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Naviplan Select User Manual: Level 1 and Level 2 Plans

1. 0 00 X Add Regular Cash Gift gt Lump Sum Cash Gifts Asset Gifts Figure 165 Set Goals section Estate Planning category Estate Strategy page Gifting tab e To enter the details of cash gifts that occur on a regular basis click Regular Cash Gifts Click the Add Regular Cash Gift button and then enter the gift details e To enter cash gifts that occur on a one time basis click Lump Sum Cash Gifts Click the Add Lump Sum Cash Gift button and then enter the gift details e To enter the details of gifts to be made from specific assets click Asset Gifts Click the Add Asset Gift button and then enter the gift details 6 To enter trusts that exist in the clients existing estate scenario go to the Trusts tab click Add Trust and then select the type of trust only These settings do not affect li afi Gons in other reports Estate Distribution Asset Estate Details Ging Trusts Inter Vivos Trusts Lifetime Description Type Details Report Delete ILIT ILIT Existing Insurance B x Add Trust Irrevocable Trust ILIT Existing Insurance ILIT New Insurance Figure 166 Set Goals section Estate Planning category Estate Strategy page Trusts tab showing trust selection options 196 The appropriate dialog box opens The fields will vary depending on the type of trust you selected For more information see the application Help 197 Chapter 10 Examining results 198 Af
2. To view or edit account distribution for all plan goals click Goal Funding Goal Funding gt Major Purchase Accounts 3 750 Unassigned Accounts 3 750 Figure 111 Set Goals section Major Purchase category Major Purchase page Level 2 Plan 5 To change the clients investor profile for a specific major purchase goal under Investment Profile select the Override check box for the major purchase goal and then select another investment profile Note The Asset Allocation module must be selected on the Plan Management section Modules category Modules page 6 If you want to override the proposed portfolio for the major purchase goal and the answers on the Plan Management section Asset Allocation category Questionnaire page do not accurately reflect the goal or you are not using Ibbotson Asset Allocation see Overriding the proposed investor profile for a goal Level 2 Plans on page 131 7 To allocate an account to the major purchase goal or to view or edit account distribution for all plan goals click Goal Funding For more information see Allocating accounts to goals on page 139 All accounts allocated toward the major purchase goal appear on the Major Purchase page under Major Purchase Accounts The market value of each account displayed reflects the market value for the account and not the actual amount allocated to the major purchase goal Any accounts not allocated to a goal appear unde
3. 1 Go to the Set Goals section Estate Planning category Estate Strategy page 5 Assumptions Funded Trusts Gifting Growth amp History Estate Expenses Estate Strategy 4 Back Next gt gt Instructions 1 E Total Taxes 121 693 1 0M E Net to Heirs 1 159 986 E Net to Charity 0 agi Net to Heirs and Charity 1 159 986 0 6M Life Expectancy David 2021 Estate Planning Life Expectancy 0 Edit Life Expectancy 0 4M 0 2M Susan 2026 Estate Planning Life Expectancy 0 The life expectancy settings selected here apply to all estate planning scenarios and are used for comparison purposes only These settings do not affect life expectancy options in other reports 0 0M Estate Distribution AssetEstate Details Gifting Trusts This button label changes depending on the cients By default NaviPlan creates a simple will estate distribution scenario In a sl residence and citizenship status pugh to the surviving spouse under the unlimited marital deduction To allow full control of estate distribution testamentary trusts general beaefsts and asset bequests dick one of the following buttons Convert to Detailed Convert and Create Marital QDOT CST Simple Will Figure 162 Set Goals section Estate Planning category Estate Strategy page 2 To convert a simple will estate distribution to a detailed estate distribution where you can enter testamentary trusts general bequests and a
4. box to treat the trust property as if the Non Qualified QTIP election had not been made that is StartofYear Start of Year the assets are considered transferred Market Value Cost Basis from the donor spouse to the remainder o 0 beneficiaries for GSTT purposes Any Qualified remaining GSTT exemption of the donor is Start of Year Start of Year applied against any GSTT that results Market Value Cost Basis from the trust If this check box is not 0 0 selected GSTT implications on the death of the member selected wil be considered David v Beneficiaries Return Rates Figure 149 Trust Details dialog box showing qualified terminable interest property trust details Funded marital trust details Trust Start of Year Start of Year GSTT Tax Rate Market Value Cost Basis Inclusion Ratio Marital Trust 40 00 0 0 1 000 Income Member gt This GSTT Inclusion Ratio is multiplied David by the maximum estate tax rate to o determine the GSTT rate Beneficiaries Return Rates Figure 150 Trust Details dialog box showing marital trust details Funded generic testamentary trust details Funded Generic Testamentary Trust oe deari Start of Year Trust If a percentage of the trust s Description Market Water Cst Dee market value is to be distributed sons ea ct 9 as income select the Unitrust esteem a ue check box and then enter the Member Ratio i p percentage to be distributed as v 1 000 5 00 Monthly income an
5. 2 Under Deferred Annuities click Details for the appropriate annuity 65 3 o N OAU A 10 Go to the Redemptions tab and then click Substantially Equal Periodic Payments SEPP Payout Options Savings Strategy Redemptions Qualified Account Setup gt Red pias er ae eS Substantially Equal Periodic Payments SEPP Pro Rate Account First Last Description Start Date Frequency Distribution Method Payments Detsils Delete David s IRA Oct 112011 Annual Y Required Minimum Distribution v YF x Add SEPP Strategy Add Deferred Annuity _v Figure 51 Annuity Details dialog box Redemptions tab Substantially Equal Period Payments SEPP details Level 2 Plan Detailed Tax method In the Start Date field enter the date the SEPP will start From the Frequency list select the payment frequency From the Distribution Method list select the method of payment If applicable select Pro Rate First Last Payments To specify the life expectancy table to use for calculating payments and an interest rate click Details The SEPP Strategy Details dialog box opens SEPP Strategy Annual Account Distribution Description Amount Start Date Frequency Distribution Method David s IRA VA Oct 112011 Annual v Amortization Pro Rate First Last Beneficia 72 t Interest e ry Payments Life Expectancy Table Date of Birth Rat Single Life Expectancy V N A 2 0 00 3 Figure 52 SEP
6. Asset Classes tab Setting up user defined asset allocation If you have NaviPlan Select with user defined asset allocation you can override any asset allocation defaults set in the Asset Allocation Settings dialog box User Preferences menu Asset Allocation Settings for an individual plan You can also select different model portfolios suggested asset mixes for individual goals within a plan Since time horizon and risk tolerance are major components of asset allocation goals with different time horizons or objectives may require different investment profiles For example the clients retirement goal might not begin for 20 years or more but they may have education goals for their children starting in five years To set asset allocation assumptions for an individual plan follow these steps 1 Go to the Plan Management section Asset Allocation category Profile page 2 Click the Settings button The Asset Allocation Settings dialog box Asset Classes tab opens Any default asset classes that were entered on the Asset Allocation Settings dialog box Asset 20 Classes tab accessed from the User Preferences menu Asset Allocation Settings option appear under Asset Classes Esset classes Correlations Investor Profiles Portfolios gt Instructions Asset Classes Capital Deferred Description Interest Dividends Gains Growth TaxFree Total Large Cap Equity 0 000 2 400 3 010 5 250 0 000 10 66
7. Description Member Type Amount Frequency Infl Add l Start Age End Age Retirement Expense Joint v Lifestyle v 0 Monthy v v 0 00 Ret ist Death 2nd Retirement Expense Joint v Lifestyle v 0 Monthly v v 0 00 Ret 1st fi Death 2nd Add Retirement Expense Retirement Incomes If Social Security or defined benefit pensions are entered on the Ainanaa Picture section Cash Flow category Cash Flow page do not enter them in this section Only enter additional retirement incomes in this section Description Member Income Type Amount Frequency Infl Add l Start Age End Age Delete Other Taxable David Other Taxable v 0 Monthy v v 0 00 Ret Owner Death Owner X Add Retirement Income To view or edit account distribution for all plan goals Goal Funding To view or edit account liquidation strategies Liquidation Strategies gt Retirement Accounts 90 000 gt Unassigned Accounts 15 000 Figure 102 Set Goals section Retirement category Retirement page Level 2 Plan 2 Under Objectives enter your clients retirement ages or the years at which your clients want to retire and then enter your clients life expectancies 3 To change the clients investor profile for retirement 126 127 Under Profile the investor profile used by the plan is shown Select the Override check box and then select the alternative investor profile you want to apply to the retirement goal If the As
8. NaviPlan Level 1 and Level 2 Plans Entering client data and goals USER MANUAL USA Version 12 2 Contents Chapter 1 Using this manual NaviPlan Premium user manual series Conventions NaviPlan Premium resources Phone support Updates The About dialog box Chapter 2 Entering plan assumptions Entering general assumptions Changing economic factors Setting annual account fees Setting milestones Level 1 Entering income tax rate assumptions using the Average Tax method Overriding tax filing statuses Detailed Tax method Changing the Dependent of status Detailed Tax method Setting tax calculation assumptions Setting milestones Level 2 Selecting a portfolio balancing method Entering capital loss carryovers Level 2 Entering AMT carryforward credits Level 2 Entering unused charitable donations Level 2 Setting asset allocation assumptions in individual plans Determining the clients investor profile Upgrading asset allocation Chapter 3 Entering net worth information Entering lifestyle assets Entering liabilities Entering real estate assets Level 2 Entering business entities Level 2 Entering business activity Entering the sale of a business entity Modifying return rates Entering accounts Dao a4 rkn R oo oNN N 11 11 12 13 15 16 17 17 23 28 29 30 32 36 38 38 40 41 41 Creating accounts Entering holdings Entering a hold on a holding within an account Entering saving
9. Return Rate for Cash Surpluses 0 00 Frequency Quarterly Tax Deductible Revert to Defaults Figure 3 Plan Management section Assumptions category General page 2 Under Annual Account Fees in the Annual Account Fee field enter the annual account fee as a percentage of the account s market value 3 From the Frequency list select how often the account fee will be calculated 4 To claim annual account fees as a tax deductible expense select the Tax Deductible check box Note To clear any changes and revert to the defaults entered on the User Preferences Plan Settings dialog box General tab click the Revert to Defaults button Setting milestones Level 1 To enter the clients retirement dates and life expectancies follow these steps 1 Go to the Plan Management section Assumptions category General page PETTEE EEES AAEE Notes Planning Assistant Calculators Reports Economic Factors Annual Account Fees Base Inflation Rate 3 00 Inflation Rate Graph Annual AccountFee 0 00 Return Rate for Cash Surpluses 0 00 Frequency Quarterly ble Enter either an age or a date NaviPlan wil calculate the other David Susan Age Date Age Date Retire At 65 May 2035 65 Jun 2037 Life Expectancy f 90 2060 f 90 2062 Life Expectancy Graph Currently Disabled 2 Figure 4 Plan Management section Assumptions category General page Level 1 Plan 2 In the Retire At fields enter the age
10. You can view or edit other long term care insurance policies by clicking Previous Entry or Next Entry Generating the Insurance report 121 The Insurance report provides a summary of all the insurance coverage entered in the clients plan and can be used to verify data entry or quickly view all coverage To generate the Insurance report follow these steps 1 Go to the Enter Financial Data section Insurance Coverage category Insurance Coverage page Click the Insurance Coverage Report button The Insurance report appears Insurance Report David Lee and Susan Lee Financial plan 2011 Life Insurance Policies Description Life Insurance CT Policy Type Term 10 Life Owner David Effective Date Jan 1 2010 Insured David Death Benefit 375 000 Beneficiary Susan Cash Surrender Value CSV 0 Premium Payer David Premiums cease on Never Annual Premium 300 Payments CSV payable with Death No Coverage ceases on Never Benefit Disability Waiver Yes Disability Insurance Policies Policy Type Individual Disability Insured Susan Effective Date Dec 31 2010 Owner Susan Premium payer David Benefits are 3 000 month tax free Benefits begin after 3 months and are paid until age 63 Premiums are 25 month and end on Apr 30 2035 Long term Care Insurance Policies Insured David Company Effective Date Jan 1 2011 Figure 98 Insurance report Entering tax credits and deductions L
11. event or year that you want to view Click OK The Single Trust dialog box opens showing the Single Trust report Entering gifting growth and history On the Gifting Growth amp History page you can enter the growth and tax rates that apply to gifts given to beneficiaries To enter gifting growth and history follow these steps 1 Go to the Set Goals section Estate Planning category Gifting Growth amp History page Assumptions Funded Trusts Gifting Growth amp History tate Expenses Estate Strategy Instructions Prior Gifts E Growth Income Beneficiary Rate Tax Rate Julia 3 00 0 00 Matthew 3 00 0 00 Red Cross 3 00 0 00 Other 3 00 0 00 Historical Data Taxable Applicable Gift Taxes Lifetime GSTT GSTT Unused Member Lifetime Gifts Credit Used Already Paid Exemption Used Already Paid Spousal Exclusion David 0 0 0 0 0 0 Susan 0 0 0 0 0 0 Figure 160 Set Goals section Estate Planning category Gifting Growth amp History page 2 Under Prior Gifts enter the total original value of any gifts that will not grow going forward that each client has given to each beneficiary 3 Under Prior Gifts with Growth enter the total current value of any gifts that will grow going forward at the after tax rate that each client has given to each beneficiary 4 Under Growth Rate enter the rate of growth the gift is expected to earn Under Income Tax Rate enter the rate of taxation ap
12. Business entities are organizations that are separate entities for legal and financial purposes You can add limited liability companies LLC partnerships S corporations or C corporations that the clients hold as flow through assets Business entity assets are excluded from asset allocation To enter a business entity follow these steps 1 Go to the Enter Financial Data section Net Worth category Assets Liabilities page 2 Under Business Entities click Add Business Entity and then select the business entity type from the list A new data entry row appears 3 Enter a description and the start of year market value 4 To enter additional information click Details The Business Entity Details dialog box opens Enter or edit the additional business entity information Community Type Owner Property LLC wv Joint v Purchase Information Current Information Number Current Value Current Value Date Amount of Units As of per unit Dec 312010 so 0 000 Jan 12011 Start of Year Value Market Cost Number AMT Value Basis of Units Basis 0 0 0 000 so Activity Sale Information Return Rates Income Expenses Distributions aa bile Frequency 0 0 0 0 Annual X Infl Add l Total 0 00 0 00 Add Business Entity gt lt Previous Entry NextEntry gt OK Figure 28 Business Entity Details dialog box Entering business activity Business activity such as income expenses and distributions can be ent
13. Cay le Cape Pan j1 08 estate strategies 193 deficit coverage order entering 110 funded trusts 181 220 gifting growth and history 190 questionnaire 179 state death taxes 178 trusts reports 188 estate reports 200 estate strategies 193 estimate benefit pension 94 future benefits 96 expenses entering 99 retirement 127 surplus entering 101 F Fact Finder 200 family limited partnership trust 185 favorite reports 199 Financial Needs Analysis client report 211 Financial Needs Assessment client report 211 Financial Needs Summary client report 211 funded trusts beneficiary details 187 charitable lead trust 187 charitable remainder trust 187 credit shelter trust 182 family limited partnership trust 185 generic testamentary trust 184 grantor retained trust 185 irrevocable life insurance trust 183 irrevocable trust 182 marital trust 184 qualified personal residence trust 184 qualified terminable interest property trust 183 G generic testamentary trust 184 Index gifting growth and history 190 Goal and Expense Analysis method 147 157 disability income 165 survivor income 148 159 goal funding 139 goals defining education 133 defining emergency fund 137 139 defining major purchase 136 disability income Level 2 164 disability insurance Level 1 144 disability insurance Level 2 165 funding 139 long term care insurance 145 long term care needs 172 reports 199 retirement 125 survivor income Level 2 146 156
14. Dependents Federal Average Marginal In All Years 10 00 10 00 Tax Options Note The average marginal and long term capital gains tax rates shown represent federal rates The corresponding state tax rate and the federal deduction for state taxes are accounted for in the income tax calculations Figure 5 Plan Management section Assumptions category General page Level 2 Plan Average Tax method Note The above figure shows how the General page appears for clients with the Married filing jointly tax status The page appears differently for clients with other tax statuses 2 Under Tax Rates set income tax rates for the different time periods for the clients and their dependents NaviPlan automatically calculates tax rates for the defined income You can override the calculated tax rates by entering the desired rates into the appropriate fields 3 To override the tax rates that apply in the clients year s of death select the Override In Year Of Death Tax Rates 10 check box and then enter the applicable tax rates The state tax rate is added to the displayed average marginal and long term capital gains income tax calculations and the deduction for state taxes at the federal level is taken into account If any of the tax rates are overridden a note appears on the page and an arrow appears beside each edited tax rate Overriding tax filing statuses Detailed Tax method Note This procedure does not
