1. Defined Contribution |
2. Defined Benefit |
If your client participates in a defined contribution retirement plan, like a 401k or 403b, with or without a company contribution.
Add an asset with its current balance in the Asset section and set the employee and employer contributions to the plan. The client’s contribution to the plan is automatically treated as an adjustment to income for the tax calculations. |
If your client is eligible to receive a traditional pension, a defined benefit plan, to which the client is not making contributions.
Capture the defined income stream received at retirement in the Income section under the Pensions tab. No tax benefits are available to the client. |
3. Employee Contribution to a Defined Benefit Plan |
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If your client will receive a defined benefit pension, but is required to pay a portion of salary and wages into the plan.
For this type of plan, we need to capture the deferment of income, the tax benefit, and the future income stream. A few options are available to capture all the pieces. Here are two most common methods and an image of the data entry for the example client. Example: The client is a teacher at a public school who earns $45,000 and is required to contribute 6% into the Public Employee Retirement System. The state also contributes 6%. The client will receive a defined benefit pension upon retirement. Method 1 (Simplest) Capture the future income stream by entering the defined pension benefit in the Income section under the Pensions tab.
Method 2 (Most Accurate) Again, capture the future income stream by entering the defined pension benefit in the Income section under the Pensions tab.
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