Input Assumptions

[Kathleen Reynolds]

#4121

The Input Assumptions window lets you change the underlying assumptions about how the calculations are performed. To edit the Input Assumptions, click Input Assumptions on the Edit menu.

There are several different assumptions that can be changed (for each alternative, of course):

• Timing of Account Activity: Select when during the year each of the activities should occur. For each one, you can select Begin to have if occur at the beginning of each year or End for the end of each year. When contributions, distributions, and conversions all occur in the same year, the program makes contributions first, then distributions, and finally conversions.
• Minimum Distributions Options: The program defaults to having minimum distributions (which are not used to satisfy expenses or taxes) get reinvested in the Other Assets. Check the boxes to indicate those Alternatives which should spend this distribution amount instead of reinvesting it.
• Inherited IRA (SECURE Act 10 Year Rule)- Amortize RMDs? The SECURE Act stipulates that a non exempt beneficiary must completely distribute the plan balance as of the 10th anniversary of the plan owner’s death. If you select “Yes”, the program will distribute equal (with growth applied) payments during the 10 year payout. There are no required distribution during the first 9 years after the death of the owner, but having this option may lessen the tax burden of the beneficiary. If you select “No”, then the program will perform a lump sum distribution in year 10 following the death of the plan owner.
• Note: Exemptions to the 10 year rule are: surviving spouses, disabled or chronically illed beneneficiaries, beneficiaries who are 10 years or less younger than the plan owner, and legal minor child of the plan owner. If the beneficiary is a legal minor child of the plan owner, the exemption lasts until the beneficiary reaches the age of majority deemed by the state, and starting in the year after that age is reached, the plan balance will have to be distributed in 10 years. For exempt beneficiaries of the 10 year payout rule, the pre SECURE Act rules will be used to determine the required minimum distribution each year.
• Apply Waiver of 2009 RMDs There was a special rule that allowed people to forego their Required Minimum Distribution in 2009. This only applies to calculations for the year 2009, and do no impact any other years. In order for this calculation to occur, you must have the “First Year” input on the main screen be 2009 or less.
• Apply Waiver of 2020 RMDs The CARES Act of 2020 was signed on 3/27/2020. This allows people to forego their Required Minimum Distribution in 2020. This only applies to calculations for the year 2020, and do no impact any other years. In order for this calculation to occur, you must have the “First Year” input on the main screen be 2020 or less. By default, the program will have this option checked. The result is that there will be a $0 RMD in year 2020. If you select to not have this waiver used, the program will calculate an RMD as if the ACT was not in place.
• Under Apply Pre-59½ Penalties to Distributions, click the Alternatives that will be subject to the 10% Pre-59½ Distributions penalties.
  Input assumptions are saved in the data files (when you click Save or Save As from the File menu). Likewise, when you open a file (by clicking Open on the File menu) the Input Assumptions are loaded.

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