Newbie here. I need some help form the experts here to understand how PRC online works.
I created a extremely simple plan as a self-learn tool:
- Plan start date: 2026
- MFJ: Joe DOB 07/01/1965 Jane DOB 07/01/1965
- Retirement dates: Joe 01/01/2022 Jane 01/01/2022
- Life expectancy: Joe 85 Jane 85
- Inflation Rate = 0
- Simple Portfolio Modeling: All real rates of return = 0
- Account initial balances: Cash Accounts = 0; Taxable Investment = 0; Tax-Deferred Accounts = 2,000,000; Roth and all other accounts = 0
- Expenses: Starting 2026, $48,000 per year
Q1: In AGI Details, why are there "taxable withdraws from TD accounts" as well as "taxable withdraws from TD accounts (prior year)"? Total income is the sum of these two columns. I also not familiar with line 4d in Form 1040. Are they supposed to be 4b in both columns?
Q2: The total incomes make sense for all the years except for the first year of RMD (age 75). There is a huge spike in total income and subsequent tax burden according to the tabular projection and graphical projections. See attached screenshot.
Q3: I believe I understand the approach taken to compute annual withdrawal amount from TD accounts to pay for the income tax. The actual withdrawals are lagging behind by one year and there might be issues with uneven spending from one year to the next. I hope a self-contained iterative approach (mentioned in another thread) is indeed coming soon. Not a big deal when looking at the big picture.
Thanks in advance.
Peter Liu
@greendice 1040 Form line 4d is just something we "created" for the stated purpose: showing AGI contributions related to prior-year withdrawals from the TD accounts (i.e., unscheduked withdrawals). These are made to cover deficit spending and are currently necessary because we are not yet doing iterative tax calculations. This is the reason for the big spike in your AGI in the first year of your RMDs. Once these RMDs start, that greatly reduces the deficit spending and, thus, the unscheduled withdrawals are reduced which in turn brings the AGI back down.
Stuart
@smatthews51 Thanks for the explanations. Looking forward to the software update.
