within the specific Target-Map.

Target-Maps tax assets up front.

If you have the same tax rate today as you would at distribution it will be taken from the same amount of money. For example: I have $1,000,000 in my IRA today, If I double that money in the next 10 years it’s worth $2,000,000. But, we have a 25% tax rate at retirement so now I have $1,500,000 left to consume.

I have $1,000,000 today. We shall tax it at 25% today which is a reduction of $250,000. You therefore have $750,000 left to consume. If you double that amount in 10 years, the amount will also result in $1,500,000.

Additionally, regarding capital gains tax, Asset-Map typically doesn't know the purchase price, just current value of the asset. The amount the client gets to keep upon liquidation must be upon the advisor to assess.