VeriPlan’s tax calculator software automatically projects your real dollar tax obligations using current tax rates and tax limits that would apply in your particular situation. For example, regarding your income taxes and income tax rates, the VeriPlan tax planning software uses current marginal federal income tax rates after taking into account your projected tax deductions, exemptions, and adjustments.

Regarding state taxes and local income tax rates, VeriPlan’s tax calculator tools assesse these taxes according to the marginal or flat tax rate method that applies in your tax jurisdiction. The VeriPlan pre- and post-retirement tax calculator automatically assesses Social Security taxes, Medicare taxes, self-employment taxes, real estate and property taxes, short-term capital gains taxes, and long-term capital gains taxes. In addition, VeriPlan fully integrated IRA retirement calculator and 401k retirement calculator facilities automatically apply lifetime taxes related to your traditional IRA, 401k, 403b, 457, Simple, Keogh and other retirement accounts and to your Roth IRA and to your designated Roth 401k, Roth 403b, and Roth 457 account contributions.

The VeriPlan tax calculator software automatically applies variable U.S. federal income tax rates and limits. Current federal tax rates are included, and all tax rates and limits in VeriPlan are user changeable. VeriPlan provides and applies variable or flat income tax rates and limits for the 50 U.S. states and Washington, D.C. Furthermore, this tax planning software automatically projects any local variable or flat ordinary income tax rates according to the rates and limits that you supply. VeriPlan supports both the ‘Single’ and “Married, Filing Jointly’ tax filing statuses for your federal, state, and local income tax projections.

The VeriPlan tax calculator software projects your full lifetime taxes in annual increments in these eight separate tax categories:

1. Federal income taxes on earned income, interest income, retirement income, and other income
2. State income tax and local income taxes on earned income, interest income, retirement income, and other income
3. Social Security and Medicare taxes on earnings, plus income taxes on Social Security payments in retirement
4. Property and real estate taxes
5. Federal income taxes on mandatory tax-deferred account withdrawals and on withdrawals to pay living expenses
6. State income taxes and local income taxes on mandatory and needed tax-deferred account withdrawals
7. Federal long-term capital gains taxes
8. State income taxes and local ordinary income taxes on long-term capital gains

This is a sample of the VeriPlan lifetime tax planning calculator graphic that shows projected taxes in eight categories. This tax planning software graphic, like all other VeriPlan graphics, is automatically developed for each planning scenario that you develop in VeriPlan. (Note that this particular projection models a scenario wherein one of the earners in the family would be unemployed for six months at age 34 and for a full year at age 51. This projected loss of earned income significantly changes their projected tax obligations, and this accounts for the dramatic fluctuations in projected tax payments that you see in this tax planning software projection graphic.)

VeriPlan’s income tax planning and tax calculator tools automatically project your full lifetime federal income tax deductions. In each projection year, it automatically applies the more favorable of either the standard deduction or your itemized deductions. The VeriPlan income tax calculator software projects your income tax exemptions for up to 10 dependents, and it manages income limited phase-outs of these tax exemptions. It also projects up to 6 different adjustments to your taxable federal income, and it manages associated differential income adjustment growth rates and phase-outs automatically.

To prevent product obsolescence in the future, as you continue to use VeriPlan, you can change any tax rates and tax limits, in case tax laws, rates, and limits change in the future. There is no need to buy an updated version of the VeriPlan home financial planning and retirement tax planning spreadsheet software, because you can update it yourself.

Note: We mail your VeriPlan lifetime tax and retirement plan calculator CD on the next business day after PayPal has notified us of your order. When your order ships, we will send a shipment notification email to you using the email address supplied by PayPal. VeriPlan is shipped via the USPS, and deliveries typically take 3 to 10 days to arrive.

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VeriPlan’s comprehensive and integrated retirement planning software helps you to plan your retirement much more easily. VeriPlan’s retirement planning calculator tools automate the lifetime financial planning process for your retirement income, retirement pensions, retirement annuities, Social Security payments, retirement expense budget, retirement taxes, and tax-advantaged retirement plans.

VeriPlan’s integrated retirement planning tools enable you to set and adjust your intended retirement ages. You can vary the planned retirement ages of either earner and plan to retire simultaneously or in separate years, when each earner reaches his or her planned retirement age. The VeriPlan retirement income calculator also supports user-adjustable real dollar income assumptions for persons who choose to continue to work beyond the normal retirement age.

Automated tax-advantaged retirement account projections

VeriPlan has automated the development of your lifetime projections by incorporating current tax laws and rules associated with tax-advantaged retirement investment incentive programs such as traditional IRA, Roth, 401k, 403b, SEP, Keogh, and other retirement plans. While simultaneously providing powerful “what-if” user retirement planning controls, the VeriPlan’s IRA retirement calculator and 401k retirement calculator functionality hides the complexity of the tax laws that are associated with these various personal retirement plans and employer-sponsored retirement plans.

