PortalKota – IRA Calculator.The IRA Calculator helps you determine the most ideal distribution method for your clients IRA.
This also accounts for your clients, desired retirement income or the estate value at the end of the IRA distribution.
We can take a look at this calculator from the calculators menu on the home screen.
If you already have a client selected, you’ll be able to loop load their data directly into this calculator, if you don’t have a client selected or if you’re entering this data for a new client, you can simply enter these fields manually, so we’ll load. Our information for John and Mary, the first piece of data, will have to enter is the plan type.
The traditional IRA is the traditional IRA, which allows for tax, deductible contributions and taxable income withdrawals.
The Roth IRA has assumes contributions after tax and thus non-taxable withdrawals. The stretch IRA isn’t actually an IRA plan type.
However, it reflects an estate strategy to stretch the IRA accumulation for as long as possible in order to bequeath the IRA to a beneficiary, including second generation, third generation and even fourth generation beneficiaries.
So it assumes that you want to accumulate the capital as much as possible without a large amount of distributions.
The 401k option isn’t actually an IRA IRA type. However, it is very similar. It just has the additional employer contributions as well, so we’ll use an edition of traditional IRA in this example.
So the client data has already been loaded, so we can see the starting capital balance from their assets and liability screen here. We’Ll enter John’s annual contributions to his IRA as the maximum of $ 4,000.
We can see his current age and his retirement age from the planning assumption screen, as well as the inflation rate we set there again.
If you are doing this for a prospect client, you would just enter these fields in manually. We can also see their expected rate of return, has come from the asset allocation screen and we can see John’s annual gross income of 60,000 and the assumed mortality of age 90.
We can also see two different tax rates, pre-retirement and after retirement, which we can choose to change from the default here.
We can also set whether his marital status is single or married, as it’s loaded, mary’s information in as well we’ll select a file jointly.
We can see her age as well as her gross income and we’ll enter in her contribution of two thousand.
You can also indicate where whether either John or Mary or members of a pension plan in this bottom, payment section is where you can enter their the details of your distribution option.
So if your clients haven’t actually started their distributions, yet you can compare the different payment options for how they affect your clients, achievable retirement income or their estate.
The distribution method can be entered as three different types. Minimum means only the required minimum withdrawal will be made.
Each year target means you will set a target amount to be withdrawn every year. This could perhaps be a retirement income that the clients want to achieve and use the IRA to fund.
You can also select amortization, which means it will calculate the distribution amount based on the IRA being treated in totality over the clients lifetime. We can also choose to whether the distributions will be entered as a term certain or recalculation method term.
Certain means that the IRA will pay out over a certain term before the clients death, whereas recalculate assumes that the payments can be made past the clients death.
You can also choose to enter a 72 t method for the cases where your clients want to withdraw from their IRA before the appropriate age.
So if our clients are before age 59 and a half so perhaps at their age of retirement at age 55, they want to start their withdrawals from the IRA.
So here you can enter strategy for minimizing the withdrawal, penalties and we’ll select joy. Now that we’ve done entering the contribution and payment data, we can choose to view the report we’ll be able to see the data right on the screen, as well as in a PDF which we can give to our clients.
So here in the report, we can see the data that we’ve entered into the calculator and now we can see the capital accumulation in the IRA the savings made until they retire the returns from the rate of return on the capital, the payment made to the client, The taxes – and here we have the after-tax present value of the payments each year.
So in other words, for this year we can see the seventeen thousand seven hundred and forty nine dollars of payment being made.
John five thousand dollars of taxes, plus the previous accumulation of the after-tax present value and then discounted at the rate of 5 % or inflation plus two percent.
So overall, the IRA Calculator allows us to see the capital accumulation of the IRA accounts.
We can also see how those are able to pay out to help find the clients, retirement income, and we can also see the tax as applicable. Again, you could produce this for different distribution options, allowing you to wait, the trade-offs between retirement income and the state accumulation of the IRA, allowing you to choose the method of distribution.
That’S the most appropriate for your clients needs.