How does the Planning feature treat the Required Minimum Distribution (RMD) [Mods - Do Not Archive]

iclarius
iclarius Windows Beta Beta
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)

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Comments

  • Unknown
    Unknown Member
    edited June 2017
    There isn't any treatment of RMD's in the Quicken Lifetime Planner.

    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.
  • iclarius
    iclarius Windows Beta Beta
    edited June 2017
    Thanks gmails1. 

    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.
  • Unknown
    Unknown Member
    edited June 2017

    Thanks gmails1. 

    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.

    They provide a Lifetime Planner...which has existed for years and years and years...but never update it to include real life situations, like RMD's and other retirement income venues (such as annuities and non-taxable pensions).  

    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!
  • iclarius
    iclarius Windows Beta Beta
    edited June 2017

    Thanks gmails1. 

    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.

    Over the last 15 years, I have built a complex spreadsheet planning out my retirement. The VERY interesting aspect of it is that the results in Quicken, two Certified Financial Planning reports as well as some online financial planning tools correlate to my spreadsheet fairly closely if I use the minimums from the Monte Carlo solutions. I include RMD is my spreadsheets <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
  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited December 2017

    Thanks gmails1. 

    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.

    The Lifetime Planner DOES do RMDs. The calculation is a bit out of date, but the calculation does occur.


    To see the impact, double click on any of the chart's bars for years when you are older than 70 1/2.
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited January 2019

    From the LTP Help:


    image


    Personally, I find the LTP to be at least 3/4-assed and possibly as good as 9/10-assed.

    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • iclarius
    iclarius Windows Beta Beta
    edited June 2017

    Thanks gmails1. 

    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.

    Thanks mshiggins. I see that it indeed does show an increase in the Tax Deferred withdrawal. 

    Thanks. That answered my question.
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    edited June 2017
    mshiggins said:

    From the LTP Help:


    image


    Personally, I find the LTP to be at least 3/4-assed and possibly as good as 9/10-assed.

    Failure to account for RMDs from inherited IRAs prior to age 70.5 causes me to dock the LTP half a butt-cheek.
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited June 2017
    mshiggins said:

    From the LTP Help:


    image


    Personally, I find the LTP to be at least 3/4-assed and possibly as good as 9/10-assed.

    So you rate it as 3/4-assed?
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    edited June 2017
    mshiggins said:

    From the LTP Help:


    image


    Personally, I find the LTP to be at least 3/4-assed and possibly as good as 9/10-assed.

    Best free retirement planner I've come across. I keep saying in customer surveys that Quicken should make a deal with the developer to allow import of Quicken account data. 10X better than the fee-based 3rd party offerings in Quicken and 100X better than Lifetime Planner. http://forecaster4website.azurewebsites.net/
  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited June 2017
    mshiggins said:

    From the LTP Help:


    image


    Personally, I find the LTP to be at least 3/4-assed and possibly as good as 9/10-assed.

    Is this a cloud-based planner?
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • markus1957
    markus1957 SuperUser, Windows Beta Beta
    edited June 2017
    mshiggins said:

    From the LTP Help:


    image


    Personally, I find the LTP to be at least 3/4-assed and possibly as good as 9/10-assed.

    Nope, self contained app downloaded to your desktop. I've been using it about 5 years now. It was just upgraded last year with new tax laws. It's very flexible and can be made as simple or complex as one's needs dictate.
  • Unknown
    Unknown Member
    edited December 2017

    Thanks gmails1. 

    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.

    Quicken doesn't do any Monte Carlo simulation, It just assumes the constant rate of return on your assets that you pick.
    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.
  • iclarius
    iclarius Windows Beta Beta
    edited June 2017
    mshiggins said:

    From the LTP Help:


    image


    Personally, I find the LTP to be at least 3/4-assed and possibly as good as 9/10-assed.