For example, the VeriPlan IRA retirement calculator has fully automated the projection of your IRA contributions, deductions, asset growth, withdrawals, and taxes, regarding both traditional IRA accounts and Roth IRA accounts. VeriPlan also automatically projects required minimum distributions from traditional tax-advantaged accounts after age 70 and 1/2. If your projections indicate that you would need to take early withdrawals before age 59 and 1/2, the VeriPlan early retirement calculator automatically projects and extracts both ordinary income taxes and any federal and state early withdrawal penalties due, net of your tax basis is these accounts.

This is a sample of the VeriPlan lifetime retirement calculator graphic that shows projected balances in taxable investment accounts, traditional tax-advantaged retirement accounts, and Roth retirement accounts. This graphic, as well as all the others, is automatically developed for every lifetime planning scenario that you develop with VeriPlan:

Retirement pension and annuity projections

VeriPlan’s integrated retirement calculator with pension and retirement annuity calculator features will automatically track up to 10 pensions and annuities for you and your spouse across your lives. VeriPlan automatically projects for you the duration of your pension payments and annuity payments, whether your payments begin at you projected retirement date or a different age.

VeriPlan’s retirement annuity calculator and retirement pension calculator features automatically project taxes on your pension and annuity payments by integrating them into VeriPlan’s extensive federal, state, and local income tax projection functionality. Furthermore, the VeriPlan retirement spending calculator allows you to vary the purchasing power of your expected pension and annuity assets and payments relative to inflation both before and after payments begin.

VeriPlan’s comprehensive personal financial planning software automates the analysis of your retirement savings and Social Security income

With the VeriPlan retirement withdrawal calculator, you can adjust your expected ordinary living expense budget in retirement and set the growth rate of your retirement budgeting expenses. You can use VeriPlan’s Expense and Savings Tool to model additional retirement expenses that you might anticipate on a year-by-year basis. You can grow your budget for additional retirement expenses at rates that are below, above, or equal to expected rate of inflation. Furthermore, the integrated VeriPlan retirement investment calculator automatically projects your required annual lifetime investment portfolio asset withdrawal rates for you.

Concerning your Social Security retirement payments, with VeriPlan’s integrated Social Security retirement calculator, you can set current levels for those entitlements. You can adjust the age at which you would begin to receive Social Security payments, which could differ from the age that you actually stop working. Furthermore, VeriPlan allows you to scale back your Social Security payment expectations, given the significant uncertainty that surrounds the funding viability of the U.S. Social Security system.

Note: We mail your VeriPlan retirement tools CD on the next business day after PayPal has notified us of your order. When your order ships, we will send a shipment notification email to you using the email address supplied by PayPal. VeriPlan is shipped via the USPS, and deliveries typically take 3 to 10 days to arrive.

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VeriPlan’s 10 financial planning tools and retirement planning calculators

Retirement Planning Calculator Tool:

With this retirement planning tool, you can set individual retirement ages for Earners 1 and 2. You can select whether or not to retire simultaneously. You can also adjust your expected ordinary living expense budget in retirement and the growth rate of those expenses. Concerning Social Security retirement calculator payments, you can set current levels of your entitlements and adjust the age at which you would first begin to receive Social Security payments. Furthermore, you can scale back the amount of your projected Social Security payments, if you wish. Finally, because much older workers can face significant erosion of real dollar wage rates, with this retirement income calculator you can adjust VeriPlan’s assumptions about real dollar wage erosion for earnings at ages over 65.

Tax-Advantaged Retirement Planning Calculator:

Your settings on this sophisticated combination retirement planning calculator, IRA retirement calculator, and 401k retirement calculator will control your projected tax-advantaged plan contributions that would be funded from your future positive net income and/or your future taxable investment portfolio assets, up to the current legal annual limits, which are user-adjustable. This retirement plan calculator tool allows you to determine the portion of your projected annual contributions that would be deposited automatically into either traditional retirement accounts or Roth IRA and other Roth retirement accounts. It also can easily handle 403b, 457, Simple, Keogh, and other types of defined contribution employer-sponsored retirement plans and pension plans.

• The Total Contribution Limitation Tool of this retirement fund calculator software allows you to set your personal limitation on overall tax-advantaged account deposits, as a percent of your future annual positive net cash flows.

• The Roth Contribution Limitation Tool of this retirement planning software allows you to set the percentage that Roth IRA and Roth 401k contributions would be of your total annual contributions into both traditional retirement accounts and Roth IRA and 401k retirement accounts. Designated Roth contributions for 403b and 457 plans can be projected, as well.

Living Expense and Retirement Savings Calculator:

This financial calculator allows you to change your current expense budget levels and future expense budgeting growth rates prior to and after retirement. VeriPlan’s budget planning worksheets also allow you to enter major planned expenses and their growth rates for any future years. You can also enter positive and negative expense adjustments and growth rates for any projection year. This education finance tool explains how VeriPlan can be used as a Children’s Education Expenditure and College Savings Tool. It also provides a section on how to use VeriPlan as a Mid-Career Education Planning Tool to model the financial trade-offs associated with returning to school for career advancement.

