Update Lifetime Planner to Reflect RMD Changes to IRAs due to SECURE Act

Scooterlam
Scooterlam SuperUser, Windows Beta Beta
The SECURE Act, recently signed into law, makes some important changes to retirement plans.  There is one, maybe two changes found in the ACT that impact Lifetime Planner.   These changes only apply to the US Quicken version.

1.   The Act moves the age required to begin RMDs from 70½ to 72 - For sure a change needed in LTP.    Ensure that both current retirees and future retirees are considered in the update.

2.   The Act allows IRA contributions after 70½ - Maybe a change needed in LTP?  I haven't yet tested if there are age limitations imposed in Quicken re: contributions.

Are there other parts of Quicken impacted?  Tax Planner? Other Tax-Deferred accounts in Quicken affected?

Please vote!

<Update>  01.15.2023   Revised requirement....

Secure Act 2.0 is now law, as of December 2022.   The age 72 RMD requirement is now essentially 75, for most users.  Here is a summary of the new RMD ages v. birth years, courtesy of Kitces.com.


Read more here at Kitces.com https://www.kitces.com/blog/secure-act-2-omnibus-2022-hr-2954-rmd-75-529-roth-rollover-increase-qcd-student-loan-match/

How about it Quicken?   Time to make this change?  You've updated the the Uniform Lifetime Tables at the end of 2022 but FAILED up make a corresponding change in RMD age.
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92 votes

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Comments

  • Hownow
    Hownow Member ✭✭
    A must do update
  • pambates
    pambates Member ✭✭
    It's disgusting that they are waiting till next year to do this.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    pambates said:
    It's disgusting that they are waiting till next year to do this.
    Do you know something we don't know?  I've seen nothing about if/when these changes will be made in Quicken.  Quicken is not alone on this matter...many of the online RMD calculators have not yet been updated, as well.
    BTW, if you haven't yet already voted for this suggested product improvement above, please do so.  The Quicken Team does review these improvement ideas and the more people who vote for an idea the more likely it gets put into their product development plan and prioritized.
    (QW Premier Subscription: R44.20 on Windows 11)
  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    I suspect "next year" refers to the 2021 tax year when new life expectancy tables, proposed by the IRS and currently awaiting approval, would be used..  Approval by whom and by when exactly, escapes me.  I found few details searching online, unfortunately. Anyone have an update?

    So ... Quicken may be waiting until the new life expectancy tables are official before any changes are made to LTP.   That would be understandable and prudent.   I do hope this is on their radar screen with or without an Idea thread!    Nonetheless, please vote!

    For a deeper dive, I found the following Kitces article interesting on the subject, albeit 11 months old.

    https://www.kitces.com/blog/irs-proposes-new-rmd-life-expectancy-tables-to-begin-in-2021/

    In the article, was interesting to read this: 

    "
    Specifically, according to data provided by the IRS, of the Americans who are required to take distributions from retirement accounts, only roughly 20% are taking no more than the minimum required. Which means that the remaining 80% are taking more than the required minimum, thus making any decreases in RMDs a moot point."

    YMMV in your own retirement plan.  So maybe for most LTP users it is also a moot point?  That is no or little affect on the plans ending balance?

