- Calculation notes
- **2023_RMD_CALCULATION_NOTE**
- Is beneficiary a spouse?
- Check this box if your only beneficiary is your spouse. The IRS distribution rules use a uniform lifetime table to calculate all life expectancies for determining a minimum distribution. The only exception to this rule is if the only beneficiary is a spouse and he or she is more than 10 years younger than the account owner. In this situation, the joint life expectancy table is used. The joint life expectancy table normally produces lower required minimum distributions.
- Beneficiary birthdate
- This is only required if your beneficiary is your spouse.
- Beneficiary name
- Beneficiary's name to appear on the printable report.
- Planned annual IRA withdrawal
- Annual after-tax amount to withdraw from IRA. For Roth IRA the after-tax amount is the same as the actual withdrawal. For the traditional IRA the after-tax amount will be calculated using the entered retirement tax rate. If the gross traditional IRA withdrawal (before tax) amount is less than any RMD for the year, the RMD will be used.
The planned annual withdrawals last through the owner's and the spouse's lifetime. The tool assumes no planned withdrawals, other than the RMD, for any non-spouse beneficiary.
- Age to begin withdrawals
- Age to begin the withdrawals. Default age will be the age of retirement, but any age greater than retirement age is acceptable. This allows for time to pass before any funds are withdrawn if other resources are available that can be drawn down first. If an age entered is less than 59 1/2, the tool assumes a 10% penalty on the withdrawal.
- Annual Increase of withdrawal amount
- Allows you to automatically increase the amount taken out each year, once withdrawals begin. This can help plan for potential cost of living increases.
- Roth Conversion Subject to Income Tax
- This is the total amount of the Roth Conversion that will be taxed. This is the entire amount you are converting, unless you have made contributions to an IRA that did not qualify for a tax deduction. If you are not converting all of your IRA balances, the portion is not subject to tax is prorated for the amount that is being converted.
- Pay your conversion tax bill from your IRA?
- Check this box to use your IRA to pay your conversion tax bill. This assumes that when you convert your traditional IRA you keep enough of the proceeds, and pay any taxes or penalty on the amount, to pay any additional income taxes due to the Roth conversion. For the purposes of this analysis, the tool assumes that you do not receive any interest on the withheld amount.
- Calculate possible distribution penalty?
- Check this box to calculate a possible penalty if you are paying your conversion tax bill from your IRA. There is a 10% penalty on distributions from a traditional IRA before you are 59 1/2. The penalty would apply to any amount you use to pay for income taxes on the conversion. There would also be a 10% penalty on any amounts that you use to pay the penalty. There is no penalty if you are over 59 1/2.
- Filing status
- Choose your filing status. The ‘Filing Status’ table summarizes the five possible filing status choices. Your filing status determines the income levels for your Federal tax bracket. It is also important for calculating your standard deduction. Your marital status as of the last day of the year determines your filing status.**TAXTABLE_CURRENT_DEFINITION**
- Tax rate at retirement
- Expected marginal income tax rate at retirement.
- Investment tax rate
- Expected marginal tax rate for investments. This calculator assumes that you invest the amount that you would have had to pay in taxes in a taxable investment account. The investment tax rate is used for calculating the annual return on these taxable investments.