Real Estate Buying Calculator:

VeriPlan provides this real estate buying calculator and mortgage debt calculator for users who plan to purchase real estate in the future. For your future home purchases, this financial planning tool automatically takes into account: a) the planned purchase price, b) closing costs, c) settlement cash required, d) mortgage debt to be assumed, e) expected interim price changes, and f) subsequent expected price appreciation.

Automatic Asset Allocation Calculator:

Asset allocation strategies allows you to align the risk of your investment portfolio with your relative risk tolerance. The VeriPlan retirement investment calculator software provides five user selectable and adjustable asset management methods for your lifetime projections. Fixed, variable, and age-based asset allocation mechanisms are provided by this investment calculator tool. Re-allocations of your assets are performed automatically at the beginning of all subsequent projection years.

Investment Cost-Effectiveness Calculator:

Excessive investment costs are a huge problem for the average individual investor. VeriPlan’s automated and fully integrated financial planning calculators automatically analyze the impact of five types of investment expenses across your lifetime: 1) asset purchase fees, 2) asset management fees, 3) marketing fees, 4) securities trading costs, and 5) investment account custody fees. VeriPlan automates the comparison of your full lifetime investment costs. The VeriPlan cash flow analysis software compares the lifetime investment costs of your current financial asset portfolio to lifetime investment costs that you believe are reasonable to pay.

Historical Investment Returns Calculator:

VeriPlan’s automated “centerline” retirement planning projections are based on the very long-term, historical securities market rates of return that have been achieved in the cash, bond / fixed income, and stock / equity investment asset classes over approximately the past 75 years. You can adjust these projected rates of return, using VeriPlan’s portfolio risk investment calculator. VeriPlan’s future value calculator projections automatically deduct your taxes and investment costs from your investment asset returns. Furthermore, across your lifetime, the VeriPlan investment planning tool will automatically project the value of your real estate, property, and other assets, which are not priced currently on real-time securities markets. The VeriPlan investment planning tool will use the current fair market value and future growth rate estimates and adjustments that you provide for these real estate, property, and other assets.

Portfolio Risk Investment Projection Calculator:

VeriPlan provides two automatically combined methods to develop projections with asset class return assumptions that differ positively or negatively from VeriPlan’s “centerline” historical assumptions:

• The VeriPlan investment projection calculator Variance Tool allows you to vary asset class returns upward or downward automatically in proportion to their historical volatility or investment risk.

• The VeriPlan investment projection calculator Asset Class Return Adjuster allows you to vary investment portfolio growth rates automatically on a one-by-one basis.

The VeriPlan retirement investment calculator software also provides a Current Portfolio Revaluation Tool to help users understand the potential effects of substantial near-term changes in securities market values.

Portfolio Safety Investment Calculator:

Individual investors face a dilemma. Both less risky and more risky investment strategies may not achieve desired results for different reasons. When assessing investment strategies with different risk levels, it can be helpful to understand how the “safer” portion of your investment portfolio assets might evolve across your lifetime. VeriPlan’s Portfolio Safety Tool automatically projects how long your cash and shorter-term fixed income assets would cover your projected expense budget, if all your expected income sources ceased. This investment planning calculator tool automatically measures your projected financial capacity to weather financial planning risks that might materialize in the future.

Future Debt Calculator:

Excess consumption and the attendant costs of debt can be very destructive. This debt management calculator allows you to set an interest rate for future unfunded consumption. VeriPlan automatically accumulates an unfunded debt with unpaid interest, when your projected expense budget exceeds your projected income and your cash, bond / fixed income, and stock / equity investment assets are projected to be fully depleted. If subsequent positive net income becomes available, VeriPlan will automatically retire some or all of this unfunded consumption debt.

Regarding any current loans that you have, VeriPlan’s loan calculator automatically repays required interest and principal. You can also use this VeriPlan facility as a debt management calculator to analyze and plan for the accelerated repayment of any or all of your current loans.

Note: We mail your VeriPlan lifetime retirement planning software CD on the next business day after PayPal has notified us of your order. When your order ships, we will send a shipment notification email to you using the email address supplied by PayPal. VeriPlan is shipped via the USPS, and deliveries typically take 3 to 10 days to arrive.

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The VeriPlan retirement planning calculator automatically projects your lifetime U.S. federal, state, and local taxes

With its fully integrated lifetime retirement tax calculator and income tax estimator features, the VeriPlan personal finance software automatically projects your lifetime tax obligations in eight different tax categories. VeriPlan automatically projects your financial plan using the particular federal taxes, state taxes, and local income tax rates and limitations that currently apply to you. It also projects your income tax exemptions, tax adjustments, and tax deductions plus your property taxes and other taxes. To prevent obsolescence, the VeriPlan home retirement planning software allows you to change the tax rates and limits that its tax calculator uses, in case tax laws change in the future.

Federal Income Tax Rates and Limits:

VeriPlan’s retirement planning software automatically applies current variable U.S. federal ordinary income tax rates and limits.

State Income Tax Rates and Limits:

VeriPlan retirement tax calculator functionality automatically applies your state’s current variable or flat ordinary income tax rates and limits. VeriPlan provides income tax rates for the 50 U.S. states and Washington, D.C., and you can select any one of them.

