Lifetime Planner IDEA: Improve how IRA and 401K Accounts are Modelled in LTP

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Scooterlam
Scooterlam SuperUser, Windows Beta Beta
edited October 2023 in Budget and Planning Tools
     Lifetime Planner IDEA:  Improve how IRA and 401K Accounts are Modelled in LTP


                               Please Vote!   Add your comments and thoughts!


1.   Update IRA and 401K out-of-date contribution limits. 

2.   Update Spousal IRA Contribution limit. 

3.   Fix Spouse IRA AND 401K Ownership issue. 

4.   Update IRA and 401K contribution AGE limits.

5.   Update In-App and website LTP HELP sections re: tax deferred account rules

6.   Implement IRA and 401K Catchup Contributions for those age 50 or older. 



This IDEA expands upon an old IDEA that was lost (along with the voting record) when Quicken moved to a new forum software vendor...

Quicken LTP enforces certain modelling rules with respect to tax deferred account types such as IRAs and 401Ks.   Overtime, application development has not kept up-to-date with changes in IRS rules.    NOTE:  While the main focus of this IDEA is on IRA and 401k plans, there are other Quicken tax-deferred account types that are also likely out-of-date and need similar review, update and REGULAR maintenance.



PROPOSED UPDATES, FIXES, ENHANCEMENTS


1.   Update IRA and 401K out-of-date contribution limits. 

Ensure that future contribution limit changes are updated timely, as IRS rules change.  Current contribution limits out of date.   This is a long-standing issue.   See Table 1 and IRS RULES Reference Link, below.


2.  Update Spousal IRA Contribution limit. 

Ensure that future spousal contribution limit changes are updated timely, as IRS rules change.  Yes, Spousal IRA contributions are modelled in LTP.   BUT, they are not updated to current contribution limits.  See IRS RULES Reference Link, below.


3.  Fix Spouse IRA AND 401K Ownership issue. 

In LTP, spouse IRA and 401K ownership is lost (reverts to "your retirement") after assigning spouse ownership at IRA or 401K account creation!  That is, spouse IRA/401K ownership selection does not convey from account creation to LTP Account Details.  This issue may extend to ALL tax-deferred account types.   Impacts #2.  A separate IDEA post


4.   Update IRA and 401K contribution AGE limits. 

With the Secure Act, contributions to these plans can continue after age 72.  In LTP today, contributions stop at age 70.  A separate IDEA post


5.   Update In-App and website LTP HELP sections re: tax deferred account rules

Very out of date.  In some cases, Help is so outdated it is referring to IRA contribution limits older that what is currently modelled in LTP! See Reference Link, below.  Likely more outdated information here.


6.   Implement IRA and 401K Catchup Contributions for those age 50 or older. 

IRA catchup contributions are modest ($1 000) while 401K catchup contributions are substantial ($ 6 500).   A common feature in competitive planners.  In Quicken, age of the user can be derived from About You section and a dynamic rule allowing Catchup Contributions applied.  See IRS RULES Reference Link, below.




Table 1 - OUT OF DATE CONTRIBUTION LIMITS as of 09.09.2021


    ACCOUNT TYPE       QUICKEN LTP  LIMIT        IRS CURRENT     
         
            
         401K                         $ 15,000                     $  19,500      
                                               
         IRA                            $   5,500                     $    6,000   
                                                     
                                                       

For perspective...The last Quicken update to the IRA limit (that was published) was Q2019 R14.21 Release Notes - Oct 2018.   That revision set the IRA limit to $5.5K.   The current IRA limit of $6,000 has been in place for over 3 years now - no Q updates.    I cannot find a published 401K Quicken update, although one or more was obviously done, but not since 2006, which is when reportedly the IRS raised the IRA limit to $15K. 

For the contribution limits/catchup contribution issue, I recognize there is a workaround, creating multiple accounts to achieve the maximum contribution limit.  But, why depend on "tribal knowledge" when the rules (outdated as they are) are already built in the model but simply need updates?   

Too many "broken windows" accumulating here.   The model must be maintained or otherwise aspects unwound, leaving it to the user to determine/ enter certain applicable and appropriate data.  Note:  Most competitive consumer and professional retirement planners enforce these kinds of rules in their models and for good reason.

LTP is a real gem in Quicken's feature set, but it needs attention.


REFERNCE LINKS


IRS RULES for Retirement Plans - Everything you need to know....
https://www.irs.gov/retirement-plans

Online Help Example citing wrong information about contribution limits et al
https://help.quicken.com/display/WIN/Tell+me+how+the+Lifetime+Planner+uses+tax-deferred+savings+information

IRS Summary of Current and Recent Past Contribution Limits
https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions

Historical 401K Contribution Limits
https://dqydj.com/historical-401k-contribution-limit/



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Comments

  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    Options
    It appears that both IRA and 401k contribution limits have been updated.  I assume that these were part of the Lifetime Planner "improvements" in R44.20?  Image 1.

    From my quick look....
    • 401K maximum contribution for 2022, in LTP, is $20,500.  Grab from my test file in Image 2
    • IRA maximum contribution for 2022, in LTP, is $6,000.  Grab from my test file in Image 3

    These figures are inline with 2022 IRS rules.  2023 rates are now published with increases in both IRA and 401K limits of 6500 and 22500, respectively.  No clue as to how LTP indexes (or doesn't) current year contributions for future years.   Seems odd, nonetheless.  

    I have not verified the other "demands" in this idea.    But, judging from the half-baked RMD solution in R22.40, I would expect that not all of the demands were implemented. 

    Will Quicken embark on a yearly LTP maintenance update for these contribution limits?


    IMAGE 1:



    IMAGE 2




    IMAGE 3


  • Eschen
    Eschen Member
    Options

    The LTP is a very helpful tool, but needs to be updated with the latest tax law changes. The Secure Act 2.0 made significant changes that have not been implemented in the LTP. One of the tax law changes that affected the LTP quite a bit is the new RMD rules. Also, you need to implement any annual adjustments to LTP as a maintenance item.

    There is no reason that Quicken should not take pride in providing an accurate and up-to-date long-term planning tool. Quicken users need to be able to rely on the accuracies of the tools that you provide.

  • kempf42
    kempf42 Member
    edited May 25
    Options

    Hi,

    I am running Quicken Classic Premier for Windows, Version RS56.9, Build 27.1.56.9.

    I'd like to propose that the Quicken Lifetime Planner be modified to properly account for RMDs from IRAs. Right now, the withdrawals from IRAs seem to be calculated by some unknown algorithm, which is unrelated to the Adjustments to Living Expenses and does not consider RMDs. Having an extra section to Planning Assumptions dialog called Retirement Withdrawals which would have a base assumption of RMD withdrawals after 73 (or whatever the legally required age is in the future), then have any additional withdrawals be calculated based on the Adjustments to Living Expenses section would be much more accurate.

    Thanx.

  • NotACPA
    NotACPA SuperUser ✭✭✭✭✭
    edited May 25
    Options

    I'll ask the Mods to convert this to an IDEA, so that other users can vote on it. THAT's how proposals get brought to the attention of the developers.

    Q user since February, 1990. DOS Version 4
    Now running Quicken Windows Subscription, Business & Personal
    Retired "Certified Information Systems Auditor" & Bank Audit VP

  • mshiggins
    mshiggins SuperUser ✭✭✭✭✭
    edited May 25
    Options

    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the Quicken Windows FAQ list

  • Quicken Anja
    Quicken Anja Moderator mod
    Options

    Hello @kempf42,

    Your idea has been merged into this already active Idea thread regarding the same request.

    Thank you!

    -Quicken Anja
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