15. Level 2 When a client is currently disabled if you are using the Detailed Tax method you can indicate this on the Plan Management section Assumptions category Milestones page In this case a link to the Milestones page appears on the Set Goals section Disability Income category Client Co client Objectives page To enter data and assess disability insurance needs for the client or co client follow these steps 1 Go to the Set Goals section Disability Income Client Co client Objectives page 2 To assess insurance needs under Objectives select If lt client co client gt is disabled Client Objectives Co client Objectives 4 Back Next gt gt Instructions Objecti v If David is disabled Select an insurance analysis method Goal and Expense Analysis Income Coverage Analysis Lump Sum Needs Annual Income Needs Income Available Asset Availability Adjust Milestones David Susan Age Date Age Date Override the Retirement Age for Disability Analysis 4 Override the Disability Life Expectancy Analyze Disability Through 65 May 2035 ROR on Disability Insurance Proceeds Surpluses amp Liquidations Capital Deferred Total Interest Dividends Gains Tax Free Growth Pre Retirement 6 00 1 50 1 50 1 50 0 00 1 50 Retirement 6 00 1 50 1 50 1 50 0 00 1 50 Figure 132 Set Goals section Disability Income category Client Co client Objectives page Assumptions tab Level 2 Plan Detail
16. Penalties StartDate End Date Infl Add l Delete David s IRA 0 00 Monthly v Aug 9 2011 GA Ret Client x Add Redemption Strategy Substantially Equal Periodic Payments SEPP Add Account lt Previous Entry NextEntry Ll Koel Figure 35 Account Details dialog box Redemptions tab Redemptions section Level 2 Plan Detailed Tax method To redeem a portion of the account or all of the account over time in the Amount or field enter either the percentage of the account to redeem or an amount to redeem periodically based on the selection from the Frequency list OR To redeem the entire account as a lump sum select the Redeem All check box From the Frequency list select the frequency of redemptions If applicable for qualified accounts select the Waive Early Withdrawal Penalties check box to exclude penalties due if the asset is withdrawn early In the Start Date field enter the date the redemption should start In the End Date field enter the date the redemptions should end Note The End Date field is not accessible if Redeem All or Lump Sum is selected 9 To index the strategy for inflation select the Infl check box To index by an amount greater or less than the default inflation rate enter a different percentage in the Add field Note The Infl check box is not accessible when Redeem All or Lump Sum is selected or a percentage of the account is entered 10 Click
17. Summary Expected rate of return Expected standard deviation Proposed investor profile Proposed time horizon Scoring Settings NaviPlan shows the time horizon and investor profile that it has calculated Click Close to return to the Questionnaire page Go to the Profile page NaviPlan displays the investor profile and suggested asset mix based on the responses to the questionnaire If necessary you can override the investor profile that resulted from the questionnarie responses 11 00 14 00 9 00 6 00 3 00 14 00 3 00 Under Summary you can see the overall expected rate of return and standard deviation as well as the proposed investor profile and time horizon 8 23 12 98 Moderate Very Long Customize Asset Mix Figure 19 Plan Management section Asset Allocation category Profile page 24 5 To override the default profile select the Override Investor Profile check box and then select another investor profile from the list The Suggested Asset Mix graph displays the asset mix associated with the selected investor profile If you have user defined asset allocation you can override the investor profile for the current plan without selecting a check box You can modify the asset mix in the proposed portfolio by clicking Customize Asset Mix and then selecting either the Weightings option or the Optimize option Select the Weightings option to manually adjust the asset class weightin
18. category Funded Trusts page The fields on the Beneficiaries tab may vary slightly depending on the trust type gt Instructions Beneficiary Other Total Add Beneficiary Pro rata Add Beneficiary Pro rata 4 Previous Entry NextEntry gt Figure 158 Trust Details dialog box Beneficiaries tab To enter beneficiary details for a funded trust follow these steps 187 1 To add a remainder beneficiary under Remainder Beneficiaries click the Add Beneficiary button and then select the beneficiary you are adding To add all available beneficiaries select Add All 2 If applicable specify the income beneficiary of the trust Depending on the trust type the client or co client may already be listed under Income Beneficiaries If the beneficiary is not listed and you want to add this beneficiary click Add Beneficiary select the beneficiary and then enter the income percentage to be distributed to the beneficiary Any income that is not distributed to income beneficiaries is reinvested into the trust Note To add all available beneficiaries under Remainder Beneficiaries or Income Beneficiaries click the Add Beneficiary button and then select Add All 3 To delete a beneficiary from the trust click the Delete button next to the beneficiary you are removing 4 To assign equal distribution of income or remainder trust proceeds click the Pro rata button Each beneficiary shown receives an equal sh
19. go to the Return Rates tab and then enter the growth rate and standard deviation Activity Sale Information Return Rates Growth Standard Rate Deviation 0 0000 0 0000 Add Business Entity gt lt Previous Entry Next Entry gt Figure 31 Business Entity Details dialog box Return Rates tab Entering accounts You can manually enter investment accounts and holdings directly into NaviPlan Premium Level 1 or Level 2 Plans For instructions on entering assets see Creating accounts 41 Entering holdings 43 Entering a hold on a holding within an account 44 Entering savings strategies for accounts 45 Setting up a redemption strategy for an account Level 2 Detailed Tax 46 Setting up a SEPP strategy for an account Level 2 Detailed Tax 47 Overriding calculated return rates for accounts 48 Setting up beneficiaries for a non qualified account 49 Setting up a qualified account 50 Setting the account fee for an account 52 Setting up a 529 plan or Coverdell account 52 Entering an UTMA or UGMA account 53 Creating accounts You can enter separate accounts for each of your clients investment holdings or you can group holdings together within one account You cannot combine qualified and non qualified holdings within the same account Also you cannot combine holdings that have different ownerships within the same account 41 To enter an investment account follow these steps 1 Go to the Enter Financial Data sectio
20. in your search Search Results There are no results to display gt Instructions Education Goal Description Infl Add l College Education Y 2 00 Start Start Annual Number Projected Name Age Year Cost ofYears Cost Populate Delete Julia 2 18 2016 10 000 4 55 009 B x Add Education Expense 4 Previous Entry NextEntry gt Figure 110 Search Education Costs dialog box education expenses entered a If applicable change the inflation rate for the goal b To add an education expense click the Add Education Expense button c If you selected an expense option using the Peterson s Undergraduate Database enter the expense details and then click Populate NaviPlan updates the Projected Cost field for that expense d When you have finished entering details click OK The Search Education Costs dialog box closes If multiple expenses were entered for the goal the total projected cost of the objective appears under Education Objectives To allocate an account to the education goal or to view or edit account distribution for all plan goals click Goal Funding For more information see Allocating accounts to goals on page 139 All accounts allocated toward the education goal appear on the Education page under Education Accounts The market value of each account displayed reflects the market value for the account and not the actual amount allocated to the education goal Any accounts not allocated t
21. of Start Description Member Type S or Details Delete Description Surplus Year End Year Detsils Delete Pension David Estimate Benefit 80 00 yr Ea x Surplus Expense 0 00 2011 Death Br x Pension Susan V Estimate Benefit 80 00 yr YF x pension David Y Benefit Formula 0 yr BP x Add Surplus Expense Add Benefit Pension E Cash Flow Report Figure 66 Enter Financial Data section Cash Flow category Cash Flow page 2 To add anew income click the Add Income button and then select an income type Note If you are using the Detailed Tax method additional income types are available 3 If applicable select the family member receiving the income and then enter the annual income amount Incomes that 84 85 continue into retirement years appear on the Set Goals section Retirement category Retirement page To enter additional details for an existing income or to change the frequency of the income click the Details button for that income The Income Details dialog box opens Details Description Member Income Type David s income David wv Salary Annual Amount Frequency Amount per Period 75 000 Monthly v 6 2 Start Date End Date Infl Add l Jan 12011 Ret Owner vV 0 00 PEES Other Opti iabl TPE kd gs er r gt available ae ae Se a only in Level 2 Plans Exclude from group disability insurance Exclude from Social Security tax Exdude from Medicare tax Exclude from savin
22. repairs 2 500 mo EF Susan s income Susan v 60 000 y BF X Food 1 000 mo BF David s bonus David v 7 000 y Br X Transportation e g gas insurance 2 000 mo BF Entertainment e g restaurants m 1 000 mo EF Personal e g clothing hobbies 750 mo EF Other e g child care travel 2 000 mo BF Add Expense Add Income 7 Other Expenses Description Type Mortgage Principal and Interest 1 000 mo College Education Education 6 000 Ayr Social Security Social Security Details Defined Benefit Pensions Surplus Expenses Amount of Start Description Member Type or Details Delete Description Surplus Year End Year Detsils Delete David s pension David Estimate Benefit 80 00 yr YF x SurplusExpense 0 00 2011 fH Death lym Br xX Add Surplus Expense Add Benefit Pension Cash Flow Report Figure 83 Enter Financial Data section Cash Flow category Cash Flow page Level 2 Plan 2 To add a surplus expense click the Add Surplus Expense button A new data entry row appears under Surplus Expenses 3 For each expense enter a description the percentage of surplus funds designated to the expense and the start and end years By default surplus expense strategies end in the year before death Death 1 since there may be surpluses in that year due to estate settlement Surplus expenses entered here also appear on the Enter Financial Data section Strategies category Surplus page See Entering surplus s
23. 00 v 0 00 0 00 ECS Figure 53 Annuity Details dialog box Return Rates tab 4 Under General Account enter a value in the Pre annuitization Return Rate field 5 To override the return rates that apply to variable subaccounts under Variable Subaccounts select the Override check box and then enter new return rates and standard deviation values Setting up a qualified annuity Note The options available on the Qualified Account Setup tab are dependent on the Account Type selected To set up a qualified annuity follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page 2 Under Deferred Annuities or Annuitized Annuities click Details for the appropriate qualified account or annuity 66 67 Go to the Qualified Account Setup tab 4 Select the primary and contingent beneficiaries To waive early withdrawal penalties for an account or a fixed or variable annuity select the Waive early withdrawal penalties check box If income in respect of decedent IRD taxes are not applicable select the Multi Generational check box When this check box is selected the asset will pass to the beneficiary and not to the client or co client Estate taxes may be due but IRD taxes will be avoided If the plan type is 403 b in the Pre 1987 Account Balance field enter the value of the plan on December 31 1986 Required minimum distribution payments on the pre 19
24. 52 2022 300 375 000 53 2023 300 375 000 2011 2023 2024 2036 2037 2049 2050 2062 2063 2075 2076 2088 2089 2101 2102 2110 6 8888 8 ees es ees 0 0 0 0 so 0 0 0 0 0 0 0 0 eesesee eee se ees eesee eee see se 8 gt Fill Values Start End Start Base Increase Period Column to Fill Year Year Value Rate Rate By years Modal Premium 2011 2110 0 0 00 0 00 1 Clear Column Values Fill Add Life Insurance gt lt Previous Entry NextEntry Figure 95 Life Insurance Details dialog box Future Values tab Level 2 Plan Detailed Tax method 4 Select Modify the Calculated Values and then click OK to the message that appears 5 To change future values for specific years enter updated values in the fields for those years OR To change future values for multiple years use the expanded Fill Values section where you can quickly assign future values to multiple years as follows a Select a column type that you want to modify from the Column to Fill list b Enter the Start Year and End Year dates to set the range of years that will include modifications c In the Start Value field enter an amount that corresponds with the Start Year d In the Base Rate field enter the rate at which the selected column values will increase annually e If the base rate is expected to increase in the Increase Rate By field enter the rate at which to index the future value f I
25. 520 Thomas St v v Original Liability Type Loan Date Principal Mortgage v Dec 312004 700 000 Calculation Options Remaining Amortization Field to Calculate Balance Payment Years Months End Date Amortization v 300 000 2 7 The Other Options and Debt Modification tabs Other Options Debt Modificati os odian appear only in Level 2 Plans Insured for Disability Payoff Options at Death Renegotiate Transfer to survivor R Early Payoff Make Early Payoff Date Penalty Select Copy of Current to create a copy of the existing asset Do this to avoid re entering data when you have similar items to add Add Liability New Liability Copy of Current Figure 26 Liability Details dialog box Level 2 Plan 1 Previous Entry Ne Enter the additional information 7 To change the liability calculation under Calculation Options select an option from the Field to Calculate list and then modify the remaining calculation details The calculated field updates Note NaviPlan Premium does not allow the original principal to be lower than the outstanding balance Go to the Other Options tab To exclude a liability from the disability analysis select the Insured for Disability check box The liability will be paid in full from disability insurance proceeds l To indicate that the unpaid loan balance will be transferred to the survivor select Transfer to survivor f
26. Apr 30 2035 2 000 mo Inflation Yes travel Figure 84 Cash Flow report You can use the options at the top right of the report as follows e To generate a printer friendly report click the PDF or the Word button NaviPlan generates and opens the report using the selected format e To update the open report after changes are made to the plan data click the Refresh button e To see two copies of the report side by side click the Duplicate button e To access the Reports menu click the Reports button e To view another report that has been previously generated in NaviPlan click i next to Window and then select the report Chapter 5 Enter strategies Level 2 104 This chapter explains how to enter your clients financial strategies using the Strategies category Strategies can be used to accumulate assets or to pay down debt You can enter savings strategies that are deducted from regular income or surplus cash On the Savings page you can enter savings of specific amounts on a regular basis or as a lump sum amount On the Debt Modification page you can enter additional principal payments or if your clients have interest only or last period payment loans enter increases to the principal of a loan You can also change the order in which cash surpluses are used On the Redemptions page you can enter regular and lump sum redemption strategies and substantially equal periodic payments SEPP strategies On
27. Benefit Formula Use this method to automatically calculate Social Security benefits based on the annual income entered on the Cash Flow page Estimate Benefit Use this method to enter benefit amounts directly from a Social Security Statement Currently Receiving Benefits Use this method to enter benefit amounts that the client is currently receiving Drones Monthly Benefits From Social Security Statement Start Retirement Benefits Event V David Retirement May 2035 Figure 73 Social Security Details dialog box Details tab Level 2 Plan Estimate Benefit method selected 5 Select the Eligible for Spousal Benefits check box if the client is eligible to receive spousal Social Security benefits 6 Enter the starting date for retirement benefits The table updates to display the benefits that will be paid to the client s surviving family members after the client s death 7 If the client has any dependent children go to the Eligible Dependents tab 8 Select the appropriate check box es to link each dependent to the client for Social Security purposes Social Security Details Instruction Select a Social Security method Benefit Formula Use this method to automatically calculate Social Security benefits based on the annual income entered on the Cash Flow page Estimate Benefit Use this method to enter benefit amounts directly from a Social Security Statement Currently Receiv
28. Capital Loss Carryovers 2011 Term AMT fields appear only when Short using the Detailed Tax method Term Long Term Short Regular Regular Term Long Term Tax Tax MT AMT Figure 9 Plan Management section Assumptions category Capital Loss Carryovers page Level 2 Plan Detailed Tax method 2 In the Short Term Regular Tax and Long Term Regular Tax fields enter any existing short or long term carryovers 3 D Tax gt In the Short Term AMT and Long Term AMT fields enter any existing short or long term alternative minimum tax AMT capital loss carryovers Entering AMT carryforward credits Level 2 Note This procedure only applies if you are using the Detailed Tax method If your clients paid alternative minimum tax AMT in a prior year they may be eligible for a credit for a portion of that AMT against their regular tax liability for the current year and for subsequent years Use this page to calculate your clients AMT carryforward credits Note The 8801 form 6251 form and Schedule D Schedule D Worksheet 1040 of the clients tax returns from last year are needed to use this page To enter AMT carryforward credits follow these steps 1 Go to the Plan Management section Assumptions category AMT Carryforward page ETEEN EAFA Notes Planning Assistant Calculators Reports General Milestones Current Portfolio Setting Capital Loss Carryovers AMT Carryforward Unused Charitable Donation
29. Details dialog box opens 22 10 11 12 13 Investor Profile Details Investor Profile Description Conservative About this profile 4 Previous Entry NextEntry gt Figure 16 Investor Profile Details dialog box Enter the details of the new profile and then click OK The Investor Profile Details dialog box closes To edit the existing investor profiles click the investor profile you want to change and then make your changes To delete an investor profile click the appropriate Delete Go to the Portfolios tab On this tab you can edit the composition of all possible investor profiles in the plan Asset Allocation Settings Asset Classes Correlations Investor Profies Portfolos gt Instructions Portfolio Criteria Investor Profiles Conservative Reset Asset Allocation Portfolio Class Name Weightings Class Name Weightings Large Cap Equity 10 00 Small Cap Equity 35 00 International Equity 10 00 Aggregate Bonds 35 00 Cash 10 00 100 00 Figure 17 Asset Allocation Settings dialog box Portfolios tab Under Portfolio Criteria select the investor profile you want to change and then under Portfolio enter the asset class percentages for this profile To revert to the default asset mix values entered on the Asset Allocation Settings dialog box Portfolios tab accessed from the User Preferences menu Asset Allocation Settings click Reset Asset Allocation If no d
