SIPS Essentials allows you to calculate annual effective taxes in your income plan by setting a tax rate for each year. Below is a hypothetical example of a client going through their career and retirement, including periods before and after Social Security, withdrawals and Required Minimum Distributions (RMDs). Below is the forecasted effective tax rate breakdowns that are reflected in the article:
- Working (year 1 through year 3): 15%
- In retirement before SS disbursements (year 4 through year 6):14%
- In retirement with SS disbursements (year 7 through year 15):12%
- In retirement with Social Security, Withdrawals, and RMDs amounts (year 16 through year 20):3%
To learn more about Add Inc Tax functions within SIPS Essentials see articles:
- Calculating and Applying Tax Rates in SIPS Essentials
- Setting Effective Tax Rates for SIPS Essentials
If you would like to learn more about advanced tax planning in SIPS Advanced see article:
To learn about setting up tax calculations options for income and expesne see articles:
- Tax Calculation Option: Adding Assets into a Structured Income Plan
- Tax Calculation Option: Adding Income and Expenses into a Structured Income Plan
To learn more about forecasting effective tax rates see articles:
Step 1: Edit: Click on the green Edit button underneath the Structured Income Planning sub-heading.
Step 2: Add Inc Tax: Click on the green Add Inc Tax button underneath the Structured Income Planning heading.
Step 3: Tax Name: Enter in a Title for the Income Tax column. 
Step 4: Starting Effective Tax Rate: Type in the effective tax rate. 
Step 5: Add Adjustment Text Box: Type in the percentage that will be used while the client is in retirement and before the SS disbursements. 
Step 6: Tax Adjustment Years: Click on the text boxes for year 4 through 6.
Step 7: Pick Years: Click on the green pick years button.
Step 8: Tax Adjustment Table: The 14% will have automatically be moved in the years 4 through 6.
Step 9: Add Adjustment Text Box: Type in the percentage that will be used while the client is in retirement and receiving social security. 
Step 10: Tax Adjustment Years: Click on year 7.
Step 11: Start Years for X Years Text Box: In the Start Years for X Years Text Box, enter in the year 9.
Step 12: Start Years for X Years: Click on the green Start Years for X Years button.
Step 13: Tax Adjustment Table: The 12% will have automatically be moved in the years 7 through 15.
Step 14: Add Adjustment Text Box: Type in the percentage for the full retirement; 3%.
Step 15: Tax Adjustment Years: Click on year 16.
Step 16: Start Year for Rest of Plan: Click on the green button Start Year for Rest of Plan.
Step 17: Tax Adjustment Table: The 3% will have automatically be moved in the years 16 and for the rest of the plan.
Step 18: Save: Click on the green save button underneath the Manage Tax Heading.
Step 19: Structured Income Plan: Two new columns have automatically appeared, the Inc. Tax and After-Tax Income. Both columns automatically display the amounts.
Step 20: Display Options: Click on the green Display Options button underneath the Structured Income Planning Heading.
Step 21: Column Display Options: Click on the green View Tax Rates button.
Step 22: Structured Income Planning: The Income Tax Column will automatically show the monetary and percentage amount. The effective tax rate is rounded on the income plan for display purposes.
Step 23: Save: Click on the green save button underneath the Structured Income Planning heading.
If you feel you need more support or would like to set up demo time with one of our representatives, please contact us at: +1-888-449-6917 or support@planscout.com.
