Wondering if there is a Best Practice for Modeling LTC Costs in Pralana Online?
I tried the Build>Expenses>LTC and ran into a serious limitation.
1. It uses the default Withdrawal Priority which makes no sense (at least in my case) since I would always take it from my IRA and take advantage of the Medical Expense Tax Deduction.
What I would like to see is a column added for Source which would move money from the Source to the Cash Account.
**Entered a Usability Feedback for this to get it into the queue.
As a kluge, I setup a Scheduled Withdrawal from my IRA to my Cash Account to cover the funds needed. It works but now I have to update 2 entries as I look at the effects of needing LTC at different times in Retirement.
Wondering how others are modeling LTC expenses?
Yes, you would use the Scheduled Withdrawal Table. The tax law here is a little tricky so it's not clear that they should try to automate it. The main benefit of pulling from tax deferred is to use up the entire medical deduction. Beyond that, your income is climbing back through the normal brackets, but faster than normal because the medical deduction is phasing out by 7.5% for every extra $ of income. Your effective tax rate on a larger withdrawal is therefore 1.075 times the normal rate. So it would still be worth filling the 12% bracket beyond the medical deduction if you are normally in the 22% bracket because your taxes will effectively be 1.075*0.12 = 12.9%, but filling the 22% bracket to avoid the 24% later is pretty much pointless as the 22% bracket will be taxed as 1.075 * 0.22 = 23.65%.