30. Entering cash flow information This chapter explains how to enter your clients cash flow You can enter incomes Social Security assumptions government pensions defined benefit pensions regular expenses and surplus expenses Additional cash flow options are available when the optional Detailed Cash Flow module is selected on the Modules page In this chapter Cash flow calculations 79 Entering regular or lump sum incomes 83 Entering Social Security benefits Level 1 86 Entering Social Security benefits Level 2 88 Entering pension income 94 Entering expenses 99 Entering surplus expenses 101 Generating the Cash Flow report 102 Cash flow calculations 79 These calculations apply to all plan levels unless specific levels are mentioned NaviPlan Premium makes the following annual calculations Calculates the clients cash inflows for the year Adds the clients asset returns itemized income from other sources and any special income to calculate their total cash inflows for the year e Calculates the returns earned by each of the clients assets NaviPlan makes this calculation based on how you define the assumptions for each asset This calculation can be based on o The assets asset class weightings and the return rates assigned to each asset class The return rates entered for each specific asset o The valuation date for each account or holding e Adds up all itemized income from other sources e
31. Frequency Number of Years End Date Dec 31 2010 100 00 Monthy Y 10 General Account Benefit Payment Index Index Amount Payments Rate 500 Variable Subaccounts Benefit Payment Standard Amount AIR Override Return Rate Deviation 250 6 00 v 6 00 Add Annuitized Annuity 1 Previous Entry NextEntry Figure 48 Annuity Details dialog box Payout Options tab showing an annuitized annuity with Life Income income option 3 Enter the start date of the annuity the percentage of the annuity that is taxable the payout frequency and the number of years the annuity will pay out 4 Under General Account enter the benefit amount coming from the general account and if the payout is indexed select the Index Payments check box and then enter an index rate 5 Under Variable Subaccounts enter the benefit amount coming from the subaccounts and the assumed interest rate 6 To override the return rate of the subaccounts select Override and then enter a new return rate Entering savings strategies for annuities Savings strategies can be set up either when entering an annuity or at a later time 61 62 To define regular savings or contributions to an annuity follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page Under Deferred Annuities click Details for the appropriate fixed or variable annuity The Annuity Details dialog box opens Go to the Sav
32. Lifestyle Asset Real Estate NaviPlan creates default liability Market Rental entries for every new plan Description Value Income Details Delete including mortgages a car loan Real Estate 0 0 mo Br xX a personal loan and other debt Add Real Estate Busi Entiti Click the Add Business Entity button to create a new row To add a new labilty click the Add Liability button Add Business Entity Add Liability gt B Assets Liabilities Report Figure 25 Enter Financial Data section Net Worth category Assets Liabilities page Level 2 Plan Detailed Tax method 2 To add a new liability click Add Liability and then select a liability type from the list The new liability item appears at the bottom of the liabilities list 3 If applicable enter the liability s description balance interest rate and payment 4 If applicable from the Link to Asset list select the asset that is linked to the liability Note An asset can be linked to more than one liability but a liability can be linked to only one asset 5 To enter additional details for the liability click the corresponding Details button The Liability Details dialog box opens 33 Balance Interest Compound Description Owner As of Date Rate Frequency 520 Thomas St mMortgage Joint v Aug 9 2011 5 00 Monthly v Payment Interest is Payment Type Frequency Link to Asset Tax Deductible Principal and Interest v Monthly wv
33. Line Deduction or Below the Line Deduction 3 Enter the details for the deduction To enter additional details click the Details button The Misc Deductions dialog box opens where you can enter additional information Misc Tax Deductions Description Owner Type Applies To Above the Line Deduction David Above the Line Deductii v Federal Only Original Amount Yearly Change Original Indexed by Inflation Annual Change After Start Date Amount Before Start Date Infl Add l Amount v v 0 00 and 0 Applicable Start Date End Date Jan 12011 Death Owner lamma Kaa Figure 100 Misc Deductions dialog box To enter a tax credit follow these steps 1 Go to the Enter Financial Data section Tax Details category Tax Details page 2 Click Add Credit and then select either Refundable Credit or Non Refundable Credit 3 Enter the details for the credit To enter additional details click the Details button The Misc Credits dialog box opens where you can enter additional information 123 Misc Tax Credits Description o Owner Type Refundable Tax Credit David v Refundable Tax Credit v Original Amount Yearly Change Amount Before Start Date Infl Add l Amount 0 rd V 0 00 and o Start Date End Date Jan 12011 E Death Ownerl Figure 101 Misc Credits dialog box 124 Chapter 7 Entering accumulation goals When you create a plan you
34. Pay Off Outstanding Liabilities Outstanding Description Principal v Mortgage 146 498 v Loans 9 298 Major Purchase Goals to Description Amount Target Date Cover Vacation 8 000 Jan 12014 100 Additional Lump Sum Needs Description Amount Infl Add l Delete Lump Sum Need 0 vY 0 00 X Add Lump Sum Need Figure 121 Set Goals section Survivor Income category Client Co client Objectives page Lump Sum Needs tab Level 2 Plan Goal and Expense Analysis method selected 11 Under Pay Off Outstanding Liabilities select any existing loans that will be paid off by insurance proceeds For each loan that is not selected NaviPlan Select assumes that the payments continue and will be included as part of the survivor s cash flow Note This option is only available if liabilities exist in the plan and if on the Enter Financial Data section Net Worth category Assets Liabilities page Liability Details dialog box Details tab the Payoff Options at Death selection is Transfer to survivor or Payoff at first death from estate 12 Select any future major purchase goals that will be paid for in the event of death This option is only available if major purchase goals exist in the plan 13 Under Additional Lump Sum Needs if any other lump sum needs are expected click Add Lump Sum Need and then enter the details of the need in the fields that appear 14 To indicate when accounts are to be made available d
35. Symbol Market Value Date Weightings New Subaccount 0 Aug 9 2011 Add Variable Subaccount Classify Reset Symbols Add Life Insurance 5 lt 4 Previous Entry NextEntry gt Figure 94 Life Insurance Details dialog box Details tab Level 2 Plan showing a variable life insurance policy 7 Enter general details about the policy If you selected a variable life or variable universal life policy under Variable Subaccounts enter details of the various subaccounts within the policy as follows a Enter a general account market value if applicable b Click the Add Variable Subaccount button Enter the subaccount details in the row that appears c Enter a description of the various subaccounts and their market values on the valuation date If you have the Ibbotson Asset Allocation option in the Symbol field enter a symbol for the holding and then click Classify NaviPlan enters the description and asset class weighting for the symbol You can also search the database for a symbol as explained in Searching the asset classifier database on page 73 OR If the holding is fully weighted in one asset class select the asset class from the Asset Class Weightings list OR If the holding is weighted in multiple asset classes select Manual Classification from the Asset Class Weightings list 10 The Asset Class Weightings Details dialog box opens Assign percentages to various asset classes to equal 100 and then cl
36. US REITs 0 00 International Equity 30 00 Emerging Markets Equity 0 00 Long Term Bonds 0 00 Intermediate Term Bonds 0 00 Short Term Bonds 0 00 High Yield Bonds 0 00 International Bonds 0 00 Cash 0 00 Total 100 00 Figure 61 Enter Financial Data section Net Worth category Asset Class Weightings page Level 2 Plan 2 Under Assets select the desired asset 3 If the asset contains holdings select a holding 4 Under Asset Class Weightings enter the appropriate weightings of the asset classes You can allocate all or a portion of an account to fund specific goals By default annuities fund the retirement goal and the funding cannot be adjusted Qualified retirement accounts fund the retirement goal by default but can be modified to fund education and major purchase goals as well Qualified education accounts can fund only education goals 1 On the Enter Financial Data section Net Worth category Accounts page click Goal Funding The Goal Funding dialog box opens OR Go to the Set Goals section Goal Funding category Goal Funding page The information on the Goal Funding page is identical to the Goal Funding dialog box gt Instructions Goal Funding College Account Name Owner Account Type Total Retirement Education Vehicle David s IRA 50 000 100 0 0 Susan s IRA 60 000 90 10 0 Joint savings Non Qualified 10 000 0 BALANCE 529 account David 529 Plan for Julia 20 000 5 100 N
37. apply if you are using the Average Tax method When using the Detailed Tax method you can override the tax filing status you selected when you created the client file only for this plan To override the tax filing status for a plan follow these steps 1 Go to the Plan Management section Assumptions category General page 2 Select the Override check box and then select the desired tax filing status from the list s Changing the Dependent of status Detailed Tax method Note This procedure does not apply if you are using the Average Tax method When using the Detailed Tax method you can override the dependent status that was set for the dependent when the client file was created shown on the Client Management section Client Information category Personal Information page with a Dependent of status specifically for this plan To change the status of dependents follow these steps 1 Go to the Plan Management section Assumptions category General page 2 Under Dependent Status select the applicable Override check box and then select an option from the Dependent of list Setting tax calculation assumptions To change the tax options setting follow these steps 1 Go to the Plan Management section Assumptions category General page 11 2 Click Tax Options The Tax Options dialog box opens gt Instructions As Legislated Starting in 2013 the tax calculations revert to the laws
38. box The Suggested Asset Mix graph on the Profile page updates to display the optimization Upgrading asset allocation When you open a plan for editing if the Modules category includes the Asset Allocation Upgrade page you can upgrade the asset allocation settings or view details about the changes made to the settings since this plan was last updated NaviPlan Premium presents the option to upgrade each time you open the plan until you upgrade the asset allocation To continue using existing settings go to the Modules page and resume planning To use the new asset allocation settings for this plan follow these steps 1 Go to the Plan Management section Modules category Asset Allocation Upgrade page 2 Click Upgrade Asset Allocation NaviPlan asks you to confirm the upgrade 3 Click OK NaviPlan upgrades the asset allocation The upgrade is permanent and plan results may change 28 Chapter 3 Entering net worth information This chapter explains how to enter your clients net worth information In a Level 1 and a Level 2 Plan summary information can be entered for lifestyle assets liabilities simple accounts detailed accounts with holdings and deferred and annuitized annuities In a Level 2 Plan you can also enter real estate assets into the plan and business entities if you are using the Detailed Tax method In this chapter Entering lifestyle assets 30 Entering liabilities 32 Entering real estat
39. created asset can be further defined by clicking Account Details To transfer the lump sum payment into the clients cash flow on the pension owner s benefit start date select Cash Flow Use the fields under Early Retirement to calculate how early retirement can affect the pension benefit Go to the Future Benefits tab The future pension payouts and pension adjustments appear To override the displayed items select Modify the Calculated Values and then enter the benefits you want to use Instead of entering an amount for each year on the tab you can use the Fill Values feature to fill in the amounts automatically To use this feature follow these steps a Click the Fill Values link b From the Column to Fill list select the column of values you want to fill c Enter the criteria you want NaviPlan to use to calculate the amounts d Click Fill Entering expenses 99 Use the following procedure to enter the clients lifestyle and business expenses Do not use this procedure to enter loan or mortgage payments insurance premiums property taxes savings contributions estate planning gifts or trust transfers Expenses that only apply to retirement should be entered on the Set Goals section Retirement category Retirement page To enter an expense follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page Under Expenses you can enter expenses When you crea
40. dialog box For the Retirement goal under Investor Profile select the period for which you want to override the profile To override the selected Investment Profile select the Override check box and then select the alternative investor profile you want to use for the selected period Retirement goal only You must select an asset mix other than All Retirement Accounts if you want to override the clients investment profile or customize the asset mix 7 Select the asset mix you would like to review or override The current asset mix graph changes depending on the selected asset mix The suggested asset mix graph is based on your clients goal investment profile 8 Scroll down to the bottom of the profile If applicable you can modify the asset mix in this proposed portfolio for the selected retirement goal by clicking the Customize Asset Mix button and then selecting either the Weightings option or the Optimize option 9 Use the Weightings option to manually adjust the asset class weightings of the portfolio for all or selected accounts For more detailed instructions see Editing asset class weightings Level 2 on page 74 Note If you are not authorized to change the asset class weightings the Weightings option is not available If you are not authorized to use mean variance optimization the Optimize option is not available 10 Use the Optimize option to use the Ibbotson Mean Variance Optimizer to generate a new p
41. highest to lowest ii Return rate from lowest to highest iii Market value from smallest to largest iv Asset category in the order of cash accounts mutual funds and investment portfolios v Alphabetically based on the Description field c Non qualified annuities that are not paying out ordered by annuities with the Withdrawals as Needed income options and then by their ratio of adjusted cost basis to market value as of the end of the year with the assets containing the highest ratio used first d Roth and Roth annuities that are not paying out ordered by their total return rates from lowest to highest with accounts with the same total return rates used in alphabetical order e Qualified accounts and annuities that are not paying out in the following order i Ratio of qualified basis to market value as of the end of the year from highest to lowest ii Total return rate from lowest to highest iii Alphabetically based on the Description field f Stock options and restricted stock entered on the Enter Financial Data section Net Worth category Equity Compensation page Note If needed you can revise the liquidation order of assets used for the retirement goal in a Level 2 Plan by clicking the Liquidation Strategies button on the Set Goals section Retirement category Retirement page Entering regular or lump sum incomes 83 Use the following procedure to enter the clients annual
42. in its own window and can be printed from your desktop 208 Preparing user defined text for client reports 209 In NaviPlan Premium you can create and customize text that will be included in client reports You can enter personalized objectives recommendations and action plans for financial planning reports for reports related to goals and for estate planning reports To enter personalized text for reports follow these steps 1 Go to the Results section User Defined Text category User Defined Text page 2 Under User Defined Text Summary select the goal or category for the user defined text 3 To add an objective recommendation or action plan click the appropriate Add button The User Defined Text Entry dialog box opens Figure 172 User Defined Text Entry dialog box 4 Enter the text in the dialog box and then use the formatting buttons where applicable 5 To close the dialog box click OK Under Objectives Recommendations or Action Plan a new row appears Note A spelling checker is not available You can copy and paste plain text from Microsoft Word into the User Defined Text Entry dialog box Graphics are not supported User defined Text User Defined Text Summary Asset Allocation v Enter client specific goals to personalize the client reports Objects Desai Add MoveUp Move Down Enter dient specific recommendations to personalize the dient reports Recommendations Descr
43. inflation rate applies to all fields on the Activity tab Entering the sale of a business entity 40 To enter the sale of a business entity follow these steps 1 In the Business Entity Details dialog box go to the Sale Information tab Activity Sale Information JReturn Rates Sale Option Sale Date Selling Cost Do not sell entity vV H Installment Sale Details Seller Installment Annual of Sale Amount Interest Rate Payment Compound Payment Frequency Frequency Type Length of Installment Sale Length of Amortization Years Months End Date Years Months End Date Dec 31 3004 Dec 31 3004 Add Business Entity lt Previous Entry NextEnty gt OK Figure 30 Business Entity Details dialog box Sale Information tab From the Sale Option list select the appropriate option If selling enter the sale date You can enter a specific date or you can specify that the sale will be triggered by an event such as retirement or death You can also offset the sale from the triggering event by a given number of years For example you can specify that the business entity will be sold two years before the owner s retirement by entering ret 2 Enter the cost of selling the business entity as a percentage of the market value If you plan to sell the business entity in installments enter the details under Installment Sale Details Modifying return rates To modify return rates for the business entity
44. information Adding holdings to accounts and annuities Entering business entities Entering real estate assets Entering equity compensation Entering detailed estate planning information Entering advanced estate planning information Using the Detailed Tax method and the Detailed Cash Flow module Entering saving and redemption strategies Entering client goals Generating simple estate planning reports Generating client reports rman en Level 1 and Level 2 Plans Analyzing client goals Analyzing your clients goals using side by side comparisons of the Current Plan scenario and Recommended Plan scenario Conducting detailed cash flow and net worth analyses Generating Monte Carlo simulations Creating goal scenarios Creating estate planning scenarios Generating client reports Conventions This user manual uses the following conventions The names of items on the screen are italicized For example the Clients page opens The names of items that you must select click or enter appear in bold For example select Recommended and then click OK To help you navigate through the application locations are separated by en dashes For example Enter Financial Data section Net Worth category Accounts page Figure 1 Enter Financial Data section Net Worth category Accounts page To help you use this manual please note the following abbreviations and graphics AA Refer
