How does the Planning feature treat the Required Minimum Distribution (RMD)
Quicken Premer 2016, with W10.
I am trying to understand how the Quicken Planning feature treats the Required Minimum Distribution (RMD) in its projections.
Does Quicken automatically start reducing the deferred investments by the RMD once the holder of the investment turns 70 1/2?
(Please Preserve-Part of an active Idea)
I am trying to understand how the Quicken Planning feature treats the Required Minimum Distribution (RMD) in its projections.
Does Quicken automatically start reducing the deferred investments by the RMD once the holder of the investment turns 70 1/2?
(Please Preserve-Part of an active Idea)
Tagged:
0
This discussion has been closed.

Comments
Looking at the Lifetime Planner, you'll have to somehow determine what your investment return will be (percentage-wise) including those RMD's.
You can use separate rates for taxable and non-taxable accounts...but that's about it.
The only other workaround might be to put the RMD's in as "other income". But doing so may mess up your investments listed.
I am very surprised by the answer since Quicken uses, I think, 10,000 Monte Carlo scenarios and stops the automatic adjustment of IRA contributions at age 70 1/2. The RMD does have an important impact on the planning scenarios. It seems like they'd have factored in the RMD somehow. They do seem to include quite a bit into the product. Wish they had more detailed information on how things are calculated.
Thanks for the response.
And I don't see anything else out there as a Retirement Planner except really poor "here's your current income and investments, here's what you'll have at retirement" products.
Luckily, my financial planner can input all my info, including RMD's and expected withdrawals from ALL my retirement accounts (including annuities) combined with my necessary "living expenses" and figured out how long I can live. LOL!
I totally agree that Intuit does a marginal job in handling investments. I've been using Quicken for nearly 20 years and it is only in the past 8 years or so have they started properly addressing other aspects besides basic Banking.
Thanks again,
George
To see the impact, double click on any of the chart's bars for years when you are older than 70 1/2.
Questions? Check out the Quicken Windows FAQ list
From the LTP Help:
Personally, I find the LTP to be at least 3/4-assed and possibly as good as 9/10-assed.
Questions? Check out the Quicken Windows FAQ list
Thanks. That answered my question.
Questions? Check out the Quicken Windows FAQ list
Questions? Check out the Quicken Windows FAQ list
Set your age to 69 and your Tax-Deferred assets to $274,000. Exclude your spouse. According to the tax tables, the first RMD is $10,000.
You won't see that number withdrawn by the Lifetime Planner.
Instead, it takes out $16,500. This over-withdrawal depletes your tax-deferred accounts prematurely.
Here are the details as I see it.
First where do you see this calculation? In the year details (click on the bar graph) as:
Total Excess Min Distribution Investment.
The reason it isn't called "RMD" is because if it had already determined that you took out some money to cover your expenses, that amount would have been subtracted from this amount.
As in if you are required to take out $10,000 and it already took out $5,000 to cover your expenses, it would only show $5,000 in this field.
So to make sure I can get pure numbers, I setup the following.
$500,000 in tax deferred accounts as of the end of the last year, and now transactions in this year.
No expenses.
No inflation, No return on investment, 10% tax.
Born 1/1/1948 (70 1/2 in 2018).
Single.
Details for 2017:
So the $500,000 at the end of 2017 should be the amount used for 2018's RMD.
$500,000 / 27.4 = $18,248.18.
The amount Quicken shows is $28,125. Now if I back calculate that.
$500,000 / $28,125 = 17.78. I doubt that this is an "old value", if is more than "is a bit out of date" is extremely out of date.
Here is the next year:
Back calculate: $468,750 / $27,574 = 17.00. (Proper amount: ($500,000 - $18,248.18) / 26.5 = $18,179.31)
I will also point out a couple more problems.
One is the Tax on Withdraws. If the tax rate is 10% why is the tax $3064 instead of $2757?
They are taking out an extra amount to pay for the taxes, and in doing so, are calculating paying tax on that amount. Note that I set it so that there is no expenses. So I don't need this money.
But they are basically ensuring that you get their 'RMD' amount after taxes, and assuming that you will pay for the taxes from your tax deferred accounts.
