Hi,
My pension is offering a lump sum payout that can be rolled over to a pre-tax account, such as traditional IRA or 401k. What is the best way to go about modeling this in PRC?
Thank you,
Aubrey
The lump sum can be rolled over into a pre-tax account (taxes deferred) OR a Roth account (lump sum is taxable, but up to entire amount can go into a Roth IRA or Roth 401k), so I'd like to be able to model both.
The best solution I have come up with so far is to model this as a second Income Stream with start 1/1/2023, end 12/31/2023. If I wish to model rollover into a pre-tax account (401k, Traditional IRA), I enter the lump sum amount as a Company Contribution to Pre-tax Account. If I wish to model it as a post-tax rollover, I enter it as a windfall then enter the amount of post-tax contribution in the Income Stream Company Contribution to Post-Tax. This seems to model it correctly, but if there is a better/more direct way let me know.
@aubrey I think your solution works. You could also do things like include the new account balances in the start of year balances for 2023 or 2024, whichever is closer, or play with the mid-year adjustments maybe (I haven't spent a lot of time with that myself).
Thank you, Bill, those are good options if the way I am doing it above does anything strange, but so far so good. Thanks again.
