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Optimize Withdrawal Priorities

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(@sazplanner)
New Member
Joined: 3 months ago
Posts: 2
Topic starter  

I've run with Optimize Withdrawal Priorities and it has the has the Adopt button activated.

I have a few questions:

1. Can I see the details behind the Adopt button? I'd like to see the details (e.g. amounts withdrawn from each account each year) before I select the Adopt button.

2. Once I select the Adopt button I assume it is overriding the details on the Management: Withdrawal Priority tab

3. How to I back out the Adopt changes?

Thanks for the assistance.


   
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(@charlie-stone)
New Member
Joined: 1 year ago
Posts: 3
 

@sazplanner

Hi, this is Charlie with Pralana.

Q1: No you cannot see the amounts withdrawn from each account, each year before you select the Adopt button.

Q2: Yes, that is correct.

Q3: There is currently no direct way to do that, but you have some options. Create a 2nd scenario and copy all inputs from S1 to S2. Then you can optimize Withdrawal Priorities S2 and compare the results of S1 to S2. Of course, the OWP graph shows you final savings for the permutations evaluated.

Roth Conversions allow you to revert to R/C parameters saved in a baseline. I could modify OWP add a similar 'revert' feature.


   
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(@ricke)
Estimable Member Customer
Joined: 4 years ago
Posts: 174
 

Pralana's optimization picks one account to use at a time, so once you see the account order, that's all there is to show you. If there exists some optimum strategy that would take a little from this account and a little from that account in the same year, Pralana can't find that automatically (other than required things like taking RMDs). That said, the program is working hard, it runs up to 625 combinations since it is simultaneously looking at two time periods -generally pre-RMD and post-RMD.

Pralana is finding the best accounts to use in broad strokes, but you can use the Scheduled Withdrawal table to see if there might be times when using money from another account would be helpful. Opportunities are most likely to occur when you are facing one of the ramps or cliffs in the tax system.

A common example is if you need more cash in a year that you are taking ACA, the rapid reduction in premium credits may make meeting cash flow using some Roth money attractive, particularly if your taxable account only has investments with high capital gains.

In my own case, I have a smallish inherited IRA that is slightly attractive to use in the last year before I claim SS, as its RMDs end up in the SS benefit taxation phase-in, resulting in very high tax cost for its RMDs for several years.

If you test a couple of ideas like that, you will probably discover that Pralana's plan is pretty darned good, but maybe you can make it a little better.

On question 2, yes, adopting the plan means Pralana is overriding your original choice of account spending order

On question 3, to go back, you just set the account spending order back to where you had it.

This post was modified 3 months ago by Richard Eaton

   
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(@sazplanner)
New Member
Joined: 3 months ago
Posts: 2
Topic starter  

@ricke Thank you. I did Adopt the recommendations and so was able to see, to your point, that it withdraws from a single account at a time. Now I'm digging into that further.

I appreciate the feedback. I'm still very early on the learning curve.


   
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