What is best practice for plan start date values if one starts a plan now, 10-10-2025? What if the client doesn't know her balances as of Jan 1, 2025? Thank you.
@alevgreatvalleytax-com In that case, my recommendation would be to set the start year as 2026 and make an educated guess as to the balances at the start of 2026. Then on January 1, 2026, you can do an update based on year-end 2025 actuals. On the Build > Scenario Assumptions > Tax Assumptions page, make sure to check the box for "assuming OBBB is active" and deleting the expiration year for TCJA.
Stuart
@smatthews51 Do you mean I should skip ahead to 2026 ONLY if I don't know my figures for the beginning of 2025? I have my old statements, so I should still start with the Jan 1 2025 figures, right? Or (to get really fancy) reverse engineer current figures back to January by dividing them by my specified ROR?
The accuracy for what Pralana does in the current year depends on the amount of work you want to put into it. You know the rate of return that you entered for your portfolio, so you could take the current balance and adjust for what you projected the growth would be. For instance, if you projected 8% growth for stocks, then you might assume that we will have no more growth this year and so divide the current balance by 1.08. If you hold different allocations in different accounts, you would have to work out the weighted average of the expected returns you entered. You get the idea, Pralana's deterministic model is going to simply apply the growth you told it to the starting balance, so you just have to reverse the procedure to get back to the starting balance that will harmonize Pralana with current reality.
Next, you know if you have something lumpy that's gone on already that would skew the account balances - received a bonus, bought a car, made a Roth Conversion, sold a rental property, paid for kids college tuition, etc. So adjust starting account balances up or down for those things.
The above works fine for me for everything except my inherited IRA, it's gone up in value, but the RMD and therefore this year's taxes are based on the last year's end of year balance, so I leave that alone.
It's because of the myriad of possibilities that Pralana doesn't go there, you have to spend a little time to work up some sensible start-of-year numbers separately.
I don't have the patience to do what Rick suggests above. My imperfect workaround is starting in August to enter actual live balances into Pralana but adjust my expected returns for stocks for 2025 (mode 2) to 0%, leaving cash and bonds where they are. My gains comes mostly from stocks, so this hack is 'good enough' to get me in the ballpark for this year. It distorts this year's taxation a bit (by hiding half the stock AGI and overreporting interest). But I don't use Pralana for current-year tax estimates anyway; I use it for long range planning, so this gets the job done without needing to pull out my calculator. It essentially trades accuracy in this year's tax figures for convenience.
