RMD Data Input
Data input prompts for the Required Minimum Distribution tool are discussed below:
This will allow for more configuration for the illustration for cases such as an inherited 403(b) qualified plan, etc.
This option allows for comparing taking a traditional RMD from an account with starting earlier, to potential reduce the exposure to taxation. This option will remove a number of the prompts for the RMD Comparison and display the following prompts:
Illustrate Target-Match RMD
Selecting this option will prompt for setting distribution start age, the target age and the distribution COLA.
Selecting this option will add an additional prompt for the custom distribution dollar value.
Enter the client's date of birth.
This data is used for the hypothetical cash flow analysis. If your client is younger than the proposed retirement date, the client's proposed retirement date is needed.
Life Expectancy (years)
The default value is from the IRS life expectancy tables. If a 'Reset' button () appears on the right of the editor, a manual value was entered. To reset it to the IRS tables, click on the 'Reset' button.
Used for illustrating the hypothetical cash flow analysis to the beneficiary
Enter the date of birth of the named beneficiary.
Beneficiary is Spouse
Check if the beneficiary is the spouse.
Show Beneficiary's RMD Values
Determines if the beneficiary is included in the illustration.
Beneficiary's Life Expectancy (years)
Similar to the client's life expectancy prompt: the default value is from the IRS life expectancy tables. If a 'Reset' button () appears on the right of the editor, a manual value was entered. To reset it to the IRS tables, click on the 'Reset' button.
Account is a 403(b) Qualified Plan
Check if the account is a 403(b) account, and then the 12/31/1986 balance can be documented.
Account Balance as of 12/31/1986
Available only if the prior input (Account is a 403(b) Qualified Plan) is checked. Enter the balance for the 12/31/1986 date.
Balances as of 12/31/[Last Year]
Enter the balance of the account on the last day of last year.
Total Year to Date Distributions
Enter the total year to date distributions.
# of Deposits per Year (until the year turning 70½)
If deposits are ongoing, enter the ongoing deposits.
Enter the value of the ongoing deposits, if any.
Pre-Retirement Interest Rate
Enter the pre-retirement interest rate.
Post-Retirement Interest Rate
Enter the interest rate after retirement.
Deposit Increase Method
Enter the method for increasing deposits. The options are None, Annually by %, and Annually by $.
Enter the value corresponding to the Deposit Increase Method selected.
This is only available if Quick Comparison is selected as the Illustration Type (the first prompt).
The illustration compares taking the traditional RMD payments with starting prior to the requirements to alleviate some of the potential exposure to taxation.
There are two type of comparison options for this: Automatic Target-Match and Custom Distributions. The Automatic Target-Match has TRAK to calculate a level distributions (or as much as possible) during the specified period of time. The Custom Distributions allows the user to control the time period and the value of the distributions. A cost of living adjustment (COLA) can be applied to both time periods. The prompts are the same for both options, except the Custom Distributions option requires a specific distribution be entered. The prompts are discussed below.
Distribution Start Age and End Age
Enter the age span that the RMD comparison is to be calculated.
This is only available if Custom Distributions is elected as the RMD Comparison. Enter the distribution that occurs during the Distribution Start Age.
|Getting the right value for the Custom Distribution make take some guessing. After entering the value, it may good to see how this chances the analysis, and the increase or decrease the value entered.
This is the cost of living adjustment (COLA) that is applied each year during the distribution. Because tax brackets are indexed to inflation, entering a value here keeps distributions lower in the ealy years, where higher tax rates may be applied with the higher distributions.