Taxable Portfolio Value

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joerob58
Posts: 7
Joined: Fri May 03, 2019 8:17 am

Taxable Portfolio Value

Post by joerob58 » Fri May 03, 2019 8:25 am

New user - I am trying to plan for a Roth conversion over the course of about 10 years. I set my information/data. I have the initial Taxable Portfolio Value set to $0.00. I entered my Tax Deferred Portfolio value, set the Tax Free Portfolio value to $0.00. Fill in all the other information on the Summary view, go to additional inputs and set up a Tax Deferred Savings withdrawal of $50k per year, a Tax Free Savings of $43k to provide for paying the taxes from the deferred withdrawal resulting in a deposit into the Roth of $43k.
My question now is when the scenario is run, the Taxable Portfolio Value begins rising. Where doe the Taxable Portfolio obtain the money from?
Thanks to all that comment.

jimr
Posts: 542
Joined: Thu Feb 28, 2008 6:48 pm

Re: Taxable Portfolio Value

Post by jimr » Fri May 03, 2019 8:33 am

Generally, there are three ways that the taxable portfolio can get additional funding during retirement. The first is by direct contributions using the taxable savings cash flow. The next is due to RMDs that are automatically deducted from tax deferred starting at age 70, and the final way is if income during retirement is greater than expenses any extra funds are automatically deposited into the taxable portfolio.

To see exactly which of these scenarios might apply, it can be helpful to select the detailed view tab after running the planner, then select the "Show more detail" radio button on that view. This adds a bunch of columns to the table including a column that shows RMD amounts. If that's not enough detail, you can also right-click on any column header in the table to get a menu that lets you "show all columns." This expands the table to show all the simulation output information that was recorded.

joerob58
Posts: 7
Joined: Fri May 03, 2019 8:17 am

Re: Taxable Portfolio Value

Post by joerob58 » Fri May 03, 2019 2:07 pm

jimr - thanks for your reply. It helped me understand, of course I had to read it and review the tables several times.
As a result of your reply, I ask you this: I have one banking account from which I use normal checking and have a sizable amount built up from consolidating a savings account into the checking account. I also have a Traditional IRA. Is it correct for me to consider the Taxable Portfolio to be either a Brokerage account (taxable) or the checking account where I can receive the additional money coming from the IRAs through either RMDs or distributions (taxed or not)? Thanks

jimr
Posts: 542
Joined: Thu Feb 28, 2008 6:48 pm

Re: Taxable Portfolio Value

Post by jimr » Fri May 03, 2019 2:44 pm

I think that makes sense. Usually a checking account wouldn't be worth including in the taxable portfolio since the balance is usually relatively small. However, if you're keeping a relatively large checking balance it's probably good to include it in taxable.

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