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RMD Calculation in Lifetime Planner

petermartin1950

It appears the factors for RMD's have not been updated in the latest Update as of 1/10/2022. Using R37.66 Buils 27.1.37.66

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Comments

Scooterlam

We're still waiting for Quicken to update RMD ages/tables as a result of the Secure Act, passed in late 2019....

Have a look at and vote for this idea to do just that:

https://community.quicken.com/discussion/7865450/update-lifetime-planner-to-reflect-rmd-changes-to-iras-due-to-secure-act

Sherlock

The Lifetime Planner does not calculate RMDs.

Ps56k2

Just curious- where is the RMD reflected in the Lifetime Planner ?

Scooterlam

Ps56k2 said:

Just curious- where is the RMD reflected in the Lifetime Planner ?

As for forecasting RMD in Lifetime Planner, unfortunately, LTP does not have a specific line item in the Plan Summary tables called "RMD". Depending on your plan for the year before and the year turning 70.5, you might have to do some math to see it....

Seeing your RMDs could be as simple as looking at the Your Tax-deferred Less: Withdrawals line of the Portfolio Value section. This depends on whether you need the RMD to cover expenses or you need more than the RMD to cover expenses for that year. That is, your RMD + additional tax-deferred withdrawal to cover expenses.

How I check my RMD forecasts in LTP....a simple case....

First, I start with ensuring any ROTH accounts are backed out of Total Your Tax - deferred line in the Portfolio Value Section for the year prior to taking RMD. Image 1. Note that Quicken has comingled ROTH accounts in with Tax-deferred accounts in LTP. BUT behind the scenes, they do exclude that ROTH for the purposes of forecasting the RMD. I usually just turn off (temporarily) my ROTHs in LTP to get the Total Your Tax - deferred balance for the year before turning 70.5 from which to apply the first year's factor of 27.4 (in my case).

Not excluding the ROTHs in the prior year balance trips folks up....The RMD withdrawal is still correct at 70.5 but when calculating based on prior year's balance and the IRS tables, it appears that the RMD in LTP is not correct...appears to be understated due to the ROTH comingled in the tax-deferred balance. So back it out...

Also....When checking up on RMD calculations, I usually look at the plan numbers in future dollars (v. todays dollars) to avoid the added confusion of the 1 year of inflation adjustment to the withdrawal amount that LPT applies.

During the year you turn 70.5, you can (maybe) see the RMD directly inspecting the Your Tax-deferred Less: Withdrawals line of the Portfolio Value section. Image 2.

Dividing prior year balance (less ROTH account value) by Your Tax-deferred Less: Withdrawals of the year you turn 70.5 should get you to the IRS withdrawal factor. Again a simple case to check for correct RMD.

You might also see the line item populated in the Expenses section, called Excess Min Distribution Investment. Image 3. This is not the RMD itself but the excess amount that is put back into taxable savings as a deposit. So you could have a case where your RMD results in surplus cash that year (more income than expenses). The excess RMD is then put back into taxable savings. I haven't played around with the Surplus Cash setting (in Living Expenses) to see if that adjusts this amount or not....

Image: https://us.v-cdn.net/6031128/uploads/editor/ds/d44bmjgn8m7p.png

There is probably a number of cases here that could obfuscate the real RMD amount taken.. I think I remember @Chris_QPW posting some additional detail about RMDs. I remember too that the new forum wiped out his helpful illustrations so it might make that post a bit harder to read.

So, clear as mud....Perhaps there needs to be a specific line item called RMD in both the Portfolio Value section and expense sections. Maybe too, some better treatment of ROTHS in LTP, vote HERE.

Chris_QPW

Here is about as clean as example you are going to get. First off, I would like to point out that the IRS' table has never been changed, they didn't even remove 70 and 71 from the table:

Image: https://us.v-cdn.net/6031128/uploads/editor/ss/okmam64flwan.png

Birthday 1/1/1957, which mean 70 1/2 is 2027.
No inflation, tax, or returns on money, and 1,000,000 in IRA accounts at the end of the 2026.

Image: https://us.v-cdn.net/6031128/uploads/editor/3s/00dkpqrimw5m.png

Image: https://us.v-cdn.net/6031128/uploads/editor/me/l50lggz0izz6.png

1,000,000 / 36,496 = 27.4.
Note both the year it is taken out 70 1/2 (2027) and the number to divide by 27.4 are the old values (but correct for those).

Here is an interest quirk with the "1/2" year coming into play (hopefully Quicken got this behavior right, but it isn't going to matter when they finally change to 72 instead of 70 1/2)
Change birthday to 7/1/1957. That put 70 1/2 into 2028.

Image: https://us.v-cdn.net/6031128/uploads/editor/35/d4gpi5mra6tz.png

Image: https://us.v-cdn.net/6031128/uploads/editor/9c/cm07cobhje3h.png

1,000,000 / 37,736 = 26.5 (Note from the IRS' table this is the number used for 71!

If your birthday is 7/1 or later in the year the year that you become 70 1/2 is also the year you become 71. So, Quicken is using the number for 71 instead of the one for 70.

Chris_QPW

BTW I will point out that Quicken always uses the uninform table, it doesn't take into account when the spouse is 10 years younger or know about inherited IRAs and such.

Rocket J Squirrel

Chris_QPW said:

First off, I would like to point out that the IRS' table has never been changed, they didn't even remove 70 and 71 from the table:

Change is coming to the life expectancy tables.

See 1/5/22 draft of Form 590-B

Chris_QPW

@Rocket J Squirrel thanks, I didn't look for "drafts".