45. insurance needs if both clients die Level 2 To analyze life insurance needs in the event that both clients die follow these steps 1 Go to the Set Goals section Survivor Income category Both Objectives page 156 f nwt Client Objectives Co dient Objectives Both Objectives gt Instructions Objectives v If David and Susan die Select an insurance analysis method Goal and Expense Analysis Income Coverage Analysis Ongoing Expenses Lump Sum Needs Asset Availability gt Instructions The Jax Rates section ROR on Cash Flow Surpluses amp Liquidations only appears when the Capital Deferred plan is using the Total Interest Dividends Gains TaxFree Growth Detailed Tax method Pre Retirement 6 00 1 50 1 50 1 50 0 00 1 50 Retirement 6 00 1 50 1 50 1 50 0 00 1 50 Tax Rates Dependents Federal Long Term Tax Bracket State Average Marginal Capital Gains 0 8 500 lt 4 5 00 10 00 10 00 0 00 Note The average marginal and long term capital gains tax rates shown represent federal rates The corresponding state tax rate and the federal deduction for state taxes are accounted for in the income tax calculations Figure 126 Set Goals section Survivor Income category Both Objectives page Assumptions tab Level 2 Plan Detailed Tax method and Goal and Expense Analysis method selected 2 Under Objectives select If lt client gt and lt co client gt die 3 Select an insurance analysi
46. of the LTC period For lifestyle assets that are available immediately you can specify the rate of petfirn on the proceeds from the sale of the asset by entering values in the rate of return fields Tax Rates v Override Tax Rates Federal Long Term Tax Bracket Ol en Average Marginal Capital Gains Pre Retirement 69 001 139 350 6 00 19 44 25 00 15 00 Retirement 69 001 139 350 v 5 00 19 44 25 00 15 00 Rate has been overridden Rate Rate has been overridden been overridden Note The average marginal and long term capital gains tax rates shown represent federal rates The corresponding state tax rate and the federal deduction for state taxes are accounted for in the income tax calculations Figure 140 Set Goals section Long term Care category Client Co client Objectives page Assumptions tab Level 2 Plan Average Tax method selected 3 On the Assumptions tab define the age at which the client or co client will enter long term care and the duration of the long term care period NaviPlan Premium assumes that the client will die at the end of the long term care period 172 4 Under ROR on Surpluses amp Liquidations enter the expected return rates 5 To override tax rates select Override Tax Rates and then enter the tax rates you wish to use Changing the tax rates here only affects the tax rates for long term care insurance calculations It does not affect rates used in the rest
47. opens 3 Go to the Account Fee Setup tab Savings Strategy Redemptions ReturnRates Beneficiaries Account Fee Setup Override Annual Fee Tax Amount Frequency Pay Fees From Deductible 1 00 Quarterly Joint savings v Figure 41 Account Details dialog box Account Fee Setup tab Detailed Tax method 4 Select Override 5 Adjust the account fee details as required Note The Tax Deductible check box is available only when using the Detailed Tax method Setting up a 529 plan or Coverdell account To set up a 529 plan or Coverdell account follow these steps 52 1 Go to the Financial Picture section Net Worth category Accounts page 2 Click Add Account A new data entry row appears 3 From the Account Type list select 529 Plan or Coverdell 4 Under Qualified and Non Qualified Accounts click Details for the new account The Account Details dialog box opens 5 Under Account Details select the owner donor and the distributions beneficiary of the plan The applicable dependent should be selected as the distributions beneficiary Note For a Coverdell account the Distributions Beneficiary must be a dependent Description Julia s Market Qualified Watio Value Hold Basis Date 0 0 00 0 Sep 8 2011 Add Holdings Savings Strategy ReturnRates Account Fee Setup Click the Add Savings Strategy button to create a new row Add Savings Strategy Figure 42 Accoun
48. options for annuities varies depending on the type of annuity and the selection from the Income Option list Entering payout options for variable and fixed annuities Variable and fixed annuities with the Withdrawals as Needed income type do not have payout options For information about entering payout options for annuities with the Guaranteed Withdrawal Benefit income option see Entering payout options for an annuity with a guaranteed withdrawal benefit on page 60 To specify payout options for a variable or fixed annuity follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page 2 Click Details for the appropriate variable or fixed annuity The Annuity Details dialog box opens 3 Go to the Payout Options tab Note Variable annuities have separate sections for the annuity s general account and variable subaccounts Variable Annuity Description Account Type Owner Annuitant Beneficiary Income Option New annuity Non Qualified v Joint v David Surviving Client w Amount Certain General Account Subaccounts Waive Early Market Cost Valuation Market Pre Annuitization Withdrawal Value Basis Date Value Cost Basis Annual M amp E Fee Goal Funding Penalties 100 000 80 000 Aug 9 2011 5 0 00 Subaccounts Savings Strategy Redemptions Return Rates Annuitization AtEnd Number Final Start Date Frequency Of Period of Years Payment Date Ret ist f Annual v a Gen
49. plan has been finalized as the final presentation to the clients This report is useful to clients who are nearing or at retirement and provides an in depth review of the plan retirement period and the distribution of income the clients may expect in retirement The report focuses on the apparent risks in the clients current plan and how those risks have been reduced by strategies implemented in the proposed plan It also shows a review of the fixed and total incomes as well as expenses during retirement This report provides a comprehensive view of the entire plan including a summary of the clients needs and objectives the financial assumptions used in preparing the financial analysis as well as additional strategies that could be implemented to achieve the objectives The report includes summaries of the various analyses performed and recommendations and strategies that could be used to meet the clients objectives A synopsis of the analysis data is included In an update plan an approved financial plan in Update Plan status you can generate a Progress report which compares the updated plan information with the approved plan This report compares the clients current and previous net worth cash flow and asset allocation mixes and also tracks the success of each goal The Progress report will help you determine whether your clients are staying on track towards attaining their financial goals To generate a client or pr
50. pre retirement income If the clients are already retired their income should be entered on the Set Goals section Retirement category Retirement page To enter a regular or lump sum pre retirement income follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page When you create a new plan NaviPlan creates default entries for salaries and bonuses that appear under Incomes Any incomes that are entered on the Set Goals section Retirement category Retirement page will also appear under Incomes The clients sources of income such as employment income bonuses and inheritances can be entered on this page Do not include investment income from assets as NaviPlan calculates this income based on the data entered on the Enter Financial Data section Net Worth category Accounts and Annuities pages Instructions Incomes Expenses Description Amount Details Delete Description Salary 75 000 yr Br X Housing e g utilities repairs Salary 60 000 BF X Food David s bonus 7 000 yr BF x Transportation e g gas insurance Entertainment e g restaurants m Personal e g dothing hobbies Other e g child care travel Add Expense Add Income Other Expenses Description Type Amount Social Security Mortgage Principal and Interest 1 000 mo Socal Security Details College Education Education 6 000 yr Defined Benefit Pensions Surplus Expenses Amount
51. procedures e Working with the Goal and Expense Analysis method on page 165 e Working with the Income Coverage Analysis method on page 168 Using the Goal and Expense Analysis method if one client dies 148 The Goal and Expense Analysis method must be selected on the Set Goals section Survivor Income category Client Co client Objectives page See Entering survivor income goals Level 2 on page 146 To use the Goal and Expense Analysis method follow these steps 1 Go to the Ongoing Expenses tab 2 Under Annual Expenses enter the percentage of lifestyle expenses to be covered by life insurance proceeds The percentage entered becomes the default for the expenses listed under Expense Note Pre retirement or retirement expenses must be entered in the plan for the Expense fields to appear on this tab 3 To select a different percentage for an individual expense clear the corresponding Use Defaults check box and then enter the percentage in the to Cover field Assumptions Ongoing Expenses Additional Annual Income Lump Sum Needs Asset Availability gt Instructions Annual Expenses Percentage of lifestyle and medical expenses to cover 85 Use to Expense Amount Defaults Cover Housing e g utilities repairs 7 200 100 Food 6 000 Transportation e g gas insurance 7 200 Entertainment e g restaurants movies 4 800 Personal e g clothing hobbies 7 200 Education Expenses Number A
52. s or date s when the clients will retire 3 In the Life Expectancy fields enter the clients life expectancies To populate the life expectancy fields using actuarial data click the life expectancy calculator E next to the field To view the Life Expectancy Graph click Life Expectancy Graph Entering income tax rate assumptions using the Average Tax method Note This procedure does not apply if you are using the Detailed Tax method Using the Average Tax method you can specify the client s and co client s income tax brackets before and during retirement and define the tax rate for dependents The inclusion rate for all Social Security benefits regardless of income level is 85 In a Level 2 Plan you can also specify an income bracket during the InYear of Death time period This rate is universally applied at the death of both the client and co client To enter income tax rate assumptions in a plan follow these steps 1 Go to the Plan Management section Assumptions category General page gt Instructions Economic Factors The Tax Rates section Base Inflation Rate 3 00 appears only when Annual Account Fee 0 00 Inflation Rate Graph using the Average Tax Frequency Quarterly method Revert to Defaults Tax Rates David and Susan Married filing jointly Tax Bracket Pre Retirement 69 001 139 350 Vv Retirement 69 001 139 350 v Override In Year Of Death Tax Rates In Year of Death
53. selected NaviPlan projects the cash flow that would have occurred in pre retirement if neither client had become disabled Any pre retirement surpluses resulting from that projection become additional pre retirement disability expenses in the years they are projected to occur The Percentage of lifestyle and medical expenses to cover value also applies to these expenses 6 If you anticipate additional annual expenses under Additional Annual Expenses click Add Additional Expense and then enter any anticipated expenses during disability in the fields that appear 7 If you anticipate additional annual incomes go to the Additional Annual Income tab click Add Annual Income and then enter any anticipated incomes in the fields that appear Assumptions Ongoing Expenses Additional Annual Income Jump Sum Needs Asset Availability Instructions Additional Annual Income Annual Description Income Type Amount Start Date End Date Infl Add l Delete Salary Salary v 10 000 Jan 12012 amp Ret Client Mv 0 00 X Add Annual Income Figure 134 Set Goals section Disability Income category Client Co client Objectives page Additional Annual Income tab Level 2 Plan Goal and Expense Analysis method selected 8 Once all ongoing incomes are entered go to the Lump Sum Needs tab 167 Assumptions Ongoing Expenses Additional Annual Income Lump Sum Needs Asset Availability gt Instructions Pay Off Outstanding Li
54. short investment time horizon is less able to withstand losses The remainder of the difference is attributable to the individual s appetite for risk Volatility can be nerve wracking for many people and they are more comfortable when they can avoid it However there is a definite relationship between risk and return Investors need to recognize this risk return trade off The following risk tolerance questionnaire has been designed to measure an individual s ability time horizon and willingness risk tolerance to accept uncertainties in their investment s performance The total score recommends which of the five risk profiles is most appropriate for the investor 1 When do you expect to begin withdrawing money from your investment account Less than 1 year 1 to 2 years 3 to 4 years 5 to 7 years 8 to 10 years 11years or more 2 Once you begin withdrawing money from your investment account how long do you expect the withdrawals to last I plan to take a lump sum distribution 1 to 4 years Figure 18 Plan Management section Asset Allocation category Questionnaire page 3 To view the asset allocation risk scores for the investor profile click Scoring The Scoring Summary dialog box opens 23 gt Instructions Investor Profile Override Investor Profile Select an investor profile Large Cap Growth Equity Large Cap Value Equity Mid Cap Equity Small Cap Equity AUS REITs A International Equity Emerging Markets Equity
55. the Deficit Coverage page you can specify the order in which account types are redeemed when covering pre retirement deficits or specify the order in which individual accounts are redeemed On the Surplus page you can specify additional savings and expenses that will apply every time the clients have sufficient surplus cash flow In this chapter Entering a regular savings strategy 105 Modifying a loan 105 Entering redemptions 107 Setting the deficit coverage order Detailed Tax method 110 Entering surplus strategies 110 Entering a regular savings strategy With all savings strategies you must save to an existing account you cannot save to a lifestyle asset If you haven t entered an appropriate account go to the Enter Financial Data section Net Worth category Accounts page to do so For more information see Creating accounts on page 41 To enter a regular savings strategy follow these steps 1 Go to the Enter Financial Data section Strategies category Savings page All existing savings strategies implemented in the plan appear Savings Debt Modification Redemptions Deficit Cover Amount Sor of Salary Frequency StartDate EndDate Infl Add l Delete Joint savings 200 Monthly Jan 12011 HH Ret 1s V 0 00 X Choose Account Add Savings Strategy Qualified Amount or of Salary Direct SavingsTo Mandatory Owner Pre tax Post tax Employer Frequency StartDa
56. the listed expenses If necessary click Add Retirement Expense to create an additional expense that will occur during retirement Expenses can be entered for the entire retirement period or they can be entered in a staged format The second option is best used when the clients needs change during the retirement period For example a client may expect to need 65 000 annually from age 65 to age 75 but then expect to reduce or increase spending from age 76 to 80 or the clients may expect to have one time or time limited additional expenses that are over and above the amounts specified on an annual basis In joint plans NaviPlan makes the following assumptions for retirement expenses when the keyword retirement is entered in the Start Age field and the keyword death is entered in the End Age field If the retirement The expense begins expense is on The expense ends on Singly owned January 1 of the year December 31 of the year the in which the owner of owner dies unless the Tfr to the expense retires Survivor check box is selected Jointly owned January 1 of the year December 31 of the year of the in which the first last client s death client retires Retirement expenses previously entered on the Enter Financial Data section Cash Flow category Cash Flow page that continue into retirement appear on the Retirement page Changes made on either page automatically appear on the other page 4 To indic
57. used in 2001 except where extended by the Pension Protection Act of 2006 The estate tax and the state death tax credit will be in effect and the applicable exclusion will be equal to 1 000 000 No Sunset The tax laws used in 2011 will continue through to the year 2013 and beyond The estate and gift tax applicable exclusion is equal to 5 000 000 indexed for inflation Figure 6 Tax Options dialog box The Economic Growth and Tax Relief Reconciliation Act EGTRRA of 2001 reduces personal tax rates provides increased education incentives increases the child tax credit provides relief from the marriage penalty repeals the estate and generation skipping transfer taxes and enhances the retirement savings incentives The Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 extends EGTAA changes through to the end of 2013 At the end of 2013 except where extended by the Pension Protection Act of 2006 and in the absence of new legislation the tax laws revert to those in place in 2001 Because of the uncertainty about the effect of EGTRRA after 2013 your clients may want to make different assumptions as to how the provisions of EGTRRA will affect their plan 3 Select the tax assumption you want to use in the plan and then click OK The Tax Options dialog box closes Setting milestones Level 2 12 On the Milestones page you can set the retirement dates and life expectancies that will be
58. used in the plan To set milestones follow these steps 1 Go to the Plan Management section Assumptions category Milestones page I Assumptions EEE EET EEA Notes v _ Planning Assistant Calculators General urrent Portfolio Setting Capital Loss Carryovers AMT Carryforward Unused Charitable Donations i The Currently Disabled check boxes appear only when using David Susan the Detailed Tax method Age Date Age Date Retire At 65 May 2035 65 Jun 2037 Life Expectancy f_ 90 2060 _ 90 2062 Life Expectancy Graph Currently Disabled 2 Figure 7 Plan Management section Assumptions category Milestones page Level 2 Plan Detailed Tax method 2 In the Retire At fields enter the age s or date s when the clients will retire 3 In the Life Expectancy fields enter the clients life expectancies To populate the life expectancy fields using actuarial data click the life expectancy calculator E next to the field To view the Life Expectancy Graph click Life Expectancy Graph 4 To indicate that a client is already disabled select the Currently Disabled check box for that client This sets the disability status percentages for incomes and expenses to 100 NaviPlan assumes that incomes and expenses entered on the Cash Flow page already take the disability into account Selecting a portfolio balancing method 13 In NaviPlan Premium you can specify how your clients assets are to be rebalanced us
