How are capital gains calculated? Where do I change capital gains assumptions such as cost basis and the percent of the return due to capital gains?WealthTrace uses the account cost basis and the First In, First Out (FIFO) method to estimate capital gains taxes when you withdraw from a taxable investment account.How FIFO worksFIFO (First In, First Out) means the program assumes the first shares [...]
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126 ArticlesCan I withdraw from multiple investment accounts at the same time?
WealthTrace uses investment accounts in the established withdrawal order to cover expenses. It does not automatically blend withdrawals across multiple investment accounts for a single expense.How to Model Blended WithdrawalsIf you want to model withdrawals from multiple accounts in the same year, create separate and assign each expense to a different investment account as the .For example, if [...]
When I run Roth conversion scenarios, which account do the converted funds go into?
If you have a Roth account already, it will move the funds into that account. If you have more than one Roth account, it will use the first one in the list. If you have no Roth accounts, the program creates one behind the scenes with a $0 balance. Also note that the Annual Return used for the Roth account in this scenario of the account being converted. This allows the program to compare apples to [...]
Why does WealthTrace show expenses being paid from a taxable account after the account balance appears to reach $0?
If an investment account appears to be depleted but WealthTrace continues showing expenses or taxes being paid from it in later years, the account is likely receiving additional funds.This can happen if:Rebalancing is turned on. WealthTrace can move funds back into the account as part of the rebalancing process. You can turn this setting on or off under Plan Settings > Other. You can read more [...]
How can I model an HSA or Retiree Health Account (RHA) to cover Medicare premiums and other healthcare expenses in WealthTrace?
WealthTrace allows you to model Health Savings Accounts (HSAs) and Retiree Health Accounts (RHAs), including investment growth and tax-free qualified withdrawals.However, WealthTrace does not automatically withdraw funds from an HSA or RHA to cover Medicare Part B and Part D premiums, including any IRMAA adjustments.Setting Up an HSA or RHA1. Disable Automatic Medicare EstimatesNavigate to Plan [...]
I want to withdraw from my IRA before one of my accounts that is in the Taxable & Tax-Advantaged section. How do I do this?
There are two ways to control this. You can set an age when funds can be used from an account in the Taxable & Tax-Advantaged section, thereby "locking it out" for a set time period as you can see in the screenshot below. The last screenshot below shows you how to only use an account once all other accounts are depleted. You can also tell the program to only use the account after all other [...]
I see shortfalls when I am 55, just after I retire. But I have plenty of money in my investment accounts. Why are there shortfalls?
Shortfalls very early on usually occur because you don't have access to your traditional IRAs or 401(k) plan before age 59.5. The program defaults to not allowing withdrawals from qualified retirement accounts before this age. However, you can . If you don't have enough retirement income and money in taxable accounts and you're not taking qualified account withdrawals before age 59.5, there will [...]
I have an account with a small balance, but large contributions. When I look at projections for each investment, I don't see the balance growing by nearly enough. Where are the contributions?
Balances for accounts might not look intuitive if you have the setting 'Rebalance Investments Annually' set to Yes. You can see this setting below. If this is set to Yes, the program rebalances investment accounts each year to the percentages the accounts were at the beginning of the year. In this example, the contribution does occur, but then the account is rebalanced back to its smaller portion [...]
How can I prioritize tax-deferred accounts for expenses and taxes?
You can to specific accounts, which overrides the standard withdrawal order for those expenses. Use the setting to prioritize qualified tax-deferred accounts for other withdrawals. You can lock taxable or Roth accounts until a specific age or set them to be used last. This directs WealthTrace to use available tax-deferred accounts [...]
What happens when my Social Security or pension income is more than I need to pay for expenses?
When Social Security, pension income, or other income exceeds your expenses, WealthTrace treats the remaining amount as excess cash flow.The excess income goes into your taxable investment accounts as a cash inflow on a pro-rata basis, based on the balances of those accounts.This means you may see money flowing into a taxable account even after that account had previously been You can review [...]