Local Income Tax Rates and Limits:

The VeriPlan tax calculator functionality automatically applies any local ordinary income tax rates and limits that you supply. It can project a) no taxes, b) flat tax rates, c) variable tax rates, or d) New York City income tax rates, which are provided.

Taxable Income Differences:

States and localities may adjust your federal taxable income. VeriPlan can automatically develop projections that use different levels of taxable income at the federal, state, and local levels.

Income Tax Filing Status:

The VeriPlan retirement planning tool supports the ‘Single’ federal income filing status and the “Married, Filing Jointly’ filing status, and it automatically applies the tax rates and limits that are associated with these filing statuses.

Income Tax Exemptions:

VeriPlan’s financial planning calculators automatically project annual tax exemptions and their phase-outs for up to 10 dependents.

Income Tax Adjustments:

VeriPlan automatically projects annual tax exemptions for up to six different adjustments to your taxable federal income. It also manages differential growth rates and phase-outs.

Income Tax Deductions:

The VeriPlan retirement tax calculator automatically projects your multi-year federal income tax deductions. In each projection year, VeriPlan automatically applies the more favorable of either the standard deduction or your itemized deductions.

Social Security and Medicare Taxes:

The VeriPlan Social Security retirement calculator automatically applies Social Security (FICA) and Medicare taxes. It automatically projects either employee or self-employment tax rates, as appropriate.

Investment Taxes:

The VeriPlan retirement investment calculator automatically applies long-term qualified dividend and capital gains taxes on your capital distributions and asset withdrawals net of your accumulated asset tax basis. For each of your asset holdings, you can provide your current asset tax basis. Across your lifecycle projections, The VeriPlan retirement tax calculator will automatically increase and/or reduce your aggregate tax basis for your cash, bond, and stock asset classes.

Property and Real Estate Taxes:

VeriPlan automatically projects your total property, real estate, and other assessment taxes. You can also project that your property taxes will grow at a rate different from inflation.

Your Tax-advantaged Retirement Plans:

To the extent possible, the VeriPlan IRA retirement calculator and 401k retirement calculator has automated your lifetime projections regarding the various employer retirement plans and personal retirement accounts that allow you to defer taxation or to avoid future taxation altogether. The VeriPlan retirement tax calculator automatically projects separate values for your taxable accounts, traditional ‘tax-deferred’ accounts, and Roth retirement accounts. VeriPlan has fully automated the projection of your IRA contributions, deductions, asset growth, withdrawals, and taxation for both traditional tax-deferred IRA accounts and Roth IRA accounts. When necessary, the VeriPlan retirement tax calculators automatically assess federal early withdrawal penalties, which are supplied by VeriPlan, and any state early withdrawal penalty that you enter.

An example of VeriPlan’s lifetime tax payments projection graphic:

This is an example of the projected lifetime annual tax payments graphic that is automatically developed for you by the highly sophisticated VeriPlan financial planning retirement software:

Note: We mail your VeriPlan retirement planning software CD on the next business day after PayPal has notified us of your order. When your order ships, we will send a shipment notification email to you using the email address supplied by PayPal. VeriPlan is shipped via the USPS, and deliveries typically take 3 to 10 days to arrive.

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Reduce the Chances of Mail Theft

Never leave any outgoing financial letters containing checks or sensitive information outside in public for the postman. To receive mail, you should have a mail drop slot rather than a mailbox on the outside of the house. Always mail your financial letters inside of a reliable US Post Office. Theft of checks in the mail – from outside your home happens more often than you may think. And, you are the one who suffers when your payment is not received in time; you credit rating gets dinged; your check is stolen, washed, and cashed; you lose your money; and you waste a huge amount of time puting your financial identity theft Humpty Dumpty back together again.

Stolen checks can be chemically washed to remove ink. To do this criminals tape over your signature on both sides, and then remove the tape. The end result is a blank check with your signature. To avoid check washing, you can purchase certain gel pens with ink that cannot be washed in this manner. Several vendors offer gel pens that claim not to be washable. You can research them on the web with Google. For example, Sanford distributes the Uniball Signo line of gel pens with gel ink that supposedly cannot be washed. These pens may be found in local stores.

Review ALL Bills and Financial Statements Promptly and Handle Significant Problems in Writing Within 60 Days

Review your credit card bills and other financial account statements carefully and respond to any problems promptly. Unfortunately, after 60 days the few consumer protections that are available to you under the Fair Credit Reporting Act will cease. Thereafter, you are at the mercy of the goodwill of banks and other financial institutions, which all too often is sorely lacking. Never count on the goodwill of any financial institution after 60 days has passed. This is particularly the case, with financial services companies that you cannot visit locally in person. Over the telephone, financial services companies — particularly credit card companies — have mastered the art of (usually) politely telling you that they are sorry, but there is nothing that can be done to fix a problem without, of course, it costing you a lot of money!

Check every financial statement that you receive in a timely manner and report any problems. If the dollar amount in question is significant, read the instructions on your statement or on the financial institution’s website about how to make a report in writing. Only when you follow these procedures in writing within 60 days are you protected under this law.