    But despite the above quote, I would still expect Quicken to timely update the model when new tables are approved.
  • artg
    artg Member ✭✭✭✭
    I'd like to join this discussion and add my wish that Quicken updates the LTP to reflect the changes in the SECURE Act. In fact the age (70.5-72.0) change should take place immediately. Any changes to the RMD (at age 72) such as going from 3.91 to 3.67 percent (I think) could/should just be part of a normal update. Maybe this is too much wishful thinking but the truth of the matter is that I just don't think there's enough of us that see the value of the LTP tool. I've written about this before but the LTP right along with the Tax Center are, in my opinion only, essential tools if used properly.
  • karrob2
    karrob2 Member ✭✭
    I totally agree, it is disgusting that Quicken has not seen fit to updated their program to reflect the SECURE Act. It could be as simple as letting an person selected the age at which they want to start taking their RMD - 70.5, 71 or age 72. Currently Quicken is useless to me for tax planning. If it is not updated by January 2021 I will find a money management program that has more respect for its users.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    karrob2 said:
    I totally agree, it is disgusting that Quicken has not seen fit to updated their program to reflect the SECURE Act. It could be as simple as letting an person selected the age at which they want to start taking their RMD - 70.5, 71 or age 72. Currently Quicken is useless to me for tax planning. If it is not updated by January 2021 I will find a money management program that has more respect for its users.
    I'm curious why you feel LTP is a good tool for tax planning.  That is not the function of LTP as it lacks the detailed preciseness and granularity needed for tax planning.  The purpose of LTP is to provide a long-term estimation of how well our financial assets will last us through our lives based upon many different forward looking assumptions.  It takes no historical data into account.  Simply stated, LTP is not the best tool for doing tax planning. 
    Far better tools for tax planning are Tax Planner and the tax reports.  And these tools will capture RMDs for the year and calculate the tax impact provided Reminders are set up for the RMD distributions.
    (QW Premier Subscription: R44.20 on Windows 11)
  • Ben12
    Ben12 Member ✭✭✭
    New age for required minimum distributions is 72 not 70.5
  • Quicken_Tyka
    Quicken_Tyka Alumni ✭✭✭✭
    Hello @Ben12

    Thank you for taking the time to visit the Community to post your question.

    I have moved your post to the ongoing Idea thread to update the Lifetime planner.

    Be sure to navigate to the top of this post and click the up arrow to add your vote!


    Ideas are reviewed by our development team to see what people would like to be available in the future.

    Thank you,

    -Quicken Tyka

    ~~~***~~~
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    It looks like perhaps another part of LTP and/or the Help for annual contribution limits for retirement plans might need to be updated:  https://community.quicken.com/discussion/comment/20135691#Comment_20135691.
    (QW Premier Subscription: R44.20 on Windows 11)
  • luce1234
    luce1234 Member ✭✭
    I have been anxiously awaiting this for a long time. Quicken please get this update taken care of. I am just turning 70 and it really messes up my LTP planning. I don't intend to start distributions until 72.
  • Ps56k2
    Ps56k2 SuperUser ✭✭✭✭✭
    Just browsing the topic -
    in the LTP -
    is there some place where the actual RMD calculations are displayed,
    vs just the overall summary numbers
    when you click on a specific year bar in the graph.
    QWin Deluxe Subscription - Win10
  • Ben12
    Ben12 Member ✭✭✭
    Lifetime planner needs an update. Two things that should be easy and very important include get the RMDs right and also include a new category in the graph for Roth IRAs
  • Greg Lampe
    Greg Lampe Member ✭✭✭
    Quicken's current owners don't seem serious about financial planning. It's unbelievable that they haven't bothered to update the RMD in over a year!
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    They will probably get around to it the day before the new law is past that pushes it to 75.
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  • The lack of update on this in three years since the law passed, makes me question whether it is worthwhile to pay an annual fee.....
  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    @Quicken Anja Curious as to what exactly changed in LTP tax model introduced in R44.20.  Can you elaborate?  There's been a number of Ideas presented around tax handling in the planner:  https://community.quicken.com/discussion/7713110/lifetime-planner-bug-and-idea-list-make-yourself-heard/p1



  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    @Quicken Any insight?   
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    Yeah, one has to wonder what "new tax laws" they updated for if they haven't touched the RMD year which change, what 2 years ago now?

    Can anyone enlighten me as to what other tax laws the Lifetime planner is using?
    A few years ago, they removed trying to calculate the estimate on social security when the users convince them that it was too complicated for Quicken to do and is available at the Social Security site.  So, that isn't it.
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  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta

    I suspect that Quicken has tweaked on the Uniform Lifetime Table used to calculate the RMD, which I too do not see that it has changed to the new age of 72, as pointed out by @DocGer.

    I ran both my simple and extensive LTP test files, through my "parsing" tools,  on a Quicken revision prior to and after the LTP change noted in the R44.20 release notes (above image).

