How to enter an IRA rollover in a plan.

While the rollover of, for example, a 401(k) to an IRA, doesn't typically have any tax implications, since both accounts provide tax deferral and have RMDs, showing this movement of money can be helpful, especially so that clients can understand a plan using Life Hub. This article outlines the steps involved in implementing such a rollover.

Create the Accounts

First, you'll need to create the source and target accounts for the rollover. The rollover target will need at least a $1 balance.

Create a One-Time Account Distribution from the Source Account

Next, click Account and Distribution Settings on the source account and check the Specify a distribution plan for this account on the Distribution Settings tab.

Set the Distribution Plan Type to Lump Sum and select the date of the rollover.

Create an Account Contribution

Now save the plan and check the amount of the one-time account distribution you just created in Life Hub. (You may want to turn off the Round Values option to see the exact amount.)

Now create a lump sum account contribution of this amount that targets the rollover target account and occurs on the same date.

Remove the Source Account from Income Calculations

Next, mark the source account as not included in income plan calculations. Do this by unchecking the "Include account in income plan calculations" box for this account. This will ensure that the source account for the rollover is not used to fund retirement withdrawals. 

Add the Rollover as an 'Other Income' Source

Finally, create a lump sum 'Other Income' item for the same amount on the same date, with tax treatment set to 'Not Taxable'.

How to See the Rollover

Life Hub shows beginning-of-year account balances and calendar year totals for cash flows. So, in this example, we can see the balance in the source account at the beginning of 2025 and the rollover amounts in the savings and income sections.

In 2026, we see that the target account now has the balance.

Rollovers in Pre-retirement

If the rollover is planned for the period before the income plan begins, you'll need to take one additional step. Because in pre-retirement any planned savings are assumed to be funded externally (and possibly by sources never specified in the plan), and one-time lump sum income sources go to the portfolio by default, you'll need to add an 'Other/Variable Expense' item for the same amount and timing. Otherwise, the plan will double-count the rollover funds.

Another option that will keep the plan a bit cleaner is to make the one-time income item into an ongoing income source that lasts only 12 or fewer months. This will ensure that it does not head to the portfolio on its own and create a separate 'Other Savings' item. Ongoing income in pre-retirement is assumed to be spent, not saved to the portfolio.

This will allow the pre-retirement plan to look just like the in-retirement plan in Life Hub.