59. which the client turns age 80 and the client is assumed to die at the end of this period Under Objectives enter the percentage of lifestyle and medical expenses that is expected to continue when the period of long term care begins The default is 100 but the percentage can be changed Enter the amount of any additional daily long term care expenses for the client or the co client For long term care insurance non qualified and qualified assets are available at the start of long term care and lifestyle assets are available for the estate Entering survivor income goals Level 2 146 You can enter insurance needs and objectives for the client and co client in the Survivor Income category Data entry is the same for both To consider insurance needs when both clients die see Analyzing insurance needs if both clients die Level 2 on page 156 To enter data and assess needs for the client or co client follow these steps 1 Go to the Set Goals section Survivor Income category Client Co client Objectives page ient Objectives Co dient Objectives Both Objectives gt Instructions Objectives v If David dies Select an insurance analysis method Goal and Expense Analysis Income Coverage Analysis Ongoing Expenses Additional Annual Income Lump Sum Needs Asset Availability Adjust Milestones Susan Age Date Override the Retirement Age for the Survivor n The Tax Rates section only Override the Surviv
60. years 20 00 None After 5 years 20 00 None After 6 years 0 00 None After 7 years 0 00 None After 8 years 0 00 None After 9 years 0 00 None After 10 years 0 00 None Total 100 00 lt TEE EEEE gg CKRKK KK KKK 40 00 Joint savings ESSEC ES IES IES IES IES IIS IIS IIS ESSEC ESIC IES IEC v Auto vest on retirement If retirement is on or after age v Auto vest on death Figure 59 Restricted Stock Details dialog box Vesting and Release tab 7 Define when the stock will vest and a release strategy and then enter any other related details Defining asset class weightings You can define asset class weightings for the following asset types e Accounts on the Accounts page and in the Account Details dialog box 72 Variable annuities on the Annuities page and in the Annuities Details dialog box Stock options in the Stock Option Details dialog box Restricted stock in the Restricted Stock Details dialog box To define asset class weightings for any of the above asset types do one of the following If the asset belongs to a single asset class select that asset class from the Asset Class Weightings list If the asset is weighted in multiple asset classes select Manual Classification from the Asset Class Weightings list The Asset Class Weightings Details dialog box opens Assign percentages to various asset classes to equal 100 and then click OK If you have the Ibbotson Asset Allocation option
61. 0 0 4500 1 0000 B Small Cap Equity 0 3200 1 0000 0 2300 1 0000 C International Equity 0 4500 0 2300 1 0000 1 0000 D Aggregate Bonds 1 0000 1 0000 1 0000 1 0000 E Cash 1 0000 1 0000 1 0000 1 0000 Figure 14 Asset Allocation Settings dialog box Correlations tab 6 To change the correlation between two asset classes enter the new correlation value at the intersection of a row and column for the two asset classes The default value is updated For example to change the correlation between Large Cap Equity and Small Cap Equity go to the field that intersects row B and column A and then enter a new correlation value 7 Go to the Investor Profiles tab The investor profiles entered on the Asset Allocation Settings dialog box Investor Profiles tab accessed from the User Preferences menu Asset Allocation Settings appear under Investor Profiles Asset Allocation Settings Asset Classes Correlations Investor Profiles Portfolios gt Instructions Investor Profiles Description Conservative Moderate Conservative Moderate Moderate Aggressive Aggressive Add Investor Profile Figure 15 Asset Allocation Settings dialog box Investor Profiles tab 8 Investor profiles should be added from lowest to highest risk tolerance To add a new investor profile to the plan click Add Investor Profile A new blank data entry row appears 9 Enter a name such as Conservative and then click Details The Investor Profile
62. 0 19 610 Small Cap Equity 0 000 1 470 5 060 7 840 0 000 14 370 28 900 International Equity 0 000 1 580 4 300 5 100 0 000 10 980 24 650 Aggregate Bonds 4 910 0 000 0 000 0 000 0 000 4 910 7 110 Cash 3 130 0 000 0 000 0 000 0 000 3 130 3 010 Add Asset Class Figure 13 Asset Allocation Settings dialog box Asset Classes tab Under Asset Classes click Add Asset Class for each asset class you want to add to the plan For each asset class enter a unique description such as Cash or Bonds and then define the return rates and standard deviation values that apply To change existing asset classes enter the revised description or return rate information in the Description field of the asset class you want to change To delete an asset class from the plan click the appropriate Delete button Once you have made the required changes go to the Correlations tab Correlation measures how much you can expect your clients investments to change in price relative to each other Correlation works in the following manner Correlation value Historical relationship of the two asset classes The two assets move in exactly the same direction The two assets move in exactly the opposite direction 00 The two assets have no relationship Asset Allocation Settings Asset Cla ses Correlations J vestor Profiles Portfolios gt Instructions A B Cc D A Large Cap Equity 9000 0 320
63. 010 2 Add Deferred Annuity 1 Previous Entry Next Entry 68 10 11 12 Figure 54 Annuity Details dialog box Qualified Account Setup tab Level 2 Plan Average Tax method fixed annuity Other Salary Deferral account type To apply state taxes to the taxable portion of distributions from this account select the State taxable check box Note The State taxable check box does not appear for 457 and Roth accounts From the RMD Payment Frequency list select the desired frequency If Annual is selected select the month in which the annual payment will be made To change the market value used to calculate the minimum payout select the End of Year Market Value check box and then enter a new value in the field to the right Entering equity compensation The Equity Compensation module is only available in Level 2 Plans that use the Detailed Tax method On the Equity Compensation page you can enter stock options and restricted stock awards Entering stock options Level 2 In NaviPlan Premium the term stock options refers to compensatory stock options and not the trading of stock options A stock option gives an individual the right to purchase a set number of shares at a fixed price at some point in the future Clients can own stock options individually or jointly but dependents cannot You can enter all your clients compensatory stock options on the Financial Picture section Net Worth category Eq
64. 1 100 2018 48 1996 26 52 633 2019 49 1997 27 54 212 2020 50 1998 28 55 838 2021 51 1999 29 57 513 2022 52 30 59 239 2023 53 2001 2002 2003 2004 2005 2006 2007 61 016 62 846 64 732 66 674 68 674 70 734 72 856 1988 2007 2008 2010 Fill Values Start End Start Year Year Value 1988 2010 0 Increase Period RateBy years 0 00 1 2024 2025 2026 2028 2029 2030 gt Fill Values 2011 2030 2031 2040 54 55 56 57 58 59 60 Click the Fill Values ink to display the fields Clear Column Values Fill Figure 72 Social Security Details dialog box Earnings History tab Level 2 Plan Benefit Formula selected 11 Click OK The Social Security Details dialog box closes Entering Social Security benefit amounts using the Estimate Benefit method To enter Social Security benefit amounts from the clients Social Security Statements follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page 2 Under Social Security click the Social Security Details link The Social Security Details dialog box opens 3 Go to the Client or Co Client tab and then select Estimate Benefit 4 Go to the Details tab and then enter the applicable benefit amounts 91 Socal Security Details b Instructions Client Co Clent Benefit Method Select a Social Security method
65. 1 of the year in which the last client in the plan dies Retirement dates can be changed for specific goals such as survivor income and disability income Retirement goal reporting NaviPlan has detailed retirement reports for both the current and proposed plans The current plan reports are based on the clients current financial information entered primarily in the Enter Financial Data and Set Goals sections and show the clients their current progress towards their retirement goal All information in the plan except for What if scenarios is reported as part of the current plan in additional reports graphs and client reports In contrast the recommended or proposed plan reports reflect both the current plan information and the Recommended scenario information Defining retirement goals To define your clients retirement goals follow these steps 1 Go to the Set Goals section Retirement category Retirement page VOAN Instructions Objectives Calculate Retirement Expenses David ARR Enter the annual retirement expenses as a Age Date Age Date percentage of the current estimated after tax salary 70 140 X 0 yr percentage of the current lifestyle expenses 111 000 X 0 Ar specific amount Ae Retire At 65 May 2035 64 Jun 2035 Life Expectancy 90 2060 82 2053 To view or edit additional asset allocation details dick Asset tion Asset Allocation Add to Retirement Expenses Retirement Expenses
66. 3 10 Instructions v Overview Current Financial Position v Asset Allocation v Retirement v Attainable Retirement v Education v Major Purchase vV Emergency Fund v Disability Insurance Life Insurance Long Term Care Goal Attainability v Condusion Appendix Action Plan v Client Action List W Scenario Probability Assumptions Tax Considerations Vi Important Terminology Disclaimer Asset Allocation Rate Approval Delivery Acknowledgement Save as Template Select None Generate Report a Figure 176 Select Document Sections dialog box Select the sections you want included in the report To view the subsections for a section click the beside that section The list expands and subsections appear Select or clear the check boxes for the appropriate subsections To reorder report sections click an applicable section and then drag it to another location To save your selections as a template for this type of client report click the Save as Template button The Save Template dialog box opens Enter a name for the template and then click OK The Save Template dialog box closes The templates you create can be managed on the User Preferences System Settings dialog box Templates tab User Preferences menu System Settings Click OK NaviPlan Premium saves your selections and the Select Document Sections dialog box closes To generate the report click the Generate butt
67. 37 139 142 142 142 Disability insurance analysis Level 1 Long term care insurance analysis Level 1 Entering survivor income goals Level 2 Using the Goal and Expense Analysis method if one client dies Using the Income Coverage Analysis method if one client dies Assigning asset availability if one client dies Analyzing insurance needs if both clients die Level 2 Using the Goal and Expense Analysis method if both clients die Using the Income Coverage Analysis method if both clients die Assigning asset availability if both clients die Entering disability income goals Level 2 Working with the Goal and Expense Analysis method Working with the Income Coverage Analysis method Indicating when accounts are to be made available Assessing long term care needs Level 2 Chapter 9 Entering the clients estate plan Entering estate planning assumptions Entering funded trusts Funded trusts details Advanced estate funded trusts details Enter beneficiary details for a funded trust Generate trust reports Entering gifting growth and history Entering estate expenses Entering estate strategies Chapter 10 Examining results Generating stand alone reports and graphs Using the Planning Assistant Opening the Planning Assistant Viewing and or printing the Planning Assistant reports Preparing user defined text for client reports Generating client and progress reports Using the Client Report Monitor Online Adding notes for your own person
68. 4 10 000 100 Figure 129 Set Goals section Survivor Income category Both Objectives page Ongoing Income Needs tab Level 2 Plan Income Coverage Analysis method selected 2 To calculate a percentage of current income needed during survivorship under Current Income Level Calculator enter a percentage in the to cover field and then click Add to Support for Dependents The income need appears under Support for Dependents 3 To enter annual child support needed for each child that will be provided in the event of death click Add Support for Dependent and then enter the support details This section does not appear if dependents have not been entered 4 If education expenses exist in the plan under Education Expenses enter the percentage of education expenses to be covered in the event of death 5 Goto the Lump Sum Needs tab Assumptions Ongoing Income Needs Lump Sum Needs Asset Availability Instructions Pay Off Outstanding Liabilities Outstanding Description Principal v Mortgage 146 498 v Loans 9 298 Additional Lump Sum Needs Description Amount Infl Add l Delete Lump Sum Need sOv 0 00 X Add Lump Sum Need Figure 130 Set Goals section Survivor Income category Both Objectives page Lump Sum Needs tab Level 2 Plan Goal and Expense Analysis method selected 161 6 Under Pay Off Outstanding Liabilities select any existing loans that will be paid off by insurance proceeds For each lo
69. 72 73 74 75 76 77 77 19 79 83 86 88 94 Entering an estimated benefit pension Entering a benefit formula pension Entering expenses Entering surplus expenses Generating the Cash Flow report Chapter 5 Enter strategies Level 2 Entering a regular savings strategy Modifying a loan Entering redemptions Entering redemption strategies Entering a substantially equal periodic payments SEPP strategy Setting the deficit coverage order Detailed Tax method Entering surplus strategies Chapter 6 Entering insurance coverage and tax details Entering life insurance policies Viewing and defining future values and premiums of a life insurance policy Level 2 Entering disability insurance policies Entering long term care insurance policies Generating the Insurance report Entering tax credits and deductions Level 2 Chapter 7 Entering accumulation goals Retirement goal assumptions Defining retirement goals Defining liquidation order in retirement Level 2 Plans Modeling a Bucketing Strategy Overriding the proposed investor profile for a goal Level 2 Plans Defining education goals Defining major purchase goals Defining an emergency fund goal Allocating accounts to goals Chapter 8 Entering insurance goals Entering insurance goals Level 1 Survivor income analysis Level 1 94 97 99 101 102 104 105 105 107 107 108 110 110 114 114 117 119 120 121 122 125 125 126 129 131 131 133 136 1
70. 87 portion of the account will be delayed until retirement or age 75 whichever is later If the client s retirement date is after age 70 the milestone is defined on the Plan Management section Assumptions category Milestones page and the client is permitted to delay required minimum distributions beyond this age select the Delay RMDs to Retirement check box Note If the client s retirement begins before age 70 this check box does not appear This step does not apply to IRA spousal IRA Roth IRA Roth 401 k and Roth 403 b accounts If the Delay RMDs to Retirement check box is not selected NaviPlan Premium ensures that contributions to the plan cease no later than the year in which the client turns 70 and that RMDs will begin in the year in which the client turns 70 even if the client s retirement age has been defined as older than 70 For Other Salary Deferral Generic Employer Paid Plan or Generic Self Employed Plan select the Treat As Deferred Compensation Plan i e no RMDs check box These account types do not require minimum distributions Payout Options Savings Strategy Qualified Account Setup Primary Beneficiary Susan Contingent Beneficiary Other Multi Generational Waive early withdrawal penalties Treat As Deferred Compensation Plan i e no RMDs Delay RMDs to Retirement v State taxable v RMD Payment Frequency Monthly Make Annual Payments In End of Year Market Value as of 2
71. 99 Capital Accumulation and Redemption 200 Cash Flow 82 199 Deficit Coverage 200 Estate 200 Fact Finder 200 Favorite Reports 199 Goals 199 Income Tax 199 Insurance 199 Monte Carlo 200 Needs vs Abilities 200 Net Worth 199 Summary 199 reports assigning settings 200 duplicating 202 generating 199 202 personalizing with user defined text 209 Planning Assistant 207 Progress reports 211 refreshing the view 202 reports client Asset Allocation 211 Financial Needs Analysis 211 Financial Needs Assessment 211 Financial Needs Summary 211 Retirement Distribution Summary 211 223 NaviPlan Select User Manual Level 1 and Level 2 Plans Entering client data and goals reports stand alone Asset Liabilities 77 Cash Flow 102 Insurance 121 Single Trust 188 retirement adding expenses 127 adding incomes 128 age 13 date assumptions 125 defining goals 126 goal assumptions 125 goal reporting 126 goals overriding proposed portfolio Level 2 131 liquidation order Level 2 129 milestones Level 1 9 Retirement Distribution Summary client report 211 return rates entering 44 overriding for accounts 48 overriding for annuities 66 revenu de placement couru 76 Roth conversions entering 77 S savings strategies entering 105 entering for accounts 45 entering for annuities 61 surplus 110 SEPP strategies SEPP Strategy Details dialog box 48 65 setting up 47 48 64 108 Single Trust report 188 Social Security Benefit Formula 88 e
72. Duplicate button NaviPlan creates a duplicate and displays it next to the original in the same window To generate a report or graph from within an open stand alone report or graph window click the Reports button The Reports menu opens 203 204 Using the Planning Assistant 205 The Planning Assistant displays a broad overview of the potential success of the plan It summarizes potential problems opportunities and questions You can use the Planning Assistant reports to analyze the financial data in your clients current or recommended plan These reports identify the strengths and weaknesses of the plan In some cases the reports identify something discretionary that does not apply to the current plan and can be ignored In other cases the reports identify an improvement that could be made with a simple data change Sometimes following the recommendations requires using one or more financial planning strategies Opening the Planning Assistant To open the Planning Assistant follow these steps 1 Click the Planning Assistant button near the upper right corner of the NaviPlan window The Planning Assistant dialog box opens and displays the Overview report for the current plan Planning Assistant Financial plan Settings Current v A POF Word Overview Problems Questions Opportunities Reports The Planning Assistant is designed to assist you in analyzing the client s plan It contains information the s
73. Education Specific Accounts Account Name 529 plan 529 Plan for Julia Lump Sum Needs Asset Availability Survivor Needs Available Not Available Survivor Needs Available Not Available Survivor Needs Available Not Available Survivor Needs Available Not Available Use For Education Only v Estate Needs Not Available at Death Estate Needs Not Available at Death Estate Needs Not Available at Death Estate Needs Not Available at Death Figure 131 Set Goals section Survivor Income category Both Objectives page Asset Availability tab Level 2 Plan Detailed Tax method 2 Under Investment Accounts Lifestyle Assets Real Estate Assets and Business Entity Assets Survivor Needs select one of the following options for each account or asset e Available if the account is available for survivor needs immediately following the death of both clients The account is redeemed as required to cover the survivor s income needs e Not Available if the account is not available for survivor needs 3 If an account or asset should not be used to settle the deceased s estate under Investment Accounts Estate Needs select the Not Available at Death check box The Education Specific Accounts section is for information purposes only and cannot be modified The list includes 529 plans Coverdell accounts and UTMAs UGMAs 163 Entering disability income goals