If you attempt to resolve a problem over the telephone, take careful notes including who, when, and what was stated, etc. Nevertheless, telephone conversations do not protect your legal rights, so when the amounts in question are significant to you, you must put it in writing.

Dispose of Financial Records Properly

Be careful in disposing of all financial records and statements. Do not simply discard them in the trash or recycling. Use a crosscut shredder, which makes small confetti and not strips. Alternatively, you can keep a bag of discarded financial records, which you burn periodically. These financial records disposal recommendations also apply to preprinted credit card and other debt applications that you might receive in the mail. Do not throw these applications in the trash without first tearing off your name and address from the application.

<<<<< Go back to the previous part: Financial Planning and Identity Theft Prevention

Investment software is needed to establish a much more reasonable long-term money management strategy

This free “achieve financial freedom” site provides essays on how to develop a self-directed personal financial plan

The financial and investment planning articles on this free site supply important considerations to households about personal finance plan issues that they should take into consideration. These publications help in establishing a life time personal finance planning strategy. In addition, to make a really useful long-term money management strategy requires that you use the leading financial planning tool with the top financial investment software and an excellent home financial software.

Furthermore, this free financial freedom guide web site helps you find a leading ALL-IN-ONE home financial software home computer application with an excellent retirement planning calculator, the leading personal budget software, and an excellent investment planning software for your self-directed full life personal financial planning.

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There are trade-offs when deciding whether to allocate contributions to Roth retirement savings accounts versus traditional retirement savings accounts that have deferred income taxation features. In the majority of personal finance situations, making 100% of allowable contributions to Roth retirement plans would probably not yield the greatest total wealth in retirement compared to making contributions to traditional retirement savings accounts — even after income taxes on distributions from traditional retirement accounts during retirement are considered.

When the lifetime net present value of Roth contributions is compared to the lifetime value of making currently tax deductible contributions into traditional IRA and employer sponsored defined contribution retirement plans, such as 401k, 403b, KEOGH, and other plan accounts, most often traditional retirement accounts yield higher lifetime wealth net of taxes versus Roth accounts. Reducing current taxation with traditional accounts is usually a better bet than eliminating future taxation with Roth accounts.

However, a Roth retirement account contribution strategy also provides estate planning benefits that traditional tax-advantaged retirement accounts do not. Sometimes these estate planning benefits can tip the balance toward making Roth account contributions. When you expand your total present value analysis to include the long-term value to a multi-generational family, then Roth assets can have significantly greater value for some people.

If Roth assets remain at death, there are very significant long-term multi-generational tax avoidance advantages. In such circumstances where it is likely that a person’s assets will be adequate to cover retirement expenses even with a very long life, then it can be advantageous first to live off of traditional retirement plan assets, which are subject to mandatory withdrawals and associated income taxation in retirement anyway. This means that over one’s lifespan, when retirement assets are adequate for the long-term, then a larger and increasing proportion of one’s future financial asset portfolio would consist of Roth assets.

Why Roth retirement accounts can have some very significant advantages over traditional tax-advantaged retirement accounts for estate planning purposes

If a family’s financial model indicates that there is a strong possibility that they will still have tax-advantaged account assets at death, then those assets should be Roth tax-advantaged account assets, where feasible. Roth assets can be inherited by children, for example, and those inherited Roth assets can also grow tax-free over the expected lifespan of the person inheriting the Roth account. Heirs have certain mandatory withdrawal requirements related to their expected lifespans, but those withdrawals do not trigger income taxation on any Roth account asset appreciation either during the life of their benefactor or during their life as the heir.

For example, this means that the middle-aged offspring inheriting Roth retirement account assets from an elderly senior citizen parent when that child is age 50 perhaps, could enjoy possibly another 40 years of tax-free Roth inherited account investment growth with an income stream along the way. Under US tax law, this middle aged child would be required to make mandatory annual withdrawals related to his or her life expectancy. Nevertheless, these inherited Roth account withdrawals would be non-taxable including any asset appreciation that may have occurred during the life of the parent or the life of the child.

Only when these withdrawn inherited Roth account assets have been reinvested into a taxable account AND those reinvested and now potentially taxable assets have later appreciated in that taxable account, would only this subsequent asset appreciation potentially be subject to either short-term capital gains taxes or to long-term capital gains taxes. Depending upon the tax-efficiency of subsequent investments within this taxable account, recognition of taxes on asset appreciation could be deferred for a very long time.

Therefore, if you are among the minority of US citizens who can reasonably expect to exit this life with substantial tax-advantaged account assets, then let them be Roth account assets, if possible. Inherited traditional tax-advantaged retirement accounts do not provide these very significant and valuable estate planning tax avoidance benefits provided by inherited Roth accounts.

The only thing one needs to overcome is the current payment of higher income taxes on Roth account contributions or traditional retirement account conversions to Roth accounts. You need to possess available cash to pay the taxes, and to have the confidence that your future asset accumulation will be substantial enough to justify paying more taxes now for even greater tax savings in the future on a net present value basis. And, your kids could be quite happy with what your leave behind for them in the form of inherited Roth accounts.

