Asset Flow is one of those awesome and mind-boggling calculators that truly does it all. That’s why we love to talk about what it can accomplish. One fantastic feature is that it plays well with our other calculators. It’s important to note, however, that there is a trick to saving it with another calculator in one file. If you have already saved Asset Flow, keep it open when pulling another calculator up. For example, if the Real Estate Calculator is open, ensure that Asset Flow is also open. Otherwise, when
Read MoreCategory: Asset Flow
Truth Tip, IRAs in Asset Flow
In the Tax Advantaged section of Asset Flow, the “IRA Account” button is used to keep IRA accounts for spouses separate. This is largely for tax purposes because the cost basis of all assets, for each spouse in an IRA, are considered in the cost basis determination. If there is no cost basis, check the “Tax Deductible Contributions” box. Otherwise, the account will use all contributions in the first few years as a cost basis to offset the distributions, rather than spreading them out. Turning the button on will divide
Read MoreTruth Tip, “Old Money” in Asset Flow
All Present Value dollars in our calculators are assumed to be old money—dollars that the client already has access to when beginning an illustration. If an asset is then added as a Present Value, without that money being pulled from existing dollars, data will appear skewed. When illustrating a client’s money being pulled into a new asset, make sure that money exists elsewhere in the illustration. First, you’ll want to ensure that the money being shifted into a new asset is accounted for in the initial Ordinary Taxable Account. When
Read MoreTruth Tip, State Taxes in Asset Flow
When state tax is entered into Asset Flow, the calculator assesses a tax on Social Security. This tax is based on the benefit amount that is subjected to tax on the Federal Side. If you don’t want this to occur, leave out the state tax rate. Currently, the calculator adds the state tax to anything that is also taxed federally (after those federal deductions). Then there is an offset for the tax paid. This offset is taken off of the Federal Income Tax Basis, up to the SALT limits ($10,000).
Read MoreTruth Tip, Calculating for COLA in Asset Flow
When using the Asset Flow calculator, it is important to calculate for COLA (cost of living adjustment) when determining Social Security income. The Future Value calculator is a handy tool in this case. To set this up properly, fill in the fields as such: Present Value; the annual payment (multiply the monthly payment by 12). Rate; the annual interest rate. Time Frame; the difference between current age and distribution age. If you use the resulting number in Asset Flow as the benefit for Normal Retirement Age, the value will
Read MoreTruth Tip, Order of Taxation in Asset Flow
In Asset Flow, we chose to treat each individual asset viewed as the last dollar added or withdrawn in the tax bracket (at the margin). This is because any changes made will impact the overall taxation in that regard. However, when you view all the assets in the summary page, the taxes are equally distributed among all of the assets causing the tax. This can cause some discrepancies when viewing an individual asset against the summary of all assets. In Asset Flow, this means it is possible for an individual
Read More