The second problem that every year after you hit 70 1/2 is calculated based on the current amount in the tax deferred accounts instead of the amount from the year before. The reason for this is that the Life Time Planner only calculates the current amount in those accounts for the current year.
To illustrate this I changed to 1/1/1947 so that 2017 is the year for 70 1/2.
Now what I did is I added a $100,000 to one of the tax deferred accounts, but after 1/1/2017, so it shouldn't change anything for this year.
So if you look at the value for the current year, you better do it on January 1, before any kind of returns or gains are reported for the accounts.
I changed the tax rate and the Total Excess Min Distribution Investment amount changed. What didn't change is the total of that with the tax.
So looking at the one above with $600,000 with a zero tax rate..
So back calculating you get $600,000 / $37,500 = 16.
https://www.irs.gov/pub/irs-tege/epch602.pdf
As close as I can tell it is saying the 2002 was the first year that they used the "table" for calculating this. And the previous rules hadn't been changed since 1987.
Looking at the table on page 30 the divisor for 70 is 26.2.
So the Life Time Planner's numbers are over 15 years old, or maybe never have been correct at all.
I hope Intuit starts putting more effort into the Investment side of Quicken.
Thanks again,
George
Thanks.
BTW, I downloaded Flexible Retirement Planner. Complicated...but seems to have a much better handle on RMD's. Windows and Mac versions available. Free for individual users.
AGE DIVISOR
70 27.4
71 26.5
72 25.6
73 24.7
74 23.8
75 22.9
76 22
77 21.2
78 20.3
79 19.5
80 18.7
81 17.9
82 17.1
83 16.3
84 15.5
85 14.8
86 14.1
87 13.4
88 12.7
89 12
90 11.4
91 10.8
92 10.2
93 9.6
94 9.1
95 8.6
96 8.1
I only use up to age 96 but it is useful for most people.
http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/ira_calculators/rmd
But the IRS doesn't provide any one. Instead you need to look at the three tables in Appendix B. They vary depending on things like how close in age the beneficiary is in age to the person that has the IRA.
Most people fall into using table 3:
Unmarried Owners,
Married Owners Whose Spouses Are Not More Than 10 Years Younger, and
Married Owners Whose Spouses Are Not the Sole Beneficiaries of Their IRAs)
[email protected]'s data is from table 3.
Here is another example with expenses that exceed the min they think you need to take out:
$500,000 in tax deferred accounts as of the end of the last year, and now transactions in this year.
$40,000 expenses.
No inflation, No return on investment, 10% tax.
Born 1/1/1948 (70 1/2 in 2018).
Single.
Details for 2017 (note that without expenses Quicken gives $31,250. Actual value should be $18,248.18):
As expected nothing shows in Total Excess Min Distribution Investment because it has to take out more then what it thinks is the minimum to pay the expenses.
Now I reduce the expenses to $20,000:
Notice it took out $10,521 extra to make up what it believes is the minimum.
BTW I don't get why there is a difference between what it think the min is when you have no expenses and when you have them. There shouldn't be any difference at all but here is the same without expenses (but at least the two numbers are somewhat close $30,521 vs $31,250)
Note make sure you use a year other than the current year, because Quicken is going to prorate the current year.
Zero expenses: $31,250 ("total expenses", which is the total of expenses and what they withdrew to make up the "min").
$5,000 expenses: $31,068.
$10,000 expenses: $30,885.
$20,000 expenses: $30,512.
$30,000 expenses: $30,156.
I have a feeling that Quicken isn't doing RMD at all. They say:
It sounds like they are using some kind general rules for annuities. But even that doesn't make sense. If I have annuity it isn't going to change its payment amount based on my expenses.
In one case where I had it setup for no expenses, at age 100, it was off by about $5000. That is basically nothing especially since I wasn't compensating for inflation, which would make that worth about half as much.
Given other scenarios it was as much as $50,000 off when adjusted for inflation.
Now that is 10% of $500,000 so it isn't trivial, but remember this is at the age of 100, and in fact that one had the expenses at $40,000 a year with $30,000 coming from Social Security. So the difference would give only about another year or two (depending on of course on how much it is in comparison to say Social Security at the time).
Of course it would really be nice if the Life Planner did it right.
But like a lot of features in Quicken it should be taken with a big grain of salt.
Thanks for the great help in tweaking Life Planner.