Roth retirement plan account rules are in flux

Prior to 2010, total income restrictions limited Roth account contributions to those of low to moderate earned income. This changed in 2010 as all income restrictions on Roth account contributions and Roth account conversions were eliminated. Whether income limits on Roth account contributions will be re-instituted in the future is obviously unknowable currently. But in the interim, those who want to make Roth contributions and do Roth conversions have a potential opportunity to improve their long-term wealth.

You should use a capable retirement investment calculator to better understand the potential size of your projected Roth retirement nest egg assets in the future and the trade-offs between Roth and traditional account contributions. You should find out whether you could be one of the minority of the US taxpaying population that could amass significant enough retirement assets to have a preference of holding Roth retirement account assets rather than traditional retirement plan assets. Do not just guess, because too much money is involved in the decision.

Incidentally, to figure out whether you are one of the minority with a reasonable chance of building substantial retirement assets, you need sophisticated home retirement planning software that can help you to figure this out for your particular financial situation and circumstances. We can help, because we offer the bargain-priced VeriPlan lifetime retirement planning tool spreadsheet application that makes figuring this out for you family straightforward. To learn more, just explore the various pull-down menus that you will find on the blue menu bar near the top of this page.

This retirement planning spreadsheet software fully automates Roth account versus traditional tax-advantaged account retirement planning calculator analysis capabilities. It provides integrated Roth IRA retirement calculator, 401k retirement calculator, and other retirement plan calculator projection capabilities that take into account your particular current and projected lifetime financial planning situation. You can use VeriPlan’s flexible retirement planning tools to evaluate the net lifetime value to your family of choosing any combination of allowable Roth and/or traditional retirement account contributions over your lifetime. These retirement tax calculator features are just a few parts of VeriPlan’s rich set of lifetime financial planning and retirement planning software capabilities.

<<<<< Go back to previous part: Roth IRA Retirement Planning

VeriPlan Is Simply The Best

Roth IRA Calculator Software

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VeriPlan is a Great Product, a Great Deal,

and a Great Help with Your Personal Financial Planning.

Thank You Very Much for Your Order!

Note: We mail your VeriPlan lifetime financial planning and retirement calculators CD the next business day after PayPal has notified us of your order. When your order ships, we also send an email to you. VeriPlan shipments via USPS typically take 3 to 10 days to arrive.

Roth IRA calculator tools are needed to devise an optimum lifetime financial plan

This free retirement planning calculator website publishes documents regarding how to develop a customized family financial planning strategy

The personal financial planning strategy postings on this free website give individuals and families important ideas about lifetime financial planning issues. Our publications help to clarify important topics associated with establishing better personal finance practices. In addition, to analyze your retirement planning alternatives, you should use the best retirement calculator tool with superior retirement investment projection capabilities. You can find that retirement calculator right here. Its name is VeriPlan. VeriPlan is an excellent all-in-one financial planning tool with early retirement calculator analysis capabilities and the best retirement investment software features available for your do-it-yourself lifetime financial planning needs.

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Whether or not to make investments into “traditional” tax-advantaged employer accounts and IRAs versus investing in “Roth” tax-advantaged employer accounts and personal IRAs is never a straightforward nor simple financial planning decision. The decision on the trade offs happens to be one of the most complex aspects of lifetime personal financial planning.

A broad array of factors can influence whether a traditional retirement plan account contribution or a Roth retirement account contribution decision would be optimal. Given the significant importance of this decision on your lifetime financial plan and the build-up of your retirement savings, it would be worth taking a closer look at this decision. For most people’s lifetime circumstances, making deposits in traditional retirement accounts is the preferred decision, when those contributions would be deductible against current income taxes and would reduce level of total earned income that would be subject to current income taxes.

Factors favoring Roth plan contributions over traditional plan contributions

Many people struggle with the traditional versus Roth contribution decision for their personal financial and lifetime investment planning. The trade-offs over a lifetime are very complex. Rules-of-thumb, back-of-the-envelope calculations, and simple retirement planning spreadsheets cannot model all the important personal financial factors. The decision is not simply about present versus future tax rates and whether the income tax rate schedule might be higher or lower in the future when you are retired.

What is far more important is your long-term success or failure to build up both substantial tax-advantaged and taxable account investment asset holdings. If you do not build up substantial retirement financial assets, then future changes in tax rates will be far less relevant, since you would have fewer assets to tax. In contrast, if you build a substantial retirement asset portfolio with significant tax-deferred assets, then your future income tax obligations could be substantially higher whether future total federal, state, and local income tax rates rise, fall, or stay the same in the intervening years.

Instead of only thinking about current versus future income tax rates, this decision requires a personalized and comprehensive projection and valuation of cumulative effects of an investor’s lifetime income, expenses, debts, asset appreciation, and taxes along the way. The best way to get realistic understanding of this is with an automated retirement planning software application that can easily perform a combined IRA retirement calculator and 401k retirement calculator projection analysis, while simultaneously acting as a retirement tax calculator and a retirement withdrawal calculator. While this might seem like a tall order for the do-it-yourself home financial planner, the answer is right here on this website. Just click the underlined hyperlink in this sentence to learn about our bargain priced home Roth IRA and Roth 401k calculator retirement tool that fully automates this traditional versus Roth retirement plan analysis process for you.