    In both test file cases, tax-deferred withdrawals changed (decreased) at RMD age.  Since the withdrawals were reduced, the gains increased by the:   (withdrawal delta) * (After Retirement Rate of Return).  These where the only 2 changes I observed in my test file.  Of course, from RMD age on to the end of plan, all of the EoY balances are changed slightly.  YMMV slightly depending on the size of your tax-deferred accounts.

    There may be other impacts that did not manifest themselves in my 2 test file, although my "extensive" test file is just as it is named!

    Screen grabs from the output of my LTP parsing tools are shown below.

    So there you go....Still unknown as to what Quicken has tried to achieve here, in this improvement.   A comment from Quicken would be helpful.












  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    Yeah, what good is updating the table if is for the wrong year?

    One has to wonder why changing the years would take so long, but I was thinking about a workaround and might have an idea what is going on.

    One workaround be to change your birthdate.  Which got me thinking about that 1/2 year.  They might have put in special code to do prorating on that 1/2 year and now they don't know how to take it out.

    But given they have had about two years to figure this out, you would think they would have worked it out by now.  You have to assume that it just isn't a priority with them.
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  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    DocGer said:
    Plus, its not as simple as you laid out Chris. The actuarial tables changed with the change to age 72...so the actual percentages calculated for your RMD is completely different than the old 70 1/2 law.
    I thought @Scooterlam indicated the tables have already been updated and so that part should be right.
    Note I have not dug into the details like @Scooterlam to prove this one way or another.

    DocGer said:
    The calculation is actually "easier" now.
    Yes, it is if you are starting from scratch, but not if you are making a change to a system that is already in place.  To do that you have to first figure out how to remove the complicated code without messing anything up.
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  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    edited October 2022
    How frustrating....It continues.

    I suspected in my above post that the Uniform Lifetime table may have been updated in LTP with R44.20.  It seems it has been updated, starting at age 72 with a starting, calculated divisor of 27.4.   LTP appears to get this divisor right starting at 72 and beyond.  See first image showing LTP calculated divisor vs. the IRS Uniform Lifetime table divisor.  Right click to open in new tab to enlarge.  NOTE:  If you have a ROTH IRA, you must back this balance out of your tax-deferred balance (for a given year) in LTP to get the correct divisor.  Or simply exclude the ROTH for the purposes of verifying these findings.

    THE PROBLEM IS.....LTP continues to use age 70 for its first tax-deferred withdrawal, not the expected age of 72!     So, while the divisor is correct post 72,  withdrawals are STILL made starting at 70....These withdrawals should begin at age 72, unless other funding sources (taxable) are depleted.  See first image.

    Additionally, at 70 when tax-deferred account withdrawals are prematurely taken in LTP,  withdrawals from taxable accounts stop.  This is a known "problem" and is part of the current LTP model. To be consistent with the current model, taxable withdrawals should stop at 72 when RMDs start.   Not saying this is right, mind you.





    So...why would Quicken development update the tables but not address the two issues described above?  They are hand-in-glove!  More broken windows?

    Suggestion to those who care, to "report a problem" in app and reference this thread.



    To test this....


    I setup a very simple plan, shown in image 1.    I excluded the ROTH IRA in the plan as it is incorrectly lumped into the tax-deferred category in the summary tables, making it error prone to back it out when doing RMD calculations.   I setup retirement at age 70 with a current age of 68.   Also, I ensured that I had sufficient taxable account balance so that I would not draw from tax-deferred account prior to 72. 
    <Edit>  I also setup the plan to show future dollars.  Image.



    <Edit>  I suggested to a mod to move this post under the related RMD idea thread, here
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    DocGer said:
    Changing our birth years doesn't work. If I make us one year "younger", I still get a fraction of a year of Excess Minimum Distribution in the year I turn 72...instead of the RMD for the entire FULL year.

    Ugh. That's not how that's supposed to work at all. You must take the RMD for the ENTIRE year you turn 72. It's not prorated by birth month.
    I was thinking that you change both the year and the month to make it line up so that it would start at the beginning of a year.  Note that this will mess up your social security if you aren’t already taking it.

    And of course, this isn’t supposed to be how it works, it was just shot at making the numbers somewhat come out right.
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