And seeing that makes me wonder if Quicken Inc doing the "right thing" by waiting till it is official before changing it in the Lifetime Planner (but only because I like to hope the world is better than it seems).

Ps56k2

@Chris_QPW - tnx for posting the Prev/Next year Summary projections....

I played with the "age" to trigger the RMD and then click on the bar graph "year" to bring up those Summary pages.

For me, and my simple Fidelity IRA, the ... Income -> Withdrawal -> Tax Deferred .... was pretty close to what the actual RMD calc would be. So - good enough for future planning - mostly how much additional income would be seen for taxes.

petermartin1950

Fidelity updated their tables in the first week of 2022. I'm hopeful that Quicken will update this table soon. Not a big deal but every detail counts

Chris_QPW

Ps56k2 said:

@Chris_QPW - tnx for posting the Prev/Next year Summary projections....
I played with the "age" to trigger the RMD and then click on the bar graph "year" to bring up those Summary pages.
For me, and my simple Fidelity IRA, the ... Income -> Withdrawal -> Tax Deferred .... was pretty close to what the actual RMD calc would be. So - good enough for future planning - mostly how much additional income would be seen for taxes.

I don't think it would shift the prediction a whole lot, but the biggest problem right now is the year (and they might as well change the "divide by number" while they are at it), because it is accumulating.

At the end of the year you are 69 (or 70 if 70 1/2 pushes you into the next year), in that year Quicken subtracts the amount it calculates, so now you have that much less in your deferred tax accounts for the next year's calculation. So, it will inflate your taxes for those two years, and it will have less than it should for the math when getting to 72, not to mention that it will be predicting less than it should for the future withdraws because of table changes that @Rocket J Squirrel pointed out.

Ps56k2

petermartin1950 said: I'm hopeful that Quicken will update this table soon.

I wonder if the LTP changes only come down as part of a Quicken release - ie R37.xx - I'm sticking at R37.37 -
OR... if something else triggers it - like OSU - and it can download specific internal tidbits without a full Release update.

petermartin1950

An update soon should take care of updating the Uniform Life Expectancy table for 2022 for the recent law change.

Chris_QPW

Ps56k2 said:

petermartin1950 said: I'm hopeful that Quicken will update this table soon.

I wonder if the LTP changes only come down as part of a Quicken release - ie R37.xx - I'm sticking at R37.37 -
OR... if something else triggers it - like OSU - and it can download specific internal tidbits without a full Release update.

Even though I don't know 100%, I would give it 99% chance that this is a code change and as such would require a new patch.

Ps56k2

It is mentioned in this R36.57 posting -
but will wait until they officially merge R36.xx with R37.xx - I'm sticking at R37.37

https://community.quicken.com/discussion/comment/20231193/#Comment_20231193

Chris_QPW

Ps56k2 said:

It is mentioned in this R36.xx posting -
but will wait until they officially merge R36.xx with R37.xx - I'm sticking at R37.37
https://community.quicken.com/discussion/comment/20231193/#Comment_20231193

Those aren't for the Lifetime Planner. The Lifetime Planner has been left out of such updates for years for some reason.

Ps56k2

Chris_QPW said: Those aren't for the Lifetime Planner. The Lifetime Planner has been left out of such updates for years for some reason.

More and more it seems like Quicken is a frankenstein of bolted together "modules" that look different, work different, and use different pieces of the database.... like a "dev group" is only reponsible for their project area, and no one is responsible for tying it all together in a single cohesive program - heck, just look at the Quicken file names in our user folders... not even the same format, syntax, etc -

Image: https://us.v-cdn.net/6031128/uploads/editor/dr/2vdznh5usn5v.jpg

Chris_QPW

Ps56k2 said:

Chris_QPW said: Those aren't for the Lifetime Planner. The Lifetime Planner has been left out of such updates for years for some reason.

More and more it seems like Quicken is a frankenstein of bolted together "modules" that look different,

As far as I can remember Quicken has been this way. Triva question when was the tax planner and "lifetime planner's (that use to be the retirement planner)" Planning Assumptions created?

Here is a hint it is so old that the "flat look" came back in style.

mshiggins

The Lifetime Planner came from the standalone Quicken Financial Planner. If my memory is correct, the standalone product was integrated into Quicken in 2003.

Chris_QPW

mshiggins said:

The Lifetime Planner came from the standalone Quicken Financial Planner. If my memory is correct, the standalone product was integrated into Quicken in 2003.

That would be about the right time. I actually don't know exactly. In the last 1990s when Microsoft was late to the Internet game they pushed "Desktop as the Internet" to leverage the PC as to get back in the game, and along with that was "every application is a 'web application'".

Intuit embraced that and started changing Quicken for the new GUI interface. This means the GUI is a web page, and it communicates its data from the application (core Quicken) using ActiveX which is way to embed web pages, and other kinds of GUI components, in an application and share data between different parts. ActiveX was also very popular with the virus writers. That is the reason it fell out poplar use.

I can't remember the exact 1990s version that it came out on, but I certainly remember getting HTML 401 page not found errors when trying to change between different parts of Quicken. And they would fix it, and then a new version of IE would come out and it would break again.

The tax planner, and from what I have seen most of the "Business" forms and such were created/modified to use this "Web API", and still do to this day. In the case of the Lifetime Planner there has been some partial rewrites for parts like the graph.

Here is a look at "Planning Assumptions" in a program called Spy++ from Microsoft for looking at program components:

EDIT: The tax planner web pages are located here:
C:\ProgramData\Quicken\Inet\Common\Pnf\Qtax