I realize that for a taxable brokerage account, buying/selling securities, reallocations within an account, dividends, interest, etc, that all of these (and many more) impact taxable income, basis, etc.
However using this same logic on tax advantaged accounts; HSA's, 529's, Roths, 401k, VULs, etc., accounts either tax free or tax deferred are misleading. I have two small brokerage accounts that are taxable and Quicken handles those fine. However, most of my NW is in tax advantaged accounts and when I look at Account Overviews-Holdings-Value, the Cost Basis and thus G/L are misleading. Many investors if using target allocations, will have rebalancing cadence, which means these accounts are seeing period buy/sell within the account, which is a wholly non-taxable event, but Quicken assumes that basis of the investment in the accounts is changing as if the resulting gain or loss at a rebalance is taxable and increases/decreases basis of the securities, and thus the account has changed. This patently not the case. Basis is contributions less distributions, plus/minus taxable events (if any).
A perfect Example is my HSA and 529 plans where I have made small steady investments in these accounts over the past 10years, have never taken a distribution. My HSA is worth $75k, has had $50k of contributions since inception, so I know the gain is $25k. Yet due to rebalances over time, the cost basis in my investments is tracked as $68k, and thus only $7k of gain. This is simply not correct. Now in the case of a taxfree account, this may be moot and only informationally misleading, if the accounts are ultimately used for taxfree purposes, and thus the unrealized gain in the account is never taxable.
However, with deferral based retirement accounts, this may be much more serious as there is a deferred tax impact associated with the unrealized gain in the account, that using this same math will be possibly understating.
Is there a way to fix how Quicken behaves? I realize gain/loss REPORTS ignore retirement accounts. But its not a reporting issue, its a data handling issue.
