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In the Lifetime Planner Tool, what is the tax deferred savings 403(b) employee contribution limit?
rmillerjrcpa
Member ✭✭
It appears to still be using $10,500 which has not existed since the year 2001. The online help still states that limit. The 2020 limit is $19,500. The LPT also doesn't seem to support 50+ catch up contribution of $6,500. I've correctly entered the $26,000 total contributions in the assumptions, but the results incorrectly cap the contributions. Is there something I'm missing, or is there a workaround?
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Scooterlam
SuperUser ✭✭✭✭✭
@Boatnmaniac The link reference you made was to a LTP idea pertaining to updating RMD ages due to the Secure Act.
Perhaps the link below is more appropriate to reference. This contribution limit issue is longstanding and at one point, Quicken did make a change but I suspect to not all of the tax advantage accounts....And, perhaps the change that was made is now out of date....sigh....
https://getsatisfaction.com/quickencommunity/topics/is-there-a-10-500-tax-defered-savings-limit-lifetime-planner-seems-to-revert-to-10-500-even-when-i
@rmillercpa If I recall correctly, the workaround is to create multiple contribution lines for a particular investment, each one below the 10,500 limit. In your case you would have 3 contribution lines of 10.5k, 10.5k, 5k to sum to your 26K actual contribution. In the past, this was my approach. After adding these multiple contributions, have a look at your Plan Summary table for a given year to confirm.
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Answers
As far as I know the Lifetime Planner knows nothing about such limits.
Now the Tax Planner does, and is behind times for the new limits that "will go in place" (which means it isn't really behind times in my book) because changes this year.
The Lifetime Planner doesn't even look at your paycheck. It is simple entry of "how much income" and a percentage of what it will increase over time.
Edit And the actual retirement account is just what it is today, and the future value is calculated using the return percentage.
The Quicken Team does pay attention to posted Ideas and the more people who vote for an idea the more likely the Team prioritize and implement it. I've already referenced this post thread in that LTP improvement idea thread.
Perhaps the link below is more appropriate to reference. This contribution limit issue is longstanding and at one point, Quicken did make a change but I suspect to not all of the tax advantage accounts....And, perhaps the change that was made is now out of date....sigh....
https://getsatisfaction.com/quickencommunity/topics/is-there-a-10-500-tax-defered-savings-limit-lifetime-planner-seems-to-revert-to-10-500-even-when-i
@rmillercpa If I recall correctly, the workaround is to create multiple contribution lines for a particular investment, each one below the 10,500 limit. In your case you would have 3 contribution lines of 10.5k, 10.5k, 5k to sum to your 26K actual contribution. In the past, this was my approach. After adding these multiple contributions, have a look at your Plan Summary table for a given year to confirm.
One thing I will say about this is that I know that some of the Social Security bugs are fixed. They are fixed because there was a long discussion on the fact that Quicken couldn't really make predictions on how much Social Security one would get because of the extremely complicated rules. It was making assumptions based on the "typical use case". So the end result was they took out those assumptions and just give a link to the Social Security website for the user to figure out what is right for them.
I have no idea if a similar thing happened for the contribution limits on retirements accounts. But no matter what the help says, I see nothing in the Lifetime Planner where they can enforce such limits because the amount that the user has contributed isn't an "input" into the Lifetime Planner. It doesn't look at your paycheck or any category for your income, it is a fixed number that the user types in.
And for the retirement account itself it uses the current balance of that account.
Account bar:
Planner (Dialog for Savings and investment, Investment tab):
And the way it calculates the future value is on the Return tab of that dialog:
Return:
And also the tax planner doesn't do anything with this.
I just tried putting a paycheck of 100,000 with a deduction of 50,000 and the result is just 50,000 of "Wages". This goes for the "Taxable Income YTD" selectable on the on the Home tab, the W2 section in the Tax Schedule report. As far as I know there isn't anything in Quicken that limits these contributions.