As I understand it, Pralana does not currently support 457b accounts which are pre-tax accounts that allow for withdrawals before age 59.5 without any penalty.
My workaround for this is to calculate a conservative future value of the 457b account at the time of retirement for a given rate of return and contribution rate and then divide that portfolio value by the number of years during which I wish to take withdrawals. I then enter that value as a scheduled withdrawal, with the Source being My IRA - No Penalties.
Am I correct that this will model a withdrawal of X amount for Y years from my overall tax-deferred account balance while signaling to Pralana not to calculate a 10% penalty on withdrawals taken before I attain age 59.5?
Please let me know if I've missed anything or if there's a simpler way to model these kinds of account withdrawals. Thanks!
@ritchell Well, Pralana does model 457b accounts under the tax-deferred account category by virtue of the fact that it allows for scheduled withdrawals prior to age 59.5 with no penalties, as you've stated. So, yes, your approach seems reasonable.
Stuart
Thank you Stewart for confirming that this model would work appropriately from a tax calculation perspective. To clarify my original comment, the reason I stated that Pralana doesn't support 457b accounts is that there is no way (that I know of) for Pralana to track contributions and growth specific to the 457b account. The use case for this separate tracking is that the user could both see how various inputs change the account value over time as well as include the 457b as a specific account to prioritize withdrawals from at some point in the future.
In the absence of separate tracking and separate withdrawal prioritization, the user must guess at or approximate the 457b value at some point in the future to then approximate a revenue stream as a series of scheduled withdrawals.
Thanks again for your help!
Could we simply have a button to indicate if a pre-tax account qualifies for penalty-free early withdrawals?
(I'm also having a hard time finding where the 10% penalty shows up in Review)
I'm running into the same situation: we can access 457b funds at separation, while waiting for pensions to kick in and penalty-free access to other accounts (or may even employ a roth conversion ladder).
@mtn101 You need to keep in mind that Pralana models all of your separate tax-deferred accounts as one, so a button to indicate if a pre-tax account qualifies for penalty-free early withdrawals is not a viable generalized solution. Instead, for scheduled withdrawals (Build > Financial Assets > Scheduled Withdrawals), you can specify that a withdrawal is penalty-free. The 10% penalty is admittedly difficult to track down in Pralana's outputs, but it's there. You can find it in Review > Reports > Tax Forms & Brackets > Schedule 2, line 8.
Stuart
Makes sense and thanks for the quick response - I'm loving the program, after playing with simpler ones one our way to FIRE.
Pralana gives me so much more confidence in our projections and tracking of everything.