Whether or not a person or family will save enough and invest efficiently across a lifetime dominates the Roth retirement plan versus currently deductible traditional retirement plan contribution decision.

If an investor does not earn sufficiently high income, does not save aggressively, does not control investment costs, and/or does not grow a sufficiently substantial investment asset portfolio retirement nest egg, then that investor will not have to worry about being in high tax brackets in retirement — whether or not state and federal income tax brackets had moved up or down in the interim. If an investor will not have substantial assets and income in retirement, then the current tax savings an investor could get from contributing to a traditional tax-advantaged retirement savings plan will tend to be much more economically advantageous over a lifetime.

For an investor to justify making current Roth contributions in lieu of currently deductible “traditional” contributions, here are eight personal circumstances, taken together, that might reverse the average person’s preference for traditional tax-advantaged plan contributions.

Roth retirement plan contributions might be more advantageous over currently deductible traditional retirement plan contributions, when a retirement investor:

1. has a long time for her assets to appreciate before and during retirement,
2. is likely to earn high enough taxable income over her working lifetime to have a realistic chance of amassing enough assets to cover her retirement expenses easily and still build up financial assets,
3. is more likely to have increasing earned income that is expected to continue to rise in real dollar terms across a working life cycle, enhancing that investor’s ability to feed her investment program through increasing savings,
4. saves at sufficiently high percentage rates across her working lifetime (This normally means consistently saving at rates that are well in excess of 10% of gross earned income.),
5. will fully fund either traditional and/or Roth tax-advantaged accounts up to maximum annual contribution limits,
6. may have proportionately higher front-loaded itemized deductions (e.g. mortgage interest and real estate taxes) and lower earned income that effectively lowers an investor’s nearer term federal, state, and local marginal ordinary income tax rates compared to her more distant retirement years,
7. will adopt a very low-cost investment strategy to improve her chances of capturing higher asset appreciation rates, and/or
8. will maintain an investment asset allocation that is skewed more heavily toward equities (versus toward cash and bonds), and when her stock market and stock mutual fund financial assets continue to grow at rates that are similar to long-term historical rates of return on equities.

Given all these factors, an investor may find that her assets in traditional tax-advantaged accounts would grow to be so substantial that when they are distributed under the mandatory distribution rules after age 70 and 1/2, she is pushed into much higher marginal tax brackets. If her traditional tax-deferred assets are sufficiently large, then ordinary income taxes on these mandatory distributions COULD wipe out the value of the tax shield assets that an investor gained by making traditional account contributions that reduced her taxable earned income in earlier years. This is the crossover point where Roth contributions become more desirable on a present value basis compared with currently deductible traditional retirement new investments. Again, the majority of those saving for retirement are less likely to be in this position and should therefore prefer reducing their currently taxable income through traditional retirement plan contributions.

Currently deductible traditional retirement plan contributions versus Roth retirement plan contributions.

Also, please note carefully that the discussion in this article focuses ONLY on situations where an investor has the choice of making either a currently TAX-DEDUCTIBLE traditional IRA, 401k, or other tax-advantaged account contribution VERSUS a currently NON-TAX DEDUCTIBLE Roth IRA or designated Roth 401k tax-advantaged account contribution. For many people, this may be their situation, because they have not maxed-out their current opportunities to make tax-deductible traditional retirement plan account contributions that reduce total current income subject to federal and state income taxes.

If under the U.S.’s incredibly complex tax-advantaged retirement account rules, an investor does NOT have any further opportunities to make currently tax-deductible retirement account contributions, then a Roth contribution is the preferred choice to make. Since such an investor cannot reduce their level of current subject to income taxation and since Roth account contributions would avoid future taxation of asset appreciation during retirement, then Roth contributions are preferred, if they are allowed under IRS rules. Roth contributions would be preferred over traditional retirement account contributions, under such more limited circumstances of current non-tax-deductibility of any type of plan contribution.

<<<<< Go back to the previous part: Tax-Advantaged Retirement Investment Planning

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You may have the opportunity to make investments into both individual retirement accounts (IRA) and into employer or self-employed tax-advantaged retirement plans, such as a 401k, 403b, 457, Keogh, Simple, or other employer sponsored retirement plan. In general, if your net wage and salary earnings after living expenses will provide enough free cash flow, most retirement investment advisers would recommend that you make the full contributions each year into both individual retirement accounts and employer tax-advantaged retirement investment plans throughout your years of employment up to when you retire.

Even when you find that your annual contributions to such individual and employer sponsored retirement plans would not reduce your current annual income subject to current income taxation, very often it still makes long-term retirement financial planning sense to make these IRA and employer plan contributions, since future appreciation of your tax-advantaged assets would be sheltered from ongoing taxation.

