Flexible Retirement Planner Support Forum

Jim, in the test file I sent you I noted that the additional withdrawal is not taxed (shown in a far right column in the details tab, show more details). Why no tax? Shouldn't the additional withdrawal be from taxable followed by tax deferred (both of which are taxed)?

Since the taxable portfolio is carried at basis (eg taxes are automatically deducted from gains each year), there are no taxes due on withdrawals from the taxable portfolio. Withdrawals from the tax deferred portfolio should be taxed at the income tax rate, however, if RMDs are being taken and they cover the spending required, taxes on those show up in the Taxes on RMDs column instead of the taxes on withdrawal column.

As I write it, it sounds a bit confusing, but there is a method to the madness in that all the necessary taxes are (hopefully) accounted for just once.

Jim

Thanks. So if additional withdrawal required from deferred tax investments, this is when the taxes on additional withdrawal column would be populated. correct?

Yes, but only if RMDs aren't large enough to cover required spending. If RMDs are greater than the required withdrawal, you'll just see the RMD withdrawal and taxes on RMDs in those other columns.