Lifetime Planner IDEA: Improve how ROTH IRAs are Displayed and Modelled in LTP

Scooterlam
Scooterlam Quicken Windows Subscription SuperUser, Windows Beta Beta
edited October 2023 in Budget and Planning Tools
Lifetime Planner IDEA:  Improve how ROTH IRAs are Displayed and Modelled in LTP


This is an idea post stemming from recent posts regarding ROTH IRA handling in LTP.  Reference links below.  In the first link, I conclude that ROTH IRAs are reasonably modelled in LTP.  But, it could be much better....especially in terms of transparency in the Plan Result Tables and Graph.  


Please vote!   Add your comments and thoughts.



WHAT?

1.  In the Plan Summary Tables, break-out ROTH IRA related Income, Expenses and Portfolio Values.  ROTH IRA accounts (tax-free) are currently included under the tax-deferred account type.  Very confusing and wrong.  See image 1.  Expand this transparency to Plan Result Graph and any other current or future LTP reports.


2.  Proactively UPDATE ROTH IRA contribution limits as they change!  Implement both normal and catchup contributions in LTP.   As of this posting date,  contribution limits in LTP are $ 5500.  Current law permits  $6000 per year ($7000 per year catchup contribution for those over 50).  See Link.   Lack of contribution limit maintenance has been an issue for all contribution limited account types...Yes, there are workarounds, but "broken windows" need to be fixed, then the modelling rules, already built in LTP, maintained going forward...timely.


3.  Implement an early withdrawal penalty and tax of earnings (<59.5).


4.  Building on # 3, expand the ROTH IRA withdrawal rules or "exception flows" in the LTP model.   Image 2.  Data for this is available from LTP user data, AGE of user is explicit and AGE of Account can be derived from the register data:  (date of first ROTH withdrawal - first deposit date).



WHY?

1.  Reduce modelling error and confusion when Lifetime Planner includes ROTH IRA accounts.   

2.  Provides a step-wise approach to other LTP related improvements such as Order of Withdrawal and ROTH Conversion modelling et al.

3.  Improves the competitive position of Quicken LTP feature to other planning tools.



Please vote!   Add your comments and thoughts.





Image 1 - Breakout Tax-Free from Tax-Deferred





Image 2 - ROTH IRA Withdrawal Rules:
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Comments

  • stevepowellcpa
    stevepowellcpa Quicken Windows Subscription Member
    I completely agree with this suggestion. The lifetime planner assumes withdrawals from regular IRA accounts will be subject to income taxes. On the other hand, qualifying withdrawals (and gains/income) in Roth accounts are non-taxable. This has a significant impact on future growth of the Roth Accounts
  • Scooterlam
    Scooterlam Quicken Windows Subscription SuperUser, Windows Beta Beta
    stevepowellcpa said:
    I completely agree with this suggestion. The lifetime planner assumes withdrawals from regular IRA accounts will be subject to income taxes. On the other hand, qualifying withdrawals (and gains/income) in Roth accounts are non-taxable. This has a significant impact on future growth of the Roth Accounts
     
    Just in case....I wanted to clarify point #1 in the original idea post regarding taxation of Roth qualifying withdrawals. 

    In #1, I did not mean that Roth IRAs were taxed the same as traditional IRAs in LTP (and needed to be fixed).  But rather, that Roth IRAs should be reported separately  from traditional IRAs in plan result tables.   That is, improve Roth account transparency in the plan result tables.

    Image 2 shows what is and what is not currently built in LTP for Roth IRAs.  Of course, points #3 and #4 further expand on Roth tax handling beyond what is done in LTP today.  
  • joesdeli
    joesdeli Quicken Windows Subscription Member ✭✭
    These are all great ideas!
  • mikek753b
    mikek753b Member ✭✭✭✭
    would 401k Roth also be added? pls
    the LTP should show 2 more in the chart "Your Roth" and "Spouse Roth, which aggregates for all IRA Roth and 401k Roth

    without OP proposal the LTP isn't much help when you have Roth accounts IMHO

    is there any update from Quicken product to implement this?

    overall there are several Roth related requests and proposals already, the Roth importance have increased over past years for many
    Best Regards
  • LonPribble
    LonPribble Quicken Windows Subscription Member ✭✭
    Agree -- This would make me feel better about the LTP results I am getting. Also would like to have some "what if" on Roth conversions. How will that impact my taxes and IRMMA penalties.
  • Scooterlam
    Scooterlam Quicken Windows Subscription SuperUser, Windows Beta Beta
    edited April 2022
    LonPribble said:
    Agree -- This would make me feel better about the LTP results I am getting. Also would like to have some "what if" on Roth conversions. How will that impact my taxes and IRMMA penalties.
    @LonPribble You mentioned Roth Conversions...Have a look at this Roth Conversion Idea for Lifetime Planner - comment, elaborate and vote if you please.  By voting on an idea post, it helps Quicken's product team gauge user interest for possible future development.
  • mikek753b
    mikek753b Member ✭✭✭✭
    any updates from Quicken for this request?
    any ETA?

    tnx
    Best Regards
  • mikek753b
    mikek753b Member ✭✭✭✭
    anyone from Quicken has looked at this proposal?
    any hope Quicken to implement this missing part?

    tnx
    Best Regards
  • mikek753b
    mikek753b Member ✭✭✭✭

    Quicken, any hope for this?

    Best Regards
  • Rocket J Squirrel
    Rocket J Squirrel Quicken Windows Subscription SuperUser ✭✭✭✭✭

    Bump.

    Quicken user since version 2 for DOS, now using QWin Biz & Personal Subscription (US) on Win10 Pro.

  • LeaningTower
    LeaningTower Quicken Windows Subscription Member ✭✭

    These are all valid, excellent suggestions which Q developers should implement expeditiously.

    (They should have implemented them YEARS ago. But I'm sure their "hot tub time machine)" is out of service.)

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