74. Entering previous Roth conversion amounts You can track any Roth conversions that occurred before the plan date Only include Roth conversion amounts where the election was made to defer taxes over 2011 and 2012 The plan must include at least one Roth account and have a plan year of 2010 2011 or 2012 To enter a previous Roth conversion follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page Click the Previous Roth Conversions button The Previous Roth Conversions dialog box opens Click the Add Previous Roth Conversion button A new data entry row appears gt Instructions Previous Roth Conversions 2010 Taxable Amount Conversion Previously Taxed Owner Account Amount Post Conversion Pay Taxes From Delete David Roth account v 0 so Cash Flow VIL Add Previous Roth Conversion Figure 64 Previous Roth Conversions dialog box Select the owner and the account In the 2010 Taxable Conversion Amount field enter the amount of the Roth conversion that occurred before the plan date Inthe Amount Previously Taxed Post Conversion field enter the amount of the Roth conversion that was previously taxed From the Pay Taxes From list select the account from which the taxes will be paid Cash flow is also available Generating the Asset Liabilities report 77 The Asset Liabilities report provides a summary of all the assets liabilities accounts ann
75. OK to save the redemption strategy The Account Details dialog box closes Setting up a SEPP strategy for an account Level 2 Detailed Tax 47 You can enter a substantially equal periodic payments SEPP strategy for certain qualified accounts If an account does not qualify for SEPP redemptions the Substantially Equal Periodic Payments SEPP section of the Account Details dialog box does not appear Note Only one SEPP strategy can be added to an account To set up a SEPP strategy follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page 2 Under Qualified and Non Qualified Accounts click Details for the appropriate account 3 Go to the Redemptions tab click the Substantially Equal Periodic Payments SEPP link and then click Add SEPP Strategy A new data entry row appears Holdings Savings Strateg Return Rates Qualified Account Setup Account Fee Setup gt Redemptions Substantially Equal Periodic Payments SEPP Pro Rate Account First Last Description Start Date Frequency Distribution Method Payments Details Delete David s IRA Oct 112011 Annual v Required Minimum Distribution v BP x Add SEPP Strategy Add Account 3 Previous Entry NextEntry Figure 36 Account Details dialog box Redemptions tab Substantially Equal Period Payments SEPP section Level 2 Plan Detailed Tax method ot oy gi P 10 In the Start Date field enter t
76. Outstanding Liabilities ROR on Life Insurance Proceeds Capital Deferred Total Interest Dividends Gains Taxfree Growth 1 50 1 50 1 50 0 00 1 50 Figure 115 Set Goals section Survivor Income category Survivor Income page Level 1 Plan Under Life Insurance Analysis to Include select the appropriate If lt client co client gt dies or If both die check boxes to model the scenario If a lump sum expense is expected at death enter the estimated amount If the clients have dependents enter the estimated annual expenses to support the dependents and then enter the number of years these expenses are expected to last Note Annual Ongoing Expenses only applies for simultaneous death Under Objectives enter the percentage of lifestyle and medical expenses to cover This is the percentage of current expenses that continue in the event of the death of one client Generally some expenses utility payments and property taxes continue for a surviving client and dependents while other expenses food and clothing normally decline The default percentage is 85 but it can be changed If insurance coverage is to cover all outstanding major purchase goals select the Cover Major Purchase Goals check box for the client and or co client When this check box is not selected less insurance is required If insurance coverage is to pay off all outstanding liabilities select the Pay Off Outstanding Liabil
77. P Strategy Details dialog box For more information about the SEPP Strategy Details dialog box click Help 2 To save the SEPP details click OK The SEPP Strategy Details dialog box closes In the Annuity Details dialog box click OK to save the SEPP strategy The Annuity Details dialog box closes Overriding calculated return rates for variable annuities NaviPlan Premium calculates an overall return rate for a variable annuity based on the return rates and dollar value of the subaccounts in the annuity You can override the return rates for any variable annuity To override calculated return rates for a variable annuity follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page 2 Under Deferred Annuities click Details for the appropriate variable annuity The Annuity Details dialog box opens 3 Go to the Return Rates tab Variable Annuity Description Account Type Owner Annuitant Beneficiary Income Option Non qualified annuiti Non Qualified David v David v Susan wv Amount Certain v General Account Subaccounts Waive Early Market Cost Valuation Market Pre Annuitization Withdrawal Value Basis Date Value Cost Basis Annual M amp E Fee Goal Funding Penalti 0 0 Aug 9 2011 oll 0 00 Subaccounts Payout Options Savings Strategy Redemptions Return Rates General Account Variable Subaccounts Pre annuitization Standard Return Rate Override Return Rate Deviation 0
78. San Joaquin Valley College Fresno Aviation Campus Fresno CA San Joaquin Valley College Online Visalia CA San Jose City College San Jose CA San Jose State University San Jose CA 1 Amounts include required fees Data Source Peterson s Databases copyright 2011 Peterson s a division of Thomson Learning All rights reserved Figure 109 Search Education Costs dialog box showing search results 134 135 5 Under Search Results select the school of your choice and then select an expense option for example Tuition or Tuition Room 6 Click OK to close the Search Education Costs dialog box The value is populated in the Annual Cost field 7 To change the clients investor profile for a specific education goal do the following e Level 1 gt If the Asset Allocation module is selected on the Plan Management section Modules category Modules page under Investment Profile select the Override check box for the education goal and then select another investment profile e See Overriding the proposed investor profile for a goal Level 2 Plans on page 131 8 To add additional expenses to the education goal click the Details button The Search Education Costs dialog box opens gt Instructions Education Search Criteria Use the search criteria to access the Peterson s Undergraduate Database for college specific education expenses State School Name v Search Use wildcards
79. StartDate EndDate Infl Add l Delete Ongoing Expenses Julia v Annual A 15 000 21 Jan 12012 Jan 12019 V 0 00 X Add Support for Dependent Scenario Surplus Percent Surplus Spent Percent Surplus Saved Education Goals Number Annual to Description Name StartAge of Years Amount Cover College Education Julia 18 4 10 000 100 Figure 122 Set Goals section Survivor Income category Client Co client Objectives page Annual Income Needs tab Level 2 Plan Income Coverage Analysis method selected 4 To enter annual child support needed for each child that will be provided in the event of death click Add Support for Dependent and then enter the support details This section does not appear if dependents have not been entered 5 To determine how much of any cash flow surplus is assumed to be spent or saved under Scenario Surplus enter the percentage values For example when one client dies you expect the survivor to incur a cash flow surplus of 10 000 You also expect 152 the survivor to spend 25 of this surplus on miscellaneous costs and invest the remaining amount For this example you would enter 25 in the Percent surplus spent field NaviPlan automatically saves the remaining 75 into a non qualified account when survivorship occurs 6 To define how much of an education goal is to be funded during survivorship under Education Goals enter a percentage value in the to Cover field 7 Once income needs
80. To Dele Delete Jun 12015 v v Sell All Exercise v ash F Br x Dec 12020 v v Cashless Exerc w 40 00 Joint savir v amp x Add Exercise Figure 57 Stock Option Details dialog box Exercise Schedule tab 9 Specify when the stock options will be exercised by entering an event or date and then enter any related details regarding the exercise Entering restricted stock awards Level 2 The term restricted stock refers to the awarding of actual stock or shares in a company as opposed to the right to buy stock in the future Clients can own stock options individually or jointly but dependents cannot You can enter all your clients restricted stock on the Financial Picture section Net Worth category Equity Compensation page To enter a new restricted stock award follow these steps 1 Go to the Enter Financial Data section Net Worth category Equity Compensation page 2 To enter a new restricted stock award click Add Restricted Stock Restricted Stock Details Award of Community Description Company Symbol Owner Type Award Date Shares Property Susan s restricted stoc Susan wv Shares Y Dec 312010 1 000 v Start of Year Current Unit Awarded Retirement Section 83 b Dividend atPriceof CostBasis Unit Price Value As Of Value Override Eligibility Date Election Type 10 00 10 00 Jan 12011 0 0 Dec 312 Cash v Return Rates Vesting and Release Asset Class Annual Dividend Growth Standard Weightings O
81. You can access the Knowledge Base fromwithin NaviPlan or online at http knowledge eisi com To access resources from within NaviPlan follow these steps 1 Click 7 beside the Help button and then select Support The Support dialog box opens 2 Click the appropriate link The applicable page opens in your Web browser You can contact us by telephone at 888 692 3474 Monday Thursday 7 30 a m 6 p m central time Friday 7 30 a m 5 00p m central time Updates Using NaviPlan s Check for Updates feature you can update to the current release within the same version for example to update from v12 1 to v12 2 If the update is a major change that is it involves a change in the version number such as an upgrade from v12 0 to v14 0 the upgrade may not be available through Check for Updates You will have to install the new version To check for updates follow these steps 1 Click the Save button at the top of the window to save your work 2 Click beside the Help button and then select Updates The Updates dialog box opens 3 Click the Check for Updates button NaviPlan checks for current updates available online After a few seconds the NaviPlan Update dialog box opens 4 Follow the instructions in the dialog box If updates are available NaviPlan shuts down installs the updates and then restarts The About dialog box Clicking 7 beside the Help button and then selecting About
82. a start date and then define the inflation rate c Select the Eligible for Spousal Benefits check box if the client is eligible to receive spousal Social Security benefits 5 To calculate survivor benefits under Monthly Survivor Benefits enter a percentage of monthly benefits and then define the inflation rate that applies 6 To calculate disability benefits under Monthly Disability Benefits do the following a Select the check box es for the client s for whom you want to calculate benefits b If you re not sure how much the client or co client will receive select of monthly benefit and then enter the percentage eligibility OR To specify the monthly retirement benefits that the client will receive select Est Benefit today s and then enter the amount in today s dollars c Select a start date and then define the inflation rate NaviPlan Premium estimates the monthly benefits your client will receive 7 If the client has any dependents go to Eligible Dependents tab Social Security Details gt Instructions Client Co Ciient Benefit Method Select a Social Security method Benefit Formula Use this method to automatically calculate Social Security benefits based on the annual income entered on the Cash Flow page Estimate Benefit Use this method to enter benefit amounts directly from a Social Security Statement Currently Receiving Benefits Use this method to enter benefit amounts that the
83. abilities Outstanding Description Principal v Mortgage 123 677 Major Purchase Goals to Description Amount Target Date Cover Vehicle 30 000 Oct 12015 100 Additional Lump Sum Needs Click the Add Lump Sum Need button to create a new row Add Lump Sum Need Figure 135 Set Goals section Disability Income category Client Co client Objectives page Lump Sum Needs tab Level 2 Plan Goal and Expense Analysis method selected 9 Under Pay Off Outstanding Liabilities select any existing loans that will be paid off in the event of disability Note This option is only available if liabilities exist in the plan and if on the Enter Financial Data section Net Worth category Assets Liabilities page Liability Details dialog box Details tab the Payoff Options at Death selection is Transfer to survivor or Payoff at first death from estate 10 Under Major Purchase Goals select any goals that will be paid for in the event of disability Note This option is only available if major purchase goals exist in the plan 11 If you expect any other lump sum needs during disability under Additional Lump Sum Needs click Add Lump Sum Need and then enter the details of the need in the fields that appear 12 To indicate when assets are to be made available complete the procedure Indicating when accounts are to be made available on page 170 Working with the Income Coverage Analysis method The Income Coverage Analy
84. age page Level 2 Plan 2 To add a new life insurance policy click the Add Life Insurance button and then select a policy type The new life insurance policy item appears at the bottom of the current life insurance list 3 Select the person insured by the policy 4 To change the policy type from the Policy Type list select another option 5 Enter the death benefit beneficiary and monthly premium for the listed insurance policies 6 To enter additional details for an existing life insurance policy click the Details button for that policy The Life Insurance Details dialog box opens to the Details tab showing additional details for the individual life insurance policy The fields in the Life Insurance Details dialog box vary depending on the selected Policy Type and the plan level 115 116 detais ture Values Details Tfr to Description Policy Type Insured Beneficiary Policy Owner Survivor Life Insurance Variable Life v David v Susan v David v Benefit Details Death Direct Residual ERN Cease Coverage Community Benefit Proceeds To Details At Age On Date Property 0 Cash Flow y a Never fi v Premiums Cease Premiums Waived Payer Amount Frequency At Age On Date at Disability David v 0 Monthy v Never ie 2 v Variable Subaccounts CSV Payable with Valuation General Account Subaccounts Death Date Market Value Market Value Total CSV Aug 9 2011 0 0 Valuation Asset Class Description
85. al Account Fees Base Inflation Rate 3 00 Inflation Rate Graph Annual AccountFee 0 00 Return Rate for Cash Surpluses 0 00 Frequency Quarterly Tax Deductible Revert to Defaults Tax Filing Status When using the Detailed Tax Override Tax Filing Status method the Return Rate for Cash David filing Surpluses field appears You can use Susan Married filing jo it to specify the rate of return applied to all cash surpluses in the plan Dependent Status Override Dependent of Julia Matthew Davic Tax Options Figure 2 Plan Management section Assumptions category General page Level 2 Plan Detailed Tax method 2 Under Economic Factors enter the base inflation rate 3 To view a graph of historical inflation rates from 1914 to 2010 click Inflation Rate Graph The Historical Inflation dialog box opens 4 To focus on more recent data under Select A Graph To View click the 1986 2010 and 2001 2010 links To return to the General page click Close 5 In the Return Rate for Cash Surpluses field enter the expected return rate for cash surpluses Setting annual account fees To change the annual account fee and frequency follow these steps 1 Go to the Plan Management section Assumptions category General page EN earner ee OEA Notes Planning Assistant Calculators Reports 7 gt Instructions Economic Factors Annual Account Fees Base Inflation Rate 3 00 Inflation Rate Graph Annual AccountFee 0 00
86. al use Index 144 145 146 148 151 154 156 159 160 162 164 165 168 170 172 176 177 180 181 184 187 188 190 192 193 198 199 205 206 207 209 211 215 217 219 Chapter 1 Using this manual The NaviPlan Premium user manual series includes all the instructions you need to use NaviPlan Premium effectively This chapter will help you use all the manuals in this series More manuals are available in the Knowledge Base http knowledge eisi com In this chapter NaviPlan Premium user manual series 2 Conventions NaviPlan Premium resources 5 NaviPlan Premium user manual series The NaviPlan Premium user manuals are organized based on the tasks you can accomplish in each level If you are a new NaviPlan Premium user start with the Introduction user manual Introduction Setting up user preferences Creating and managing client engagements Determining which assessment or plan level to select to enter financial information Using NaviPlan Premium workflow Calculators and Assessments Using calculators to model specific aspects of your clients finances such as retirement savings and debt management Assessing your clients current financial situation Entering account and annuity information Determining your clients investor profile Level 1 and Level 2 Plans Entering financial planning assumptions Entering client data and goals Entering detailed net worth cash flow and insurance
87. alog box Savings Strategy tab showing an IRA Enter either the dollar amount or percentage of salary to be contributed and the frequency of the savings contribution Ensure dollar values under 25 are entered with a dollar sign or they are assumed to be percentages For certain qualified accounts to have the employee contribute the maximum amount as the federal limit increases type max in the appropriate Amount field Enter the start and end dates of the strategy 7 To index the strategy for inflation select the Infl check box To index by an amount greater or less than the default inflation rate enter a different percentage in the Add field Note The Infl check box is not accessible when a percentage of salary is entered Setting up a redemption strategy for an account Level 2 Detailed Tax You can enter a redemption strategy for any account type to redeem an account over a period of time or you can redeem an account in full as a lump sum 46 To set up a redemption strategy follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page Under Qualified and Non Qualified Accounts click Details for the appropriate account The Account Details dialog box opens Go to the Redemptions tab Holdings Savings Strateg Return Rates Qualified Account Setup Account Fee Setup Redemptions Waive Early Redeem Amount Withdrawal Redeem From All Sor Frequency
