Assets

[Kathleen Reynolds]

#3664

Please see below image for details on section inputs.

Retirement Plan (IRA)
Use the IRA category for any of the following types of plans:

• • Corporate and self-employed pension, profit sharing and stock bonus plans qualified under §401(a) (includes Keogh or H.R 10 plans, 401(k) plans and employee stock ownership plans (ESOPs)
  • Individual Retirment Accounts (IRAs) under the IRC §408(a)
  • Simplified Employee Plans (SEPs) under IRC §408(k)
  • Tax-sheltered Annuities (except for account balances existing on 12/31/1986 if kept for accounting purposes) under §403(B).

• Balance: Enter the balance as of 12/31 in the year prior to the “Analysis Start Year” from the “Details” section. Example, if the “Analysis Start Year” is 2023, enter the balance as of 12/31/2022. RMDs are calculated based off the balance as of 12/31/Prior Year.
• Non-Deductible Balance: Enter the non-deductible portion of the balance. The program will not tax distributions from (or conversion of) the non-deductible balance.
• Pre-Retirement Growth: When “Use Global Rates” is set to “No” in the “Details” screen, this input will be displayed. This input will be applied to this asset only, during the years prior to retirement (for both spouses if applicable).
• Retirement Growth: When “Use Global Rates” is set to “No” in the “Details” screen, this input will be displayed. This input will be applied to this asset only, from the retirement year through the death year (for both spouses if applicable). If the surviving spouse is the beneficiary of the first to die, then this rate will be used till the death of the surviving spouse if the account was not rolled over.
• After Death Growth: When “Use Global Rates” is set to “No” in the “Details” screen, this input will be displayed. This input will be applied to this asset only, for years after the death of the plan owner/spouse. This is the rate during the inherited timeframe for non-spousal beneficiaries.

Roth IRA
A Roth IRA has no required minimum distributions while the account owner is alive. Inherited Roth IRAs, however, do have required minimum distributions. The other hallmark of the Roth IRA is that distributions are generally free of income tax. This isn’t always true, but generally speaking, as long as you don’t distribute growth within the first five years of the Roth IRA being set up, all funds are tax free.

• Balance: Enter the balance as of 12/31 in the year prior to the “Analysis Start Year” from the “Details” section. Example, if the “Analysis Start Year” is 2021, enter the balance as of 12/31/2020. RMDs are calculated based off the balance as of 12/31/Prior Year.
• Year Established: If the balance for the Roth is greater than zero, this input will show. Though Roth distributions are generally tax-free, there is a 5-year waiting rule based on when the Roth was established. The rule will allow for tax free distributions from contributions to the Roth, but if any earnings are used to fund a distribution, then they will be taxable. If any distributions are outside of the 5-year rule, then they will be considered qualified tax-free distributions.
• Earnings Included: Enter the amount of earnings that could be taxable. This would include any growth above what was contributed. For example, if an account had a total accumulation of $100,000 of after-tax contributions, and the balance of the asset is $111,333, then the earnings would be $111,333.
• Pre-Retirement Growth: When “Use Global Rates” is set to “No” in the “Details” screen, this input will be displayed. This input will be applied to this asset only, during the years prior to retirement (for both spouses if applicable).
• Retirement Growth: When “Use Global Rates” is set to “No” in the “Details” screen, this input will be displayed. This input will be applied to this asset only, from the retirement year through the death year (for both spouses if applicable). If the surviving spouse is the beneficiary of the first to die, then this rate will be used till the death of the surviving spouse if the account was not rolled over.
• After Death Growth: When “Use Global Rates” is set to “No” in the “Details” screen, this input will be displayed. This input will be applied to this asset only, for years after the death of the plan owner/spouse. This is the rate during the inherited timeframe for non-spousal beneficiaries.

Other Taxable Assets

The Taxable Assets fund represents all assets that are not part of the Retirement Accounts. For this asset, if the analysis is used is for a Married client, the Taxable Assets will be considered joint property. When liquidating for living expenses, the Taxable Asset will be the first asset to be used to try to satisfy the expense.

• Balance: Enter the balance as of 12/31 in the year prior to the “Analysis Start Year” from the “Details” section. Example, if the “Analysis Start Year” is 2023, enter the balance as of 12/31/2022.
• Growth: Enter the growth rate to be used for the Taxable Asset. This will be used throughout the analysis
• Tax Rate on Growth: Enter the tax rate that should be applied to the Other Assets growth. This is generally capital gains taxes, usually 0%, 15%, or 20% as of 10/2022.
• Calculate Balance: This input will calculate the Taxable Balance by considering the strategies involved. It will consider all living expenses, conversion taxes to be paid (by Taxable Assets), etc. The balance will reflect the strategy with the highest level of need. If you change strategies, or change inputs, this balance will be fluid in that it will recalculate each time.

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