Description - Common Questions
Back to: Asset Basics in Moneytree Plan
This article covers common questions regarding the Description inputs for assets. Read more about the asset inputs here.
Q: What do I select for the Group?
A: The Group is a general category for the asset. This selection will not drive rate of return or impact the projection on its own. If a single option does not fit an asset, select the best fit. Group options fall into a handful of categories:
Capital Assets: This makes up the vast majority of options. Capital Assets are typically ones that are used to retirement. Common examples include Mutual Funds, Stocks, Checking Accounts, and Annuities.
Personal Property: These can be identified by options that show "(Personal)" at the end. Personal assets will be used for Net Worth and Estate reports, but will not be available for withdrawal.
Special Assets: There are a few special asset groups with special inputs. They include:
Residence: Model any primary residences owned, their sale, and replacement. For current residences, make sure to enter the mortgage information in the Liabilities section and link it to the residence asset. Read more about common residence sale scenarios.
Rental Real Estate: This is for rental properties, or other non-residential real estate or land. There are options to model rental income, expenses, depreciation, improvements, and sales.
Stock Options: Use this to model the grant, vesting, sale, etc. of qualified stock options, non-qualified stock options, and restricted stock units.
Bonds (Municipal): This is Capital Asset that includes a special option "Subject to AMT". When marked, the asset will be used towards Alternative Minimum Tax calculations.
Q: What is the Best "Type" Option to Select?
A: The Type determines how the asset is taxed, grows, and pooled together with other assets. Moneytree Plan pools assets together of the same Type and withdrawals them in this order. Each pool of assets will gets its own rate of return, making the tax-type the driving factor behind how assets are grown. This makes the Type a crucial element for Moneytree Plan projections. The options include:
Taxable: Ordinary interest baring accounts, often with low- to no-yield. Examples include Checking, Savings, and Money Market accounts.
Equity/Other: Brokerage and other equity assets. The rate of return is divided across interest, dividends, capital gains, and appreciation. Read more about rates of return.
Tax-Free: Municipal bonds and other non-Roth assets with tax free growth. For Roth assets, choose the Retirement Plan option.
Tax-Deferred: Annuities outside of an IRA and other assets with an after-tax cost basis, and growth that is taxed as ordinary income upon withdrawal. Read about modeling annuities with guaranteed income in Plan.
Retirement Plan: This option covers a series of qualified plans designed more specifically for retirement. The options fall into these categories (Read more about Retirement Plans):
Employer Sponsored: These include tax-deferred assets through employment. Most of the options fall under this category. Examples include 401k, TSA/403b, SEP, and Other.
IRA: This option is for tax-deferred IRAs. The balance will be pooled with other tax-deferred retirement plans for appropriate taxation.
Employer Sponsored Roth: The inputs for these will match the inputs for other Employer Sponsored type retirement plans. The balance will be pooled with Roth IRAs for appropriate taxation.
Roth IRA: This is for after-tax Roth IRAs.
Inherited IRA: Use this option to model IRAs inherited, or expected to be inherited, by an individual. There are number of special inputs such as the age the IRA was inherited, and how/when it must be withdrawn from. There is a box to choose whether the asset is Roth type IRA or not.
Health Savings Accounts: Use this option for HSAs. The inputs will match those of Employer Sponsored type retirement plans. The balance will be pooled separately for appropriate taxation.
Q: Why Are The Account, Class, Beneficiary, etc. Considered Optional?
The fields on the right-hand side are used for topical reports, organization, and to potentially streamline other parts of data entry. They are not a driving force of the retirement and cash flow projections, or the for the growth of assets. Provided are brief descriptions of each field:
Account: The account is used to tie several assets together that belong to the same account. The information is summarized in the Accounts tab, but will not be reflected in any reports.
Class: Moneytree Plan allows fully user customization of classes. These are used for the Asset Class reports. The selected class can auto-fill the rate of return, if elected in Settings > Asset Classes. Read more about Asset Classes.
Liquidity: These options are used for the liquidity reports only.
Beneficiary: Selecting a beneficiary impacts Estate reports. With none selected, the program assumes the surviving spouse is the beneficiary of the first to die, then heirs are the beneficiary for the second to die. Retirement and other projections assume the funds will be available to the surviving spouse regardless of the selected beneficiary. Learn how to account for non-spousal beneficiary assets.
Stock Symbol: This field is only available for assets with Type of Equity/Other and Retirement Plan. Use it to tie a stock symbol to the asset. You can update balances for all assets with linked symbols by clicking the "Stock Prices" button by the asset table. In order for values to update, they must be entered on a "Per Share" basis.