welcome to getting started with income

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lab a video series that jump starts

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great retirement income planning and

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management once you've designed a core

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retirement income plan some important

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questions remain how should I Source my

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portfolio

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withdrawals should I consider Roth

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conversions the income lab Tax Center

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helps you answer these questions and

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estimate the value of tax smart

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distribution

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planning when you analyze a plan you

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first see the distribution strategy with

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the best estimated long-term tax picture

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for that plan compared to a basic

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taxable tax deferred tax-free approach

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these tax estimates include the effects

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of all major income taxes and all of the

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specifics of the plan including the

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timing and amounts of different sources

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of income and

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withdrawals a tax ordered strategy first

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withdraws from accounts of the first cat

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category for example all taxable

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investments before moving on to the next

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category for example tax deferred assets

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for Roth conversion strategies planned

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income related withdrawals are funded

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first using the taxable tax deferred

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taxfree method and if there's any space

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left in the targeted tax bracket we fill

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that space through Roth conversions for

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this example Roth conversions that fill

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up the 24% bracket could provide a lot

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of value over the life of the the plan

Roth conversions

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here we see how this Roth conversion

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strategy has a lower long-term effective

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tax rate lower total taxes and

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correspondingly higher net income and

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higher net Legacy when compared to the

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taxable tax deferred taxfree

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strategy on the taxes tab you can see

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how the Roth conversion strategy pays

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more taxes upfront in exchange for

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control over taxation over the long term

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of course for that to be a good decision

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you'll have to live for some time the

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break even graph shows you cumulative

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estimated taxes for each strategy and

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highlights the point where those

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cross if you're comparing strategies for

How much can I spend

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a how much can I spend plan you'll

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typically see the two approaches differ

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on total taxes paid and total net of tax

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income if you combine tax savings and

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the difference in net Legacy you'll have

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the total estimated Improvement between

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the two

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approaches if on the other hand you've

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built a plan that targets a specific net

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spending level you'll see differences in

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total taxes and total net Legacy but not

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in total net income that's because for

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example for this how can I spend $10,000

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net of tax plan I've held net of tax

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spending constant for these plans the

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app assumes the taxes are paid first

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from any excess non-portfolio

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income then by withdrawing from taxable

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accounts and finally from tax deferred

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accounts in which case net Roth

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conversions are

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reduced keep in mind that you can

Comparing strategies

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compare any two distribution strategies

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and even any two plans here not just

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these defaults when you click edit

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you'll see all of the available

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strategies and their stats in today's

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dollars for example here we Chang the

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comparison to 22 % bracket management

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compared to prata or proportional

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withdrawals keep in mind that here I'm

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exploring and comparing different

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distribution strategies without actually

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changing the plan itself for example

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this plan has the taxable tax deferred

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taxfree approach currently applied but I

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can view the plan as if it had 22%

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bracket management if I went elsewhere

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in the app I wouldn't see any Roth

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conversions for this plan plan but if

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you want to actually apply the strategy

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you're looking at to the plan itself not

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just view a what if you can click apply

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strategy to plan you can also go to a

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plan's advanced settings from anywhere

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in the app and change the distribution

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strategy in the tax

Exploring taxes

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section advisers typically use the

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compare section to quickly evaluate

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which distribution strategies would be

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best for a client and to demonstrate

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that

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value but you can also use the explore

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section to dive in deeply into why taxes

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line up the way they do in a plan here

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you'll see how different income types

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Stack Up in each year of the plan on the

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left we have ordinary income note that

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this is not taxable income it's total

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income each year shows non-t taxable

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income in a 0% tax bracket at the bottom

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of the chart the this untaxed income

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includes things like Roth distributions

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untaxed Social Security any income

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you've set as non-t taxable any return

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of basis and an allowance for the

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standard

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deduction on the right you'll see

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long-term capital gains income which is

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floating because of how ordinary income

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affects the taxation of long-term cap

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gains in the US tax system you can use

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the gear picker at the top of this page

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to view how things change throughout the

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plan or for an all-in-one table view go

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to the bottom of the page here for

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example we can see how the taxability of

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Social Security is changing Through The

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Years you can also see in the explore

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section taxes by type in each year and a

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projection of tax allocation over

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time there are many more tax related

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views and features to explore here and

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throughout the app please see our

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materials on Advanced Tax topics for

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much more