Saving Types - Details

Employer Retirement Plans [401(k)/403(b)/457(b)]

For employer retirement plans, you can reflect information about employee contributions (where applicable) as well as employer contributions.  Contributions to employer retirement plans will always be included in the projection for the year, even if there is insufficient cash flow to fund the contributions once all inflows and outflows are considered.

401(k), Roth 401(k), 403(b), Roth 403(b)

Total employee contributions across these accounts will be capped at the IRS maximum value ($19,500 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

Total contributions to all defined contribution plans (employee plus employer) will be capped at the IRS maximum value ($57,000 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

401(k) and 403(b) contributions are treated as W2 deductions and will reduce the client's income prior to being reflected in wages on box 7 of the projected 1040 on the Tax / Details screen.

All employer contributions specified on a Roth 401(k) or Roth 403(b) card will be contributed to the traditional 401(k) / 403(b), per law.

457(b), Roth 457(b)

Total employee contributions across these  accounts will be capped at the IRS maximum value ($19,500 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

Total contributions to all defined contribution plans (employee plus employer) will be capped at the IRS maximum value ($57,000 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

457(b) contributions are treated as W2 deductions and will reduce the client's income prior to being reflected in wages on box 7 of the projected 1040 on the Tax / Details screen.

All employer contributions specified on a Roth 457(b) card will be contributed to the traditional 401(k) / 403(b), per law.

After-tax 401(k)

See our separate article on how to illustrate after-tax 401(k) savings

Solo 401(k)

Solo 401(k) contributions are for self-employed clients with their own 401(k) plan.  Total contributions to all defined contribution plans (employee plus employer) will be capped at the IRS maximum value ($57,000 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

401(a)

Typically 401(a) retirement savings plans are used in governmental and non-profit organizations. Total contributions to all defined contribution plans (employee plus employer) will be capped at the IRS maximum value ($57,000 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

Traditional IRA

Traditional IRA

Contributions are capped at the IRS limit ($6,000 for 2020 + $1,000 catch up for those 50 and over).  Cap includes both traditional IRA and Roth IRA contributions.

Contributions less than the income limit will be considered deductible.  Deductibility phases out between $65,000 and $75,000 of AGI for single; between $104,000 and $124,000 for joint.  Over those thresholds the entire contribution will be considered non-deductible.

You can control whether IRA savings is funded if there is insufficient cash flow in the client Settings.

SEP IRA

All contributions are employer contributions.  Total contributions to all defined contribution plans (employee plus employer) will be capped at the IRS maximum value ($57,000 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

Simple IRA

Employee contributions are capped at IRS limit ($13,500 for 2020 + $3,000 catch up for those 50 and over).

Roth IRA

Roth IRA

Contributions are capped at the IRS limit ($6,000 for 2020 + $1,000 catch up for those 50 and over).  Cap includes both traditional IRA and Roth IRA contributions.  Roth IRA contributions are only included if the household is below AGI limits.  In 2020 the contribution limit phases out between $124,000 and $139,000 of AGI for single; between $196,000 and $206,000 for joint.

You can control whether Roth IRA savings is funded if there is insufficient cash flow in the client Settings.

Backdoor Roth IRA

'Backdoor' Roth IRA contributions reflect a non-deductible contribution to a traditional IRA that is then converted to a Roth IRA.  In RightCapital, this allows you to illustrate Roth IRA savings even if the client is over the Roth IRA contribution limits.  The contribution amount is still capped at the IRS limit.  We assume that all backdoor Roth IRA contributions are not taxable.

Health Savings Accounts (HSA)

Employee contributions are capped at the IRS limit ($3,550 + $1,000 catch up for those 55 and over, per person, for 2020).  You can enter employer contributions to an HSA in the 'Flat dollar match' field.

Contributions to HSA accounts will always be included in the projection for the year, even if there is insufficient cash flow to fund the contributions once all inflows and outflows are considered.  You can control when HSA contributions are used to fund medical expenses in the client Settings.

HSA contributions are treated as W2 deductions and will reduce the client's income prior to being reflected in wages on box 7 of the projected 1040 on the Tax / Details screen.

529

When entering 529 Savings, you can choose the beneficiary of the 529 plan. The beneficiary can be the client, co-client, any child, or 'Unassigned'. If they are assigned to an individual the account can be used to illustrate college funding on the Education screen. If they are 'Unassigned' they will not show up on the Education screen but will be used to fund any college goals in the retirement projections.

There are no limits in the system on contributions to 529 plans.

You can control whether 529 savings is funded if there is insufficient cash flow in the client Settings.

Taxable

Taxable savings cards are only available if you are using the Modified Cash Flow or Goals based planning methods; if you are using the Cash Flow planning method we will calculate the taxable savings automatically.

Other 

Cash Balance Pension

This card can be used to reflect outside contributions to a pension account.  Anything entered as part of a Cash Balance Pension savings card will be shown as an employer contribution and be reflected in the 'Pension' column in the accounts tab of the cash flows.

Deferred Compensation

This card can be used to reflect employee contributions to a deferred comp / pension account.  Anything entered as part of a Deferred Compensation savings card will be shown as under Planned Savings in the cash flows and will be reflected in the 'Pension' column in the Accounts tab of the cash flows.

Profit-Sharing

This card can be used to reflect employer contributions to a profit sharing plan.  These contributions will be reflected in the '401(k)/403(b)' column in the Accounts tab of the cash flows.

Contributions to profit sharing plans are limited to 25% of the client's salary or self-employment income.  Total contributions to all defined contribution plans (employee plus employer) will be capped at the IRS maximum value ($57,000 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

Employee Stock Purchase Plan (ESPP)

Employee Stock Purchase Plan savings allows you to reflect purchase of shares in an ESPP.  If the ESPP allows for purchase of shares at a discount, you can enter in the percentage discount as part of the savings card.  For example, if the client is spending $5,000 to purchase shares at a 20% discount, you can enter $5,000 as the amount and 20% as the discount.  This will increase the client's taxable account by $6,000 ($5,000 contribution + $1,000 discount value)

ESPP savings will flow through to the taxable account.  You will see the value in the Net Flows section of the summary page of the cash flows just like Taxable savings.  The incremental value provided by the discount will be shown as an employer contribution.

Currently ESPP contributions will be taxed like any other taxable assets; we do not factor in short-term capital gain rates for withdrawals within a year.

Employee Stock Ownership Plan (ESOP)

This card can be used to reflect employer contributions to a profit sharing plan.  These contributions will be reflected in the '401(k)/403(b)' column in the Accounts tab of the cash flows.

Contributions to profit sharing plans are limited to 25% of the client's salary or self-employment income.  Total contributions to all defined contribution plans (employee plus employer) will be capped at the IRS maximum value ($57,000 for 2020, plus an additional $6,500 'catch up' for those 50 and over).

Tax-Deferred

This card can be used to reflect outside contributions to a tax-deferred account.  Anything entered as part of a Tax-Deferred savings card will be shown as an employer contribution and be reflected in the '401(k) / 403(b)' column in the accounts tab of the cash flows.

Tax-Free

This card can be used to reflect outside contributions to a tax-free account.  Anything entered as part of a Tax-Deferred savings card will be shown as an employer contribution and be reflected in the 'Roth 401(k) / 403(b)' column in the accounts tab of the cash flows.