Documentation for Detailed Table and what the headers mean

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

Documentation for Detailed Table and what the headers mean

Post by joerob58 » Sun May 05, 2019 1:01 am

Jim, just came across a question and reply in the forum about the Detailed Table columns from 2016. I am having an awful time trying to learn the "accounting" in the detail table - where is money going/moving to and when. I have slowly/painfully picked up on some columns, but, is there a "paper" or other write up to read and keep close by to help with determining where all the money is going and when?
Thanks for the planner software and your maintaining this forum.

jimr
Posts: 514
Joined: Thu Feb 28, 2008 6:48 pm

Re: Documentation for Detailed Table and what the headers mean

Post by jimr » Sun May 05, 2019 6:44 am

While it doesn't provide column by column descriptions for the detailed view table, the information on the "Planner Output" docs page might be helpful:
https://www.flexibleretirementplanner.c ... er-output/

Aside from that, there isn't a complete column-by-column description of the items in that table. Many of the columns are at least somewhat self explanatory, but I agree it'd be nice to have a cheat sheet and that's a good item for my to-do list.

In the meantime, I'm happy to answer any questions you have about any of the columns to fill in the blanks for you.

Jim

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

Re: Documentation for Detailed Table and what the headers mean

Post by joerob58 » Sun May 05, 2019 8:36 am

Yes - a cheat sheet! :D
Thanks again for your replies.

One additional question: Is there a way to set up the software to block money going to the Taxable account and go to a Roth only?

Using the software to plan - My plan is/was to create a Roth IRA, do periodic withdrawals (monthly) over each year, and drain the Traditional IRA to zero balance, building the Roth balance. As the balance of the Traditional IRA lowers and the Roth balance rises, I would begin to change the distributions, balancing the withdrawals to eventually go completely to the Roth as the sole source of distributions.

I did not plan on a "Taxable" account to receive any transfer funds from the Traditional IRA because there is additional taxes to be paid even if I do not take any money from the taxable/brokerage account.
So, on the Settings Page where the "Configure the order for portfolio withdrawals and RMDs" bullet list is, I have to choose an option that doesn't fit my plan which then throws out the whole desired plan...


I thought for a moment to take the Taxable account and feed the Roth - but that won't work as it would be a contribution to the Roth - and I don't think I am allowed any IRA contributions with my "type" of income. Pension and SS - not earned income.

The software is very helpful even with my issue of not wanting to use a taxable account.

Thanks again.

jimr
Posts: 514
Joined: Thu Feb 28, 2008 6:48 pm

Re: Documentation for Detailed Table and what the headers mean

Post by jimr » Sun May 05, 2019 8:52 am

The challenge with blocking extra money from going into taxable is that the money has to go somewhere and in most circumstances, depositing extra money into a Roth or tax deferred account will trigger excessive contribution penalties from the IRS.

Putting any extra money, either from RMDs or because income was higher than expenses, into the taxable account is the only action that we know for sure won't trigger IRS penalties.

Does that make sense or am I missing something?

Jim

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

Re: Documentation for Detailed Table and what the headers mean

Post by joerob58 » Sun May 05, 2019 11:15 am

I think you are correct. Thanks again.

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

Re: Documentation for Detailed Table and what the headers mean

Post by joerob58 » Sat Jul 13, 2019 7:31 am

Good Morning Jim,
I would like to tell you that your software, Flexible Retirement Planner Evaluation, is great. Since my last login, I have worked with a financial planning company and a local CPA to determine my options for a Roth conversion and basic planning for Traditional IRA distributions. Your software is as good as the CPA showed me. Your software is better than a $650 financial planning software sold by the professional planning company.
Thanks.
I want to come back to the question I asked at the beginning of this thread - how to account for moving my money from the Traditional IRA to a "non-taxable" location.
I have decided against a Roth conversion - just got started on that plan too late in life and don't want to invest all the taxes I would pay getting into the Roth in just a few years.
I want to take my Traditional IRA distributions and "save" some of the funds into a checking account in addition to putting some of the distributions into the Taxable Investment (brokerage) account.
Question - For the purposes of setting up the software - Specify additional Cash Flows where I list the distribution amounts and the locations to channel the money - I want to treat part of the after tax proceeds as a Tax Free account (checking account) and then the remainder of the distribution will go into the Taxable Account (brokerage).
Will the software do that and let me (in my head) treat the tax free money flow as the checking account??? Again, Thanks for all you have done and continue to maintain on this site.
Whoops - one last question. Just to verify - latest version is 04.02.17 - Build Date 02-17-2019?

jimr
Posts: 514
Joined: Thu Feb 28, 2008 6:48 pm

Re: Documentation for Detailed Table and what the headers mean

Post by jimr » Sat Jul 13, 2019 7:52 am

First, yes, 04.02.17 is the latest version.

The planner doesn't have any way to directly support having a "tax free" checking account. Basically, it just has the 3 types of portfolios and that's it.

There are a couple of indirect methods you could try that should come close to mimicking the effects of having this separate account. The first approach would be to perform some calculations to make an estimate of the impact of the separate account on the overall portfolio return/std deviation (eg probably lower for both) and also make an estimate of the impact of the tax free checking account on your average capital gains tax rate (maybe lower also if say muni bonds were used instead of a checking account).

Another approach would be to create "tax free savings" cash flows to manually move money into the Roth portfolio. This wouldn't really be a Roth account, but the checking account would have some similarities to a Roth account and since you otherwise wouldn't be using the Roth portfolio, this might be a workaround. You'd need to do the math manually to figure out all the cash flows and tax implications.

Another approach would be to treat the separate account as something that's outside of the model and model just the inflows and outflows from this separate external account by using "otherexpense" cash flows (for the outflows to the outside account) and income cashflows (for the inflows from the outside account). As with the other approaches, you'd need to do some manual calculations and double check everything to make sure you've gotten all the cash flows right.

Finally, I'd do a sanity check on whether trying to model this separate checking account is worth the extra work. You might try using sensitivity analysis, varying the tax rates, to see how much of an effect a few percentage point change in tax rate has on your plan. It may turn out that this entire exercise would only move your plan's chances for success by a percentage point or two and sensitivity analysis might be useful to help quantify the best/worst case ranges for this without doing the extra modeling work to get a more precise estimate.

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