tax-free savings or taxable portfolio???

The planner offers plenty of flexibility and can handle many complicated real-world scenarios, but sometimes it can be tough to figure out how to do it. Check out this forum for discussion of how to model things like selling a house, long-term care expenses, and much more.
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dsilberm
Posts: 2
Joined: Fri Sep 23, 2016 4:40 pm

tax-free savings or taxable portfolio???

Post by dsilberm »

I thought I'd try modeling the sale of my house two ways (we're selling it in 6 months). The first way I tried was to enter the after-tax proceeds as tax free savings on the Additional Inputs page. My plan would be to invest these proceeds in a portfolio but there was no way to represent that.

So, the second way I tried was by simply adding the proceeds to the existing value of my taxable portfolio, since that's where they will wind up anyway.

The results were dramatically different and I don't know why -- to the point where one outcome indicates I can retire earlier and the other just the opposite. :shock:

jimr
Posts: 585
Joined: Thu Feb 28, 2008 6:48 pm

Re: tax-free savings or taxable portfolio???

Post by jimr »

The labels for those cash flow types can be confusing. Tax free savings refers to additions to the tax free portfolio (eg Roth IRA). Taxable savings refers to additions to the taxable portfolio. I think you meant to create a taxable savings cashflow.

A tax free savings cashflow is basically a Roth IRA contribution. My guess is that's why the results came out so different.

You can see more details about what's going on with your plan by clicking on the 'detailed view' tab and then clicking the 'show more detail' radio button on the top right of the window.

Hope that helps...

Jim

dsilberm
Posts: 2
Joined: Fri Sep 23, 2016 4:40 pm

Re: tax-free savings or taxable portfolio???

Post by dsilberm »

Thanks, Jim

Yes, I did look at the detailed view, which confused me a bit. What you're saying about a Roth makes sense.

So adding the proceeds of the sale to increase the value of my portfolio is a valid way to go?

jimr
Posts: 585
Joined: Thu Feb 28, 2008 6:48 pm

Re: tax-free savings or taxable portfolio???

Post by jimr »

Yes. Based on what you've described, adding the net proceeds from the sale to your taxable portfolio seems like a good way to handle it.

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