After-Tax Valuation of Tax-Sheltered Assets

Authors

  • Stephen M. Horan Department of Finance, St. Bonaventure University

DOI:

https://doi.org/10.61190/fsr.v11i3.4737

Keywords:

Retirement, Tax-sheltered, Valuation

Abstract

Valuing tax-sheltered assets on an after-tax basis has many applications. This paper develops models that accommodate annuitized withdrawals from tax-sheltered accounts, an after-tax mutual fund cost of capital, and some variation in the tax rate over time. Annuitized withdrawals significantly decrease the after-tax value of tax-sheltered accounts compared to a single withdrawal over the same time period. Also, after-tax mutual fund discount rates significantly increase the after-tax cost of capital thereby decreasing after-tax valuations. Examples illustrate that using after-tax values can change investors' effective equity exposure by as much as ten percentage points.

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Published

2002-09-30

How to Cite

Horan, S. M. (2002). After-Tax Valuation of Tax-Sheltered Assets. Financial Services Review, 11(3), 253–275. https://doi.org/10.61190/fsr.v11i3.4737

Issue

Vol. 11 No. 3 (2002): FSR Fall 2002

Section

New Original Submission

License

Copyright (c) 2002 Academy of Financial Services

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