Easy Money - Lump Sum Distribution to an IRA
Q: How do I illustrate a rollover from a Lump Sum Distribution to an IRA account in a single year?
A: This can easily be shown using the Monthly Additions/Withdrawals tab of the Asset Details screen. Assume the client will receive a $100,000 lump sum distribution that they will rollover into an IRA at age 60.
- Go to the Asset Worksheet window in Asset Details.
- Create an account that you will be transferring the distribution into. Be sure to select “Retirement Plan” as the Type, and “Other” as the Retirement Plan type.
- In the Monthly Additions/Withdrawals tab, in the Age Change Worksheet, enter the age when the transfer will occur, 60 in this case, in the age column. Enter a positive monthly amount in the Company $ column for the amount of the transfer. To show a $100,000 rollover, enter the monthly addition of $8,333 under the Company $ column. This will not be picked up as an expense.
- Make a second entry with the age incremented by 1 and leave the deposit amount as 0, 61 in this example, to stop the deposit after the first year.
The result of these entries is $100,000 will be deposited by the company from the pension plan into the IRA.