The value of having a cash flow simulation is that we can run the simulation and see how the pre-tax accounts are taxed, then use that information to come up with tax rates that the pre-tax accounts may be subject to, either on a per year basis or as an average across all years of the plan to come up with a “Post-Tax Net Worth” metric/milestone.

Just like with other aspects of planning, we have the straight line value and we have values which result from simulation iterations.

The straight line value results from whatever sequence of returns we defined in the model, and that will result in a certain % paid to tax from the pre-tax accounts. We could also know the % paid per year and each year calculate a “Post-Tax Net Worth” for the pre-tax accounts.

Following the thread, using Chance of Success simulations we could also have an average % paid to tax on pre-tax accounts for the whole Plan period or a per year % paid to tax based on simulations, and it might be interesting to see the mean and standard deviation on these to understand how much they vary and how.

Here are the options I would suggest for this feature:

[Option 1] Define tax rate on pre-tax accounts for “Post-Tax Net Worth” (all the normal options: enter a value, advanced, etc.)

[Option 2] Use average calculated tax rate on pre-tax accounts from Plan to calculate “Post-Tax Net Worth”.

[Option 3] Use per year calculated tax rate on pre-tax accounts from Plan to calculate “Post-Tax Net Worth”.

[Option 4] Use average tax rate on pre-tax accounts from most recent Chance of Success simulation to calculate “Post-Tax Net Worth” (or this value could be displayed and entered manually as in Option 1).

[Option 5] Use per year average of tax rate on pre-tax accounts from most recent Chance of Success simulation to calculate “Post-Tax Net Worth”.

I’d like to add in a couple thoughts that is related, Aubrey ideas are great. It sounds like these could also fall under taxation strategies applied to a Wealth Tax consequence with an ability to levy these tax rates on tax deferred accounts (Wealth Tax only taxes on the Net Worth, Liquid Net Worth), it might be easier simple to add a Taxable Assets (Taxable Accounts + Tax Deferred) metric that is accessible not only in Plots but also selectable as the Metric to Tax in a Wealth Tax consequence. This could also be a good bit of information when might be good times for Roth Conversions especially when compared to taxable income.

A more comprehensive metric would would include options to include multiple taxing authorities under the Wealth Tax. For example, in NY, they have a rather yucky cliff. If your estate is valued over the exemption amount, then the entire estate is taxable. This is unlike the US federal estate taxation that is progressive taxation strictly over the exemption amount.

Great to see this being planned! Would a simple place to start be to just calculate an after tax value at the end of the plan? This would already be very valuable for inheritance optimization. Then expand to having post tax values year by year…