    Rocket J., My spreadsheet tells me exactly how much and when my RMD needs to be taken. I don't feel like giving my drunken uncle any more money than they should get.
  • Unknown
    Unknown Member
    edited October 2018
    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.
  • Unknown
    Unknown Member
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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 just thought of something and you can strike out problem #2 and increase the problem with their RMD calculation.

    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..
    image

    So back calculating you get $600,000 / $37,500 = 16.
  • Unknown
    Unknown Member
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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 just found this document:
    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.
  • iclarius
    iclarius Windows Beta Beta
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.

    Thank QPW. I looked at when my RMD is required (year before and yr after) and I see that the analysis takes out more than than I expect to take out in the year before RMD as well as the 1st year of the RMD. It looks like about $10,000 more than I expect. After pulling everything apart and playing with the numbers, I see that Quicken does not consider my mortgage as part of my expenses and took out extra money to pay for that. Once I reduced my living expenses by my mortgage amount, the figures looked more like I would have expected. I appreciate you heading me down the correct path.

    I hope Intuit starts putting more effort into the Investment side of Quicken.
  • iclarius
    iclarius Windows Beta Beta
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.

    In case you don't have the latest chart, here it is.https://www.irs.gov/publications/p590b/index.html

    Thanks again,
    George
  • Unknown
    Unknown Member
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.

    Do you have a direct link to the RMD calculator?  Because your link just directs me to the IRS publication listing.  

    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. 
  • iclarius
    iclarius Windows Beta Beta
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.

    The link I sent was for all the tables since everyone is going to fall into one of those categories. 
    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.
  • Unknown
    Unknown Member
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.

    Do you have a direct link to the RMD calculator?
    There are various calculators out on the Internet like this one:
    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.
  • Unknown
    Unknown Member
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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 looked at when my RMD is required (year before and yr after) and I
    see that the analysis takes out more than than I expect to take out in
    the year before RMD as well as the 1st year of the RMD. It looks like
    about $10,000 more than I expect.
    If Total Excess Min Distribution Investment is anything close to your real RMD is pure "accident", and your other totals are probably wrong.

     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):
    image

    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:
    image
    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)
    image

    Note make sure you use a year other than the current year, because Quicken is going to prorate the current year.
  • Unknown
    Unknown Member
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.

    There is a strange interaction between expenses and how Quicken is calculating this.
    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:

    image
    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.
  • Unknown
    Unknown Member
    edited December 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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 have been playing with different scenarios using Life Planner and Forecaster (which calculates this correctly), and I have basically come to the conclusion that it basically doesn't matter (at least to me) that Life Planner is doing it wrong.

    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.
  • iclarius
    iclarius Windows Beta Beta
    edited December 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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 consider even a 10% difference to fall into the noise considering it is over 30 years. I just use the planner to validate my model. So far, my model correlates very well with Vanguard, Morgan Stanley and Quicken. Gives me a warmer fuzzier feeling that I am on the right track and will not outlive my money.

    Thanks for the great help in tweaking Life Planner.
  • Unknown
    Unknown Member
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.

    Yeah it is at the noise level for me too.  Especially when I consider the fact that Quicken's Life Planner makes it pretty hard to even figure out the RMD number, so most people wouldn't be using its number to do the real withdraws.  So over time as they take out the correct amount instead of what the Life Planner says, it will converge with the correct prediction.
  • iclarius
    iclarius Windows Beta Beta
    edited June 2017
    QPW said:

    The Life Time Planner's handling of RMD is seriously flawed, and I really hope no one is using it to decide how much they need to take out.  And if a person hasn't found a way to compensate for its gross miss calculation, then they should consider it a VERY conservative estimate like you might find with a Monte Carlo simulation.

    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:
    image

    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.
    image
    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:
    image
    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.
    image
    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.
    image

    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.

    My spreadsheet does my "back of the napkin" RMD amounts so when I look at the early years of my RMD, the numbers are pretty close since the changes in the investment values aren't that great. As the years progress, my numbers depart from Quicken.
This discussion has been closed.