88. an that is not selected NaviPlan Premium assumes that the payments continue and will be included as part of the survivor s cash flow Note This option is only available if liabilities exist in the plan and if on the Enter Financial Data section Net Worth category Assets Liabilities page Liability dialog box the Payoff Options at Death selection is Transfer to survivor or Payoff at first death from estate This option is only available if liabilities exist in the plan 7 Under Additional Lump Sum Needs enter one time expenses that will be covered in the event of death Enter a unique description for each expense and then enter all appropriate data 8 To indicate when accounts are to be made available for survivor and estate needs complete the procedure Assigning asset availability if both clients die on page 162 Assigning asset availability if both clients die On the Asset Availability tab for either the Goal and Expense Analysis method or the Income Coverage Analysis method you can indicate when assets are to be made available 1 Go to the Asset Availability tab 162 Assumptions Ongoing Income Needs Instructions Investment Accounts Account Name Joint savings Non Qualified Susan s IRA David s 401k Lifestyle Assets Asset Name 520 Thomas St Joint Lifestyle Real Estate Assets Asset Name Real Estate Joint Business Entity Assets Asset Name Family business Joint LLC
89. and you know the symbol for the asset you are modifying enter it in the Symbol field and then click Classify NaviPlan enters the description and asset class weighting for the symbol If you have the Ibbotson Asset Allocation option and you want to classify the asset but do not know the symbol of the asset you are modifying you can search the Ibbotson Asset Allocation database as shown in Searching the asset classifier database on page 73 Searching the asset classifier database If you have the Ibbotson Asset Allocation option you can search for an asset classifier to use in the asset class weightings 73 To search the asset classifier database do the following 1 Go to the page or dialog box of the asset for which you want to set the asset class weightings From the Asset Class Weightings list select Search The Asset Class Weightings Details dialog box opens Asset Class Weightings Market Value Valuation Date Class Class 0 Jan 12010 Class Name Percentage Class Name Percentage Large Cap Growth Equity Large Cap Value Equity Asset Class Weightings Options Mid Cap Equity Small Cap Equity Use Asset Classifier Search US REITs International Equity Ticker Symbol Emerging Markets Equity Long Term Bonds Use 100 of an Asset Class Intermediate Term Bonds Short Term Bonds High Yield Bonds International Bonds Manually Adjust Weightings cuh Total Figure 60 Asset Class Weighting Details dialog box 3 Under Asset Cla
90. are 5 To assign a different distribution percentage for each beneficiary enter the percentage in the applicable Percent field Generate trust reports 188 In NaviPlan Premium you can generate a Single Trust report for an individual trust you have entered on the Set Goals section Estate Planning category Funded Trusts page The Single Trust report defines the trust type provides details of the values you have entered and lists a cash flow projection of the trust To generate a Single Trust report follow these steps 1 Go to the Set Goals section Estate Planning category Funded Trusts page All existing funded trusts in the plan appear under Funded Trusts Click the Report button for the applicable trust The Assign Settings dialog box opens 189 Simultaneous Death in 2011 Other Life Expectancies Event Year of Death David Estate Planning Life Expectancy W 2021 0 2021 Susan Estate Planning Life Expectancy W 2026 0 2026 Figure 159 Assign Settings dialog box To model simultaneous death under Life Expectancy select Simultaneous Death in and then enter the year in which the client and co client are expected to die OR To model other life expectancies under Life Expectancy select Other Life Expectancies and then enter the year in which the client or co client is expected to die or select an option for each client If you selected Other Life Expectancies under Event select the
91. are entered go to the Lump Sum Needs tab Assumptions Annual Income Needs Lump Sum Needs Survivor s Income Asset Availability Instructions Pay Off Outstanding Liabilities Outstanding Description Principal v Mortgage 123 654 Major Purchase Goals to Description Amount Target Date Cover Vehide 30 000 Oct 12015 100 Additional Lump Sum Needs Click the Add Lump Sum Need button to create a new row Add Lump Sum Need Figure 123 Set Goals section Survivor Income category Client Co client Objectives page Lump Sum Needs tab Level 2 Plan Income Coverage Analysis method selected 8 Under Pay Off Outstanding Liabilities select any existing loans that will be paid off by insurance proceeds For each loan that is not selected NaviPlan Premium assumes that the payments continue and will be included as part of the survivor s cash flow Note This option is only available if liabilities exist in the plan and if on the Enter Financial Data section Net Worth category Assets Liabilities page Liability dialog box the Payoff Options at Death selection is Transfer to survivor or Payoff at first death from estate This option is only available if liabilities exist in the plan 9 Enter the percentage of any future major purchase goals that will be paid for in the event of death Note This option is only available if major purchase goals exist in the plan 10 Under Additional Lump Sum Needs if any other lump s
92. ass Weightings Next gt Instructions Deferred Annuities Click the Add Deferred Annuity button to create a new row Add Deferred Annuity 9 Fixed Annuity Variable Annuity Annuity button to create a new row Add Annuitized Annuity To view or edit account distribution for all plan goals click Goal Funding Goal Funding Figure 44 Enter Financial Data section Net Worth category Annuities page If you select this annuity type NaviPlan Premium creates an annuity where Interest rates are fixed Variable Return rates vary depending on how the annuity funds are invested Annuitized The annuity is in the distribution phase and the payments begin before January 1 of the current plan year 2 To enter a deferred annuity under Deferred Annuities click x next to Add Deferred Annuity and then select the type of annuity you want to enter The Annuity Details dialog box opens 3 To enter an annuitized annuity click Add Annuitized Annuity 55 56 Variable Annuity Description Account Type Owner Annuitant Beneficiary Income Option New annuity Non Qualified v Joint v David Surviving Client w Amount Certain v General Account Subaccounts Waive Early Market Cost Valuation Market Pre Annuitization Withdrawal Value Basis Date Value Cost Basis Annual M amp E Fee Penalties 0 0 Sep 8 2011 0 00 Payout Options Savings Strategy Return Rates Market Hold Cost Valua
93. ate Xrevious Year Next Year yh Add as Favorite Reports Window Cash Flow Details Lee Financial plan 2011 avi Susan Family Cash Inflows Employment Inflows 82 000 60 000 142 000 Investment Inflows 6 498 6 498 12 995 Pension Inflows so 1 720 1 720 Total Cash Inflows 88 498 68 218 156 716 Cash Outflows Lifestyle Expenses 35 400 35 400 70 800 Taxes 20 990 15 999 36 988 Miscellaneous Expenses 4 900 3 700 8 600 Non Qualified Contributions and Reinvestments 1 365 1 365 2 730 Qualified Contributions 1 200 2 000 3 200 Total Cash Outflows 63 855 58 464 122 319 Current Surplus Deficit 34 397 Ending Surplus Deficit 34 397 V Summary View Show Family column only Show rows with zero values Hide dependents Figure 169 Cash Flow Details report 4 To redisplay the report settings click Report Settings at the bottom of the report window To hide the settings again click Report Settings 5 To generate a report or graph that you can print or distribute beside the PDF or Word button click the button and then select Automatic Portrait or Landscape The report or graph 201 202 generates as a PDF or Word file Note Selecting Automatic generates a report or graph using NaviPlan s default printer orientation If you made changes to the plan and the report window is still open click the Refresh button to update the report To duplicate the report or graph click the
94. ate the retirement expense is fixed cannot be eliminated select the Fixed Exp check box If the check box is not selected NaviPlan assumes the expense is discretionary 5 If applicable under Retirementment Incomes modify retirement incomes that have been entered on the Enter Financial Data section Cash Flow category Cash Flow page OR Click Add Retirement Income to enter additional income that will be earned during retirement Note Incomes entered on the Retirement page also appear on the Enter Financial Data section Cash Flow category Cash Flow page under Incomes 128 Defining liquidation order in retirement Level 2 Plans 129 NaviPlan Premium automatically redeems accounts to cover the retirement goal either using deficit coverage automatic account redemption method or a specific liquidation order 1 To change the manner in which accounts are redeemed during retirement click Liquidation Strategies on the Retirement category Retirement page Liquidation Order Redemptions Bucketing Do not redeem Qualified assets prior to age Liquidation Order David Ret Client E Modify the liquidation order Susan Ret Co dient Description Account Type Owner Choose the order in which assets are redeemed during retirement 2 Joint savings Non Qualified Joint Non Qualified Roth Qualified David s 401 k 401K David Non Qualified Qualified Roth Roth Qualified Non Qualified EAA Blen
95. ation option you can search for asset class weightings See Searching the asset classifier database on page 73 5 If you will not be using return rate associated with the selected asset class weighting select the Override check box and then enter the return rate values 6 When you ve finished entering the applicable details of the stock option go to the Vesting and Expiry tab Return Rates Vesting and Expiry Exercise Schedule Vesting Dec 31 2010 0 00 After 6 years 0 00 After 1 year 20 00 After 7 years 0 00 After 2 years 20 00 After 8 years 0 00 After 3 years 20 00 After 9 years 0 00 After 4 years 20 00 After 10 years 0 00 After 5 years 20 00 Total 100 00 v Auto vest on retirement If retirement is on or after age 65 v Auto vest on death Expiry No expiry All options expire years and J months after granting Add Stock Option lt Previous Entry NextEntry gt Figure 56 Stock Option Details dialog box Vesting and Expiry tab 7 Define when the stock options will vest and when they will expire 8 Go to the Exercise Schedule tab 70 Return Rates Vesting and Expiry Exercise Schedule Sell All Exercised Options Sale Date Market Value per Unit Exercise On Number of Options to Exercise when Exercised Autoredemption Number of Sold Prior Market Value Estimated Direct Expiry Date AllVested Options to 2011 Calculate per Unit Type Tax Rate Proceeds
96. be excluded from reallocation in the Hold field See Entering a hold on a holding within an account on page 44 e Assign the account to a specific goal or multiple goals by making a selection from the Goal Funding list See Funding goals on page 75 e Create a new account by clicking next to Add Account and then selecting either an account type or Copy of Current if you select Copy of Current NaviPlan creates a copy of the existing account e View or edit another account by clicking Next Entry or Previous Entry Entering holdings To enter the holdings within an account follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page If no holdings exist for an account an Add button appears under Holdings If holdings already exist for the account the number of holdings appears as a link 2 Under Holdings click Add or the numbered link for the appropriate account The Account Details dialog box opens to the Holdings tab If you are creating the account s first holding the default holding New Holding appears 43 If user defined holdings already exist click Add Holding for each new holding you want to add or click z next to Add Holding and then select a holding type Additional data entry rows appear Account Details Investment Portfolio Community Description Account Type Owner Property Goal Funding New account Non Qualified v Joint v Unallocated v Market Co
97. ble Donations lt Back Next gt Unused Charitable Donations for David and Susan Non Capital Gain CapitalGain Non Capital Gain Capital Gain P Property Property Property roperty Year line 10 1 line 19 1 line 16 1 line 24 1 2010 0 0 2009 2008 2007 2006 1 Line references are from Table 4 of IRS Publication 526 Figure 11 Plan Management section Assumptions category Unused Charitable Donations page Level 2 Plan Detailed Tax method 2 If your clients have made any charitable donations for which they have not claimed deductions in past years enter the portion that is eligible to be carried forward according to the Internal Revenue Code enter this information from your clients tax returns from last year Setting asset allocation assumptions in individual plans 17 You can choose whether or not to use asset allocation in individual plans in NaviPlan Premium To use asset allocation in a plan the Asset Allocation module on the Plan Management section Modules category Modules page must be selected There are two aspects to asset allocation in NaviPlan First the asset allocation questionnaire is used to determine your clients investor profile Once the investor profile is determined the expected rate of return is calculated as a weighted average of the underlying asset classes recommended in the suggested asset mix Second asset allocation lets you compare the asset
98. d Equity Compensation Non Qualified Roth Equity Compensation apt Det Eu capete See to spat the order in which to ipti Account Type Owner redeem accounts New stock ootion Stock Ootions David t Move Up Move Down See the Help for information on deficit coverage order and the use of residuals from accounts funding other goals accounts partially funding retirement and unlinked accounts Figure 90 Enter Financial Data section Strategies category Deficit Coverage page Level 2 Plan Detailed Tax method 2 Under Pre Retirement Deficit Coverage Order select Redeem from accounts to cover deficits in the pre retirement period 3 To specify the order in which account types will be redeemed select an option from the list OR To specify the order in which specific accounts will be redeemed select the Modify the pre retirement deficit coverage order option and then adjust the liquidation order by moving accounts up or down in the list using the Move Up or Move Down buttons Entering surplus strategies 110 In NaviPlan Premium a cash flow surplus occurs when total cash inflows exceed total cash outflows as of December 31 of a particular year If cash outflows exceed cash inflows a deficit occurs In years when a surplus exists savings and expense strategies are available By default NaviPlan allocates to surplus savings strategies before allocating to surplus expense strategies Note You can only create surplu
99. d burial expenses should be entered here Administration and probate fees are calculated separately on the Assumptions page To enter an estate expense follow these steps 1 Go to the Set Goals section Estate Planning category Estate Expenses page lt a Assumptions Funded Trusts Gifting Growth amp History Estate Expenses Instructions Estate Expenses Expense Name Owner Amount Infl Add l Delete Estate Expense David v 10 000 0 00 X Add Estate Expense Figure 161 Set Goals section Estate Planning category Estate Expenses page 2 To add a new expense under Estate Expenses click the Add Estate Expense button A new data entry row appears 3 Enter a unique name for the expense that will distinguish it from other similar expenses 4 Assign the expense to a family member define the amount and then if applicable enter the inflation rate Entering estate strategies The Estate Strategy page shows the current status of the clients estate By default NaviPlan Premium creates a simple will estate distribution assuming that all assets will pass to the surviving spouse On this tab you can enter any strategies the clients are currently using such as gifts or trusts As you add information the graph at the top of the page updates to show how the changes affect the clients existing estate plan To enter estate strategies that are in the clients existing estate plan follow these steps
100. d cash flow analysis Please refer to the Cash Flow report for more details The Net Worth report contains information on the accumulation and or depletion of assets over time It displays both assets and liabilties and the net value or difference at the end of the current year Figure 171 Planning Assistant dialog box Reports tab 2 Select one of the following reports e Introduction A summary of each of the reports available to you in the Planning Assistant e Qualified Contribution Limits Analysis and recommendations specific to IRAs 457 401 k 403 b and SARSEP plans including contributions contribution limits and unused room This analysis includes catch up contribution room when available e Cash Flow Summary of pre retirement cash flow surpluses and deficits This information is useful for seeing how the clients cash flow is affected by their goals and associated savings strategies Note The Planning Assistant is not designed to perform a detailed cash flow analysis For a more detailed report you can access the Cash Flow Details report from the Reports menu e Net Worth Summary of all the assets and liabilities entered into the plan for the clients client co client and joint ownership and the net value and accumulated surplus deficit at the end of the plan year 207 3 To print the Planning Assistant report displayed on the current tab click the PDF or Word button The report generates
101. d the frequency Figure 151 Trust Details dialog box showing generic testamentary trust details Advanced estate funded trusts details 184 The following funded trusts are available only when the optional Advanced Estate module is included in the plan The annotations in the following images show some of the unique requirements for each trust For more information see the NaviPlan Premium Help Funded qualified personal residence trust details Funded QPRT Description f Grantor Created On Qualified Personal Residence Trust Joint wv Dec 312010 Startof Year Startof Year Present Value Of Market Value Cost Basis Remainder Interest gift 0 Enter the present value of the remainder interest in the trust at the time the trust was created Figure 152 Trust Details dialog box showing funded qualified personal residence trust details 185 Funded family limited partnership trust details As well as the usual funding details for a funded FLP you must also enter partner distribution gifting and return rate information Funded FLP Marketability Minority Interest Description Created On Discount Rate Discount Rate Family Limited Partnership Dec 31 2010 0 00 0 00 Details cee nies dae Note the available tabs Santi ae aa serial Partners Income Distributions Gifting and Retum Rates Figure 153 Trust Details dialog box showing family limited partnership trust details Funded grantor retained trust d
102. d to automatically calculate Social Security benefits based on the annual income entered on the Cash Flow page Estimate Benefit Use this method to enter benefit amounts directly from a Social Security Statement Currently Receiving Benefits Use this method to enter benefit amounts that the dient is currently receiving Getic sate Dependents Earnings History Monthly Retirement Benefits of monthly benefit Event Infl Add l 3 vi David 100 Retirement v Monthly Survivor Benefits Benefits to Spouse Spouse s Revised Start Date and Survivor Benefits to for Eligible Dependents Spouse at Retirement Benefits During Retirement ee of monthly benefit of monthly benefit Event Date v David 100 100 0 Retirement v 2037 Monthly Disability Benefits Spouse s Revised Start Date Benefits gone Retirement Est Benefit today s Event Date Infl Add l Retirement v un 2037 v 0 00 Figure 70 Social Security Details dialog box Details tab Level 2 Plan Benefit Formula selected 4 To calculate retirement benefits under Monthly Retirement Benefits do the following 88 89 a To enter the client s percentage eligibility for monthly retirement benefits select of monthly benefit and then enter the percentage eligibility OR To specify the monthly retirement benefits that the client will receive select Est Benefit today s and then enter the amount in today s dollars b Select
