Steve ChenFounder and CEO, Boldin · Boldin Founder & CEO

Tax Updates to the NewRetirement Planner (March 2022)

Name: Tax Updates to the NewRetirement Planner (March 2022)
Uploaded: 2022-03-03T20:27:54+00:00
Duration: 2 min 11 s
Channel: Steve Chen
Description: A short March 2022 YouTube update by Steve Chen (speaker identified as DAV) describing three tax-related updates to the NewRetirement Planner: (1) Free…

3 Mar 2022 · 2 min

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2:11

A short March 2022 YouTube update by Steve Chen (speaker identified as DAV) describing three tax-related updates to the NewRetirement Planner: (1) Free Planner members will now be modeled with a flat 3% state income tax (users should confirm their state settings); (2) Required Minimum Distribution (RMD) tables have been updated to reflect 2022 tax law, which may slightly change RMD burdens (visible in Insights → Savings → Withdrawals chart); and (3) the planner no longer adjusts Social Security taxable-income thresholds for inflation (reflecting Congressional inaction), increasing the taxable portion of benefits for many users and potentially raising lifetime tax burden (viewable in Insights → Taxes → Gross Taxable Income by Source).

Questions this video answers

A flat 3% state income tax.

2022 tax law.

The planner stopped adjusting the Social Security taxable-income thresholds for inflation (thresholds are no longer indexed), so more benefits may be taxable.

Chapters

Hello DAV with New Retirement here with three important tax updates to the new retirement planner. The first is a change to State income tax for Free Planner members. Free Planner members will now have a flat 3% state income tax modeled. This really shouldn't change anything for Planner plus members. Unless you didn't select a state in my plan or home and real estate. Now would be a good time to make sure that your state of residence is correct. The second change is an update to our RMD tables. Our RMD tables are now up to date according to 2022 tax law. You may see a small difference in your RMD burden if you go to INSIGHTS Savings and look at the Withdrawals chart. The last update is a change to the taxable portion of your Social Security and will have a significant impact on your plan. In order to understand why we made this change, it's important to understand the context of Social Security taxation. Social Security was not actually taxable until 1984. At that point, a tax was implemented to target high income earners in retirement. Most ordinary people did not get taxed on their Social Security benefits. Social Security is taxed depending on certain AGI thresholds or adjusted gross income. However, as time went on, Congress did not adjust the thresholds to meet inflation. Nowadays, most everyone collecting Social Security is subject to federal income taxation on their benefits. So what changed? Before, we adjusted the taxability thresholds for Social Security according to inflation. Now the planner no longer adjusts these thresholds. This is a better reflection of Congress's actions and may result in a higher lifetime tax burden. You can see the taxable portion of your Social Security benefits if you go to Insights Taxes and look at the Gross Taxable Income by Source chart. Thank you.