Significant Changes to Boldin Retirement Planner: See Your Updated Projections Now

While lots might need updating in your retirement plan right now, a few big updates have been done behind the scenes to make your projections more accurate than ever. The Boldin team has added additional tax modeling rules as well as some other enhancements that change your data.

Review the updates below and log in now to see your updated projections.

Social Security and Medicare Tax Treatment

The system is now deducting Social Security and Medicare taxes — officially known as Federal Insurance Contributions Act (FICA) — from your work income. All employees are subject to FICA taxes. This is how Social Security and Medicare are funded.

So, if you are working, you will see that your tax liability has gone up. And the expense can be significant. For Social Security, the 2020 tax is 6.2% on up to $137,700 in income. Medicare taxes your income at 1.45% with no income limit.

Example: If you are currently earning $100,000 a year, then your FICA tax would amount to $7,650.

If you are self employed, you are actually responsible for double that amount. (Boldin will be adding this soon. In the mean time, you could add the amount to your expenses.)

Log in to see how your projections have changed. Everyone can look at their cash flow to see if the added expense has caused you to run in the red in any years. PlannerPlus users can also look at Tax Insights to review the FICA expense (and all other taxes) by year.

You will also want to make sure that you are still satisfied with your overall retirement plan. Look at the chart on the dashboard as well as your savings timeline to assess your out of money age with both optimistic and pessimistic assumptions.

Taxes on Pensions and Annuities

If you have a pension or an annuity, you can now specify if that income should be taxed:

• Federal and State 
• Federal only
• Or, not taxed at all

This is a big one for those with pensions since many states have conditional rules for taxing pension income.  NOTE: If only part of your pension is taxed, then break the pension up into two pension streams and specify the tax treatment only taxed up to a specific dollar amount. The best solution for that is to break it into two pension streams — one taxed both fed and state up to the limit, and then the other fed only.

Add tax treatment to your pension or annuity.

You Can Now Model Transfers Between Accounts and Set Tax Treatment for One Time Distributions 

In addition to the new withdrawals modeling (letting you see your maximum withdrawals and more), we have now added a tool to let you plan for specific transfers between accounts and set tax treatment for one time distributions.

Use this function to schedule transfers between accounts as well as disbursements.

• Transfers are used when you want to move money from a specific account to another, or to make a lump sum mortgage payment
• Disbursements are the same as one-time expenses, but this tool allows you to indicate if the disbursement should be treated as a tax deduction. NOTE: You should not enter these one-time expenses in both places.

Some common uses of this function include:

• Moving Traditional IRA/401k funds to after-tax savings prior to or in excess of required minimum distributions (the system draws from your after-tax savings to cover expenses before tapping retirement savings — by transferring the money between accounts, you can can control retirement savings drawdowns)
• Scheduling inherited IRA disbursements
• Making charitable distributions from any account and having these be recognized as taxable income deductions
• One-time debt repayments on any existing mortgages in your plan

Set up transfers between accounts and one distributions with tax treatment.

State Income Tax Modeling

We have enhanced tax modeling for some specific states. See below for these updates:

Retirement Savings: The system is no longer taxing retirement savings withdrawals for residents of Illinois, Mississippi, and Pennsylvania

Social Security: Thirteen states presently tax social security benefits. The following has been implemented:

• Minnesota, Montana, Utah, New Mexico, and Colorado tax the same benefit amount as the IRS. 
• Eight states tax a portion of the social security benefit for high earners. Five of those states use the same taxable benefit amount as the IRS. The other three – Connecticut, Missouri, and Vermont – have their own special formulas for computing the taxable benefit amount. For low earners in West Virginia, 65% of the IRS taxable benefit amount is taxable in 2020, 35% in 2021, and 0% thereafter. Low earners in the other seven states are not taxed on social security benefits. Rhode Island and Nebraska adjust thresholds annually for inflation. 

SDI/PFL: Residents of California, Hawaii, New Jersey, New York, Rhode Island and Washington are subject to mandatory Statutory Disability Insurance (SDI) and/or Paid Family Leave (PFL) taxes. These are now being modeled as additional state income taxes. 

New RMD Schedule for Younger Spouses

If your spouse is 10 years or more younger than you (or vice versa), the system now uses the correct Required Minimum Distribution (RMD) schedule. 

Reliable, Detailed Retirement Planning

We will continue to make meaningful updates to the Boldin Retirement Planner. Remember to log in frequently, at least every quarter, to update your information and see what has changed in your plan, adjusting your finances as necessary for a secure and happy future.

Please email us anytime with your ideas. And, expect some super exciting new functionality over the next year, including many developments for helping you with investments.