103. d to the Federal Taxable Estate Additional Fees David Susan or Infl Add l or Infl Add l 1 00 v 1 00 v 1 00 1 00 v Probate Fee Administration Fee If you wish to gather estate planning details click the optional Estate Questionnaire button Estate Questionnaire Estate Distribution Selection Mirror Wills Either Dies First Details entered apply regardless of order of death illustrated Specify by Order of Death Separate data entry allowed to illustrate dient or co client dying first Will Details Yes No Lastupdate David has a will Susan has a will Figure 144 Set Goals section Estate Planning category Assumptions page 2 To create alternative life expectancy scenarios for estate planning purposes under Life Expectancy Scenarios change the hypothetical ages or years when the client or co client are expected to die These life expectancies only apply to estate planning and do not affect the life expectancies used in the rest of the plan All life expectancy scenarios can be overridden by entering a different age or year NaviPlan uses the following default settings 177 178 e Life Expectancy sets the life expectancy to 10 years after the plan date for the client and 15 years after the plan date for the co client e Alternate Life Expectancy uses the reverse assumptions the life expectancy for the co client is 10 years after the plan date and 15 years after
104. dd l Delete Ongoing Expenses Julia v Annual v 0 21 Jan 12012 Jani201I9 0 00 X Add Support for Dependent Education Expenses Number Annual to Description Name Start Age of Years Amount Cover College Education Julia 18 4 10 000 100 Figure 127 Set Goals section Survivor Income category Both Objectives page Ongoing Expenses tab Level 2 Plan Goal and Expense Analysis method selected 2 Under Support for Dependents click Add Support for Dependent and then enter annual child support needed for each child that will be provided in the event of death This section does not appear if dependents have not been entered 3 Under Education Expenses define the percentage of previously entered education expenses that will be covered by life insurance This option is only available if an education goal exists in the plan 4 Goto the Lump Sum Needs tab 159 Assumptions Ongoing Expenses Lump Sum Needs Asset Availability gt Instructions Additional Lump Sum Needs Description Amount Infl Add l Delete v Lump Sum Need 0 yY 0 00 X Add Lump Sum Need Estate Expenses The following have been entered as estate expenses Description Amount Infl Add l Figure 128 Set Goals section Survivor Income category Both Objectives page Lump Sum Needs tab Level 2 Plan Goal and Expense Analysis method selected 5 Under Additional Lump Sum Needs enter one time expenses that will be covered in the
105. de to the property prior to the current year go to the Additions tab Enter the cost of the additions the depreciation so far the dollar amount that the addition will depreciate annually and the number of years until the addition will be fully depreciated 37 8 If you know the clients will be selling the real estate asset go to the Sale Information tab and then select a sell option from the Sale Option list Enter a sale date a selling cost rate and then select an option from the Direct After Tax Proceeds To list If you select New Non Qualified NaviPlan creates a new account and opens the Account Details dialog box See Creating accounts on page 41 NaviPlan uses the selected destination for after tax proceeds from the sale of the asset 9 If you do not want to use the default return rates and standard deviations associated with the asset go to the Return Rates tab select the Override check box and then make your changes 10 From the Real Estate Details dialog box you can e Create a new real estate asset by clicking 7 beside Add Real Estate and then selecting an option new real estate assets appear on the Assets Liabilities page under Real Estate e View or edit another real estate asset by clicking Next Entry or Previous Entry Entering business entities Level 2 Business entities can only be entered in plans using the Detailed Tax method that also include the optional Business Planning module
106. ded Withdrawal Move Up Move Down Susan s IRA IRA Susan B Account is not used entirely to fund the retirement goal See the Help for information on liquidation deficit coverage order and the use of residuals from accounts funding other goals accounts partially funding retirement and unlinked accounts Figure 103 Liquidation Strategies dialog box Liquidation Order tab Level 2 Plan 2 For the client and co client click the Event Calendars to enter the minimum age when qualified assets can be redeemed Ret Client Co client is entered by default 3 To redeem assets by account type only select one of the existing liquidation options OR To view and edit the order of specific accounts select the Modify the liquidation order check box For each applicable account select the account and then click the Move Up or Move Down button 4 To specify redemptions of specific dollar values or percentages of certain accounts go to the Redemptions tab and then complete the following steps a Click the Redemptions link Liquidation Strategies Liquidation Order Gedemptions Bucketing Redemptions Y All Sor Frequency Penalties StartDate End Date Infl Add l Delete 0 00 Monthly Ret Co die Death 1y Cm XK Susan s IRA Add Redemption Strategy gt Substantially Equal Periodic Payments SEPP Figure 104 Liquidation Strategies dialog box Redemptions tab Level 2 Plan Redemptions secti
107. dient is currently receiving Details Eligible Dependents Earnings History Figure 71 Social Security Details dialog box Eligible Dependents tab Level 2 Plan Benefit Formula selected 8 Select the appropriate check box es to link each dependent to the client 9 Go to the Earnings History tab The Earnings History tab displays the earnings projected by NaviPlan from which the client s Social Security earnings are calculated The client s past earnings appear under Earnings to Date and the client s future earnings appear under Future Earnings 10 To change any of the displayed earnings select the Modify the Calculated Values check box and then enter the earnings you want to use Instead of entering an amount for each year on the tab you can use the Fill Values feature to fill in the amounts automatically To use this feature click the Fill Values link enter the years you want to fill enter the criteria you want NaviPlan to use to calculate the amounts and then click Fill 90 re BEETS Use this method to enter benefit amounts that the dient is currently receiving Details Eligible Dependents Earnings to Date Future Earnings vV Modify the Calculated Values Modify the Calculated Values Year Age Amount Year Age Amount 1988 18 0 2011 41 S 1989 19 0 2012 42 1990 20 0 2013 43 1991 21 0 2014 44 89 604 1992 22 0 2015 45 1993 23 0 2016 46 95 060 1994 24 0 2017 47 1995 25 5
108. e Add field Note The Infl check box is not accessible when Redeem All or Lump Sum is selected or a percentage of the account is entered Entering a substantially equal periodic payments SEPP strategy You can enter a substantially equal periodic payments SEPP strategy for certain qualified accounts and variable annuities If an asset does not qualify for SEPP redemptions it will not appear in the Choose Account under Substantially Equal Periodic Payments SEPP on the Redemptions page Note Only one SEPP strategy can be added to an account or annuity To set up a SEPP strategy follow these steps 1 Go to the Enter Financial Data section Strategies category Redemptions page All existing SEPP strategies in the plan appear 2 Under Substantially Equal Periodic Payments SEPP from the Choose Account list select the account to which you want to add a SEPP strategy and then click Add SEPP Strategy Savings Debt Modification Defic Coverage Sapia Instructions Redemptions Use the Choose Account list below to select an account and then dick Add Redemption Strategy to create a new strategy irst Last Fi Start Date Frequency Distribution Method Payments Detsis Delete Oct 142011 Annual v Required Minimum Distribution v Br ix unt V Add SEPP Strategy Figure 88 Enter Financial Data section Strategies category Redemptions page Level 2 Plan Detailed Tax method showing a SEPP
109. e 81 Enter Financial Data section Cash Flow category Cash Flow page Level 2 Plan 100 2 To add anew expense click the Add Expense button and then select an expense type The new expense item appears at the bottom of the current expense list 3 To enter additional details for an existing expense on the Cash Flow page click the Details button for that expense The Expense Details dialog box opens Expense Details Description Personal e g clothing hot Joint Frequency Amount Start Date Monthly v Member Type vl Lifestyle v End Date m Ret ist Infl Add l 750 Jan 12011 A Y 0 00 Deductible V Transfer to Survivor V Fixed Expense Cover any pre retirement deficits created by this expense lt Previous Entry Next Entry gt Figure 82 Expense Details dialog box OK Cancel 4 Enter the expense details 5 If you are entering an expense owned by one client and you expect the expense to continue for the survivor after the client dies select the Transfer to Survivor check box 6 If you are entering a fixed expense select the Fixed Expense check box Fixed expenses are included in the calculation of emergency fund goals and in determining scenario goal coverage If you clear the check box the expense is considered to be discretionary and is not included in the calculation See Defining an emergency fund goal on page 137 for more information Note Fixed expenses are expenses t
110. e assets Level 2 36 Entering business entities Level 2 38 Entering accounts 41 Entering annuities 54 Entering equity compensation 69 Defining asset class weightings 72 Funding goals 75 Overriding previously accrued investment income 76 Entering previous Roth conversion amounts 77 Generating the Asset Liabilities report T7 29 Entering lifestyle assets Lifestyle assets are purchased for the owners personal use and enjoyment and not for the purpose of funding goals or producing income Examples include a house vacation home car or boat To enter lifestyle assets follow these steps 1 Go to the Enter Financial Data section Net Worth category Assets Liabilities page ee Accounts Annuities Equity Compensation Asset Class Weightings D Instructions Lifestyle Assets Liabilities Interest Link Description Description Balance Rate Payment toAsset Detsis Residence Mortgage 0 7 00 0 00 mo Residence v B 2nd Residence Mortgage 2 0 7 00 0 00 mo None yvy Personal Use Property 2 5 00 0 00 mo Other Perv Br y g amp v airinn la When you create a new plan NaviPlan creates default assets Add Lifestyle Asset 9 including residences personal use assets and other personal assets Real Estate Market Rental Description Value Income Details Delete Real Estate 0 0 mo BF X Real Estate appears only in Level 2 Plans Add Real Estate a Click the Add Business Entity button to create a new row Business E
111. e probability of plan success given random asset returns based on the standard deviation assigned to each account and holding To generate a stand alone report or graph follow these steps 1 Go to the Reports menu select a report category and if applicable a subcategory and then select the report or graph you want to generate 4 Favorite Reports 3 Summary 3 Net Worth 43 Cash Flow 3 Income Tax 4 Goals 4 Asset Allocation 4 Insurance 4 Estate Planning 4 Fact Finder 43 Needs vs Abilities 4 Capital Accumulation and Redemption 3 Deficit Coverage 43 Monte Carlo Figure 167 Reports menu Level 2 Plan Detailed Tax method Depending on the report or graph type selected the Assign Settings dialog box may open The contents of this dialog box varies depending on the report selected 2 If applicable enter the settings details and then click OK to generate the report or graph See the Help for more information about assigning report settings Assign Settings Scenario Figure 168 Assign Settings dialog box 3 Ifa Report Year field appears in the Assign Settings dialog box e g for the Cash Flow Details report and you want to report on a different year after you have generated the report in the report window click the Previous Year or Next Year button NaviPlan redisplays the report based on the applicable year Cash Flow Details DER Hep Q3 Por gt IW Word Hide Settings CRefresh Duplc
112. e to be made available during the survivorship period 1 Go to the Asset Availability tab 154 Assumptions Ongoing Expenses Additional Annual Income Lump Sum Needs Asset Availability gt Instructions Investment Accounts Survivor Needs Estate Needs Available Available Starting At Not Available at Account Name Immediately Retirement Not Available David s Death Joint savings Non Qualified David s IRA Susan s IRA Lifestyle Assets Survivor Needs Estate Needs Liquidate Liquidate At Not Asset Name Immediately Retirement Available David s Death Residence Joint Lifestyle v Real Estate Assets Survivor Needs Estate Needs Liquidate Liquidate At Not Asset Name Immediately Retirement Available David s Death Rental property Joint Real Estate v Education Specific Accounts Account Name 529 plan 529 Plan for Julia Figure 125 Set Goals section Survivor Income category Client Co client Objectives page Asset Availability tab Level 2 Plan Goal and Expense Analysis method selected 2 Under Investment Accounts Survivor Needs select one of the following options for each account e Available Immediately if the account is available for survivor needs immediately following the death of the client e Available Starting At Retirement if the account is available for survivor needs upon the survivor s retirement e Not Available if the account is not available for survivor needs Note If you sel
113. ecember 31 2035 is the earliest possible Withdrawal Start Date The earliest withdrawals can begin is the first anniversary of the Contract Date on or after the date the oldest owner reaches the Min Age for Guarantee The keyword Ret ist sets the Withdrawal Start Date at May 1 2035 Add Deferred Annuity lt 4 Previous Entry NextEntry gt Figure 47 Annuity Details dialog box Payout Options tab showing a variable annuity with Guaranteed Withdrawal Benefit income option 5 If the payouts have started select Guaranteed Withdrawals Have Started 6 Under Contract Information enter the date of the contract the maximum withdrawal and the minimum age the annuitant must be before payouts can begin 60 7 If the annuity has a step up feature select the Step up Feature check box enter the first year the step up is available and then select the frequency of the subsequent step up years 8 Under Withdrawal Information enter the start date the withdrawal amount as a percentage of the maximum amount the benefit base and the growth rate of the benefit base Entering payout options for annuitized annuities To specify payout options for an annuitized annuity follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page 2 Click Details for the appropriate annuitized annuity Payout Options Annuitization Guaranteed Guaranteed Period Start Date Taxable Payment
114. ecommended option represents the Recommended Plan scenario which takes into account additional assumptions and strategies including those selected in the What Are My Options dialog boxes found throughout NaviPlan 3 Detailed information is available on the tabs Click the appropriate one Problems Questions or Opportunities 4 To close the Planning Assistant dialog box click Close 206 Viewing and or printing the Planning Assistant reports The Reports tab and the Overview tab provide a synopsis of the other Planning Assistant reports To view or print the Planning Assistant reports follow these steps 1 Open the Planning Assistant select either Current or Recommended and then go to the Reports tab Planning Assistant Financial plan Settings Current v PDF Word Overview Problems Questions Opportunites Reports Select a report Introduction To review the reports listed select an option from the list above The Qualified Contribution Limits report contains information specific to retirement savings plans Here you wil find useful analysis regarding the client s qualified contributions and contribution limits The Cash Flow report contains information related to pre retirement surpluses and deficits This information is useful in determining the impact that the client s goals and associated savings plans will have on their cash flow You should be aware that the system is not designed to perform detaile
115. ect Available Immediately or Available Starting At Retirement the clients accounts are redeemed as required to cover the survivor s income needs 3 If an account should not be used to settle the deceased s estate under Investment Accounts Estate Needs select the Not Available at lt client s co client s gt Death check box 4 Under Lifestyle Assets Real Estate Assets and Business Entity Assets select one of the following options for each lifestyle asset 155 e Liquidate Immediately if the asset will be made available to the survivor when the client or co client dies e Liquidate At Retirement if the asset will be sold when the surviving client reaches retirement e Not Available if the asset will not be sold until both the client and co client die To ensure an asset is not liquidated to cover estate needs when the first client dies select the Not Available at lt client s co client s gt Death check box Note If you select Liquidate Immediately or Liquidate At Retirement the entire lifestyle or real estate asset is liquidated and the proceeds remaining at the end of the year are reinvested at the rate defined on the Set Goals section Survivor Income category Client Co client Objectives page Assumptions tab The Education Specific Accounts section is for information purposes only and cannot be modified The list includes 529 plans Coverdell accounts and UTMAs UGMAs Analyzing
116. ed Tax method and Income Coverage Analysis method selected 3 Select a method for analyzing disability insurance needs e Goal and Expense Analysis assesses disability insurance needs to cover the clients goals and expenses Goals and expenses at the plan level and additional expenses entered for the disability insurance scenario are considered This method is integrated into the rest of the plan 164 e Income Coverage Analysis assesses disability insurance needs to replace the clients income This method is independent of the rest of the plan 4 To override the client s or co client s default retirement age go to the Assumptions tab select Override the Retirement Age for Disability Analysis and then enter the age or date of retirement 5 To override the client s or co client s default life expectancy select Override the Disability Life Expectancy and then enter the age or year of death 6 In the Analyze Disability Through fields enter the last age or year you want to include in reports for the clients disability analysis The adjacent date field updates automatically Benefit payments pay into the plan from the time the policy begins and end on the end date of the disability insurance policy 7 Under ROR on Disability Insurance Proceeds Surpluses amp Liquidations enter return rates if needed 8 To override tax rates select Override Tax Rates and then enter the tax rates you wish to use Changi
117. ed