How can I forecast withdrawals from IRAs in lifetime planner ?

Planner does not deduct forecast withdrawal from selected IRA accounts

Best Answer

  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    Accepted Answer
    Understand now.   I can see the same behavior, if I am modelling it the same as you.

    In my LTP test file,   I setup a one-year, special expense at age 60 of 100K and assign an IRA account to fund that future, mortgage paydown expense.  In the plan details at age 60, I do see that the inflation adjusted 100K is being taken out of taxable accounts    See image. 

    At first blush, I would have assumed LTP would have respected my (your) account selection (IRA) and applied any penalty (prior to 59.5) and ordinary tax against the withdrawal. 

    It seems though as if Quicken is sticking to its normal "order of withdrawal" drawing down from taxable accounts first, despite your IRA account selection in Special Expenses.

    I don't have further explanation at the moment,  other than "admiring the problem"! 

    Will continue to look at it...


Answers

  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    If you click on a bar in the Plan Results, you should see withdrawals from tax-deferred accounts. Are you not seeing this?

    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • dwhizsr
    dwhizsr Member
    no, although I selected the IRA account for the special forecasted expense to be
    deducted, the plan summary deducted it from other taxable accounts.
  • dwhizsr
    dwhizsr Member
    I am using the special expense category to forecast the withdrawal amount ...is that the correct path?
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    edited January 28
    dwhizsr said:
    I am using the special expense category to forecast the withdrawal amount ...is that the correct path?
    No, it isn't. It should be under Savings & Investments in Plan Assumptions. Make sure Quicken knows the account's intended use is retirement.

    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    edited January 28
    dwhizsr said:
    I am using the special expense category to forecast the withdrawal amount ...is that the correct path?
    No, it isn't. It should be under Savings & Investments in Plan Assumptions. Make sure Quicken knows the account's intended use is retirement.



    +1  Also, stepping back a bit, make sure that the account you call an IRA is defined as an IRA in Quicken.   Right-click on the account and view the Account Details.



    Once defined and included in LTP, Quicken will begin taking RMDs at age 70.  Withdrawals from tax-deferred accounts may be taken earlier than 70 if Quicken needs to cover expenses.

    When you get it working and can see your withdrawals as @Rocket J Squirrel illustrates, then don't forget to remove your special expense to avoid double dipping.
  • dwhizsr
    dwhizsr Member
    My IRA is classified correctly as traditional IRA in the accounts and Quicken is correctly calculating and deducting annual RMDs. However, I'm trying to forecast an additional withdrawal for mortgage payoff and the plan summary is deducting it from a taxable account rather than the selected tax deferred account. The issue seems to be with "forecasted" withdrawals vs. actual withdrawals...thanks for your continuing help guys.
  • dwhizsr
    dwhizsr Member
    PS: ..and the amount is not being deducted from the "selected account"...
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    edited January 28
    That extra info would have been helpful. :) I see what you're seeing. I told the planner to take special mortgage expenses from my IRA but it shows it coming from taxable withdrawals instead of tax-deferred.
    If anyone else can confirm this, I'll say congratulations, you found a bug.
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    Accepted Answer
    Understand now.   I can see the same behavior, if I am modelling it the same as you.

    In my LTP test file,   I setup a one-year, special expense at age 60 of 100K and assign an IRA account to fund that future, mortgage paydown expense.  In the plan details at age 60, I do see that the inflation adjusted 100K is being taken out of taxable accounts    See image. 

    At first blush, I would have assumed LTP would have respected my (your) account selection (IRA) and applied any penalty (prior to 59.5) and ordinary tax against the withdrawal. 

    It seems though as if Quicken is sticking to its normal "order of withdrawal" drawing down from taxable accounts first, despite your IRA account selection in Special Expenses.

    I don't have further explanation at the moment,  other than "admiring the problem"! 

    Will continue to look at it...


  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    edited January 28
    There is also this little nugget of info. Problem is, the online help isn't very helpful.

    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    This has been one of my complaints about how the Lifetime Planner works from day one.  The user has no control over which accounts (or account types) a given withdraw will be done.

    What might make sense for one person doesn't make sense for another.  But I can see why they did it this way.  To allow the user control over this makes it both harder for the programmer and the user.  So if you are going to a "ballpark estimate" the Lifetime Planner isn't too bad especially compared to some of the others that want to try to make such predictions, but no that the user won't spend more than 30 minutes doing it.

    For me that is all the Lifetime Planner is "a ballpark estimate".
    Signature:
    (I'm always using the latest Quicken Windows Premier subscription version)
    This is my website: http://www.quicknperlwiz.com/
  • dwhizsr
    dwhizsr Member
    Thanks for all your tracks... maybe Q folks will program a fix to force the withdrawals from the "selected IRA accounts", treat it as the taxable event it is then project the correct balances forward for all accounts.....
    standing by...
  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    That extra info would have been helpful. :) I see what you're seeing. I told the planner to take special mortgage expenses from my IRA but it shows it coming from taxable withdrawals instead of tax-deferred.
    If anyone else can confirm this, I'll say congratulations, you found a bug.
    I'm leaning that way as well - BUG

    Alternatively, I tried to model the mortgage paydown scenario as a College Expense, as it has the same ability to select accounts.   College Expense behaves the same way as Special Expense - does not respect the user's IRA account selection.  So I guess there is a BUG there as well.

    Strangely, despite the selection of the IRA for this Special Expense, if you go into LTP Quicken Planner:Investments and press Details button for the brokerage account, you see that the Special Expense is listed as a dropdown option for "intended use" - under BROKERAGE!.  Image. 



    Suggest everyone who sees this issue, go to Help>Report a Problem and reference this thread.
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    This is all I can find in Help. I found nothing about telling the planner a tax-deferred account could be used for expenses. So reporting this as a bug may be futile; Quicken devs tend to reject such bug reports as "working as designed".
    You know what happens when you "assume"...
    And a larger issue is that in the planner, you can only assign one intended use to any account. In real life, you would not assign a single goal to one account. In fact "retirement" is not really an intended use. You are still likely to have specific expenses in retirement. So as @Chris_QPW says, think of the planner as a blunt instrument. This is one case it simply was not designed to handle.
    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
  • Tom4653
    Tom4653 Member
    I agree. There is no ability to source the withdrawal from tax deferred until all taxable is used up. A common action in retirement is to take a specific amount every year from IRAs so that the lowest tax brackets are "used up and not wasted" especially prior to social security being taken, but after retirement.
  • dwhizsr
    dwhizsr Member
    Thanks for all the good analysis...As a Quicken user since 1990, I've enjoyed the evolution of Quicken as a comprehensive tool that has been extremely useful to manage my sometimes complicated financial life. Its hard to believe that the Q developers provided a full list of accounts for a choice of where special expenses (or others) may be deducted without programming the ability to make it happen. It seems an easy, uncomplicating fix....standing by....
  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    dwhizsr said:
    It seems an easy, uncomplicating fix....standing by....
    Nothing in Quicken is easy and uncomplicated.
    Standing by will gain you nothing. For an idea to be considered, it must be submitted as a capital-I Idea in the proper place on this forum.
    I suggest you compose your idea into a clear and concise presentation and post it here:

    Quicken user since version 2 for DOS, now using QWin Premier Subscription on Win10 Pro.
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