Academic studies also indicate that it usually only takes a few years of non-taxed investment growth within tax-advantaged retirement plans to overcome the 10% federal penalty for withdrawals before age 59 and 1/2. For the vast majority of people, it tends to be unlikely that they would need emergency access to these tax-advantaged assets in the few year period before their tax savings would reach the break-even point versus this potential early withdrawal penalty. Thus, from a variety of points-of-view, maximizing available tax-advantaged plan contributions year after year tends to be a better lifetime financial planning strategy.

Tax-advantaged retirement savings plan rules are complex

The complexity of US income tax rules related to individual retirement account and defined contribution employer sponsored retirement plans simply cannot be understated. The highly complex and confusing retirement investment tax mess that Congress has developed over time for US citizens to cope with is simply idiotic. Nevertheless, it is what it is, and all you can do is to try to understand the rules and to optimize your retirement investment strategy within these rules.

The best way to understand these topics yourself is to download Publications 560 and 590 from the IRS website. These tax publications are long and involved, so grab some coffee and dedicate a few hours to the task of learning about US retirement plan taxation. Grab some aspirin, if needed, but keep at it.

This can be a very valuable expenditure of your time, particularly if you have ever asked these questions: “how much do I need to save for retirement?” or “how long will my money last in retirement?” It does not take much reflection to realize that the answer to these questions would depend greatly upon whether your retirement savings account assets are “pre-tax” or “after-tax.” The pre-tax or after-tax income tax status of your retirement portfolio can make a huge difference in determining how much to save for retirement!

For those of you who are self-reliant and would like to find the answers for yourself, you really need an automated retirement savings calculator and retirement income calculator with sophisticated saving for retirement calculator functionality including fully integrated lifetime retirement tax calculator capabilities. (Here is a hint: poke around on the blue pull-down menu bar of this website, and you will find just what you need right here. The VeriPlan retirement planning software integrates, automates and hides these complex US tax-advantaged retirement investment plan rules, allowing you to stop guessing and to focus on making more optimal lifetime financial planning decisions.)

Traditional tax-advantaged employer sponsored plan and IRA contributions versus Roth retirement account investments

The multi-page article that follows provides information that will allow you to understand better the trade-offs between “traditional” and “Roth” tax-advantaged retirement accounts. Understanding the trade-offs between traditional IRA and 401k retirement contributions versus Roth 401k retirement plan contributions and Roth IRA contributions requires automated analysis of all the factors over one’s lifetime that impact this decision. Back-of-the-envelope calculations can easily be simplistic, incorrect, and deceptive. This decision can only properly be made with the assistance of a comprehensive retirement plan calculator tool.

If you do not have access to an IRA retirement calculator, 401k retirement calculator, or other retirement fund calculator that can do this analysis for you, you really should acquire such a retirement planning software tool. The dollar amounts involved can be very large over a lifetime, and the best retirement calculator can help you to determine the advantages of one choice over another. Following uninformed instincts and assumptions could lead you to pursue a highly sub-optimal retirement savings plan, and over your lifetime you might accumulate many, many thousands of dollars less than you could have saved with a more optimal tax-advantaged retirement investment strategy.

Generally, for the projected lifetime financial circumstances of the majority of Americans, a retirement plan calculator tool would develop lifetime projections indicating that it would be more advantageous to make contributions into traditional tax-advantaged retirement accounts rather that into Roth tax-advantaged retirement accounts. This tends to be true, whenever a person saving for retirement can take advantage of the current tax deductibility features of traditional tax-advantaged IRA, 401k and other retirement account investments. However, note that when retirement savers cannot a) take advantage of current tax deductibility to reduce their current taxable income and b) their earned income and cash flow still allows for some level of retirement plan contributions, then Roth contributions are preferred, if the tax rules allow the person to make Roth retirement plan contributions.

While a sophisticated and automated retirement plan calculator tool usually indicates that retirement savers should prefer to make traditional retirement plan contributions (versus Roth contributions) to reduce current taxable income, you should monitor the situation each year to understand the rules in effect in a particular tax year. Unfortunately, while tax-advantaged retirement plan account rules are already complex, some of the rules have been shifting from year to year. You need to keep paying attention to maintain an optimal tax-advantaged retirement savings plan strategy.

The following pages of this multi-page retirement financial planning article will provide some very useful information allowing you to understand better the trade-offs between “traditional” and “Roth” tax-advantaged retirement accounts. A subsequent article also discusses the estate planning and inheritance advantages of Roth retirement savings accounts, which can be very substantial, if your assets are likely to out-live you.

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VeriPlan is a Great Product, a Great Deal,

and a Great Help with Your Personal Financial Planning.

Thank You Very Much for Your Order!

Note: We mail your VeriPlan retirement planning worksheet CD the next business day after PayPal has notified us of your order. When your order ships, we also send an email to you. VeriPlan shipments via USPS typically take 3 to 10 days to arrive.

Retirement planning calculator software is highly recommended, when you want to develop a superior family financial strategy

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The personal finance plan essays on this free website supply important thoughts about financial planning strategy topics that you may wish to consider. Our publications can help you in your efforts to establish a high quality, full life personal financial planning strategy. In addition, to produce a fully comprehensive long-term money management strategy depends upon you using superior financial planning software with the top investment planning software and the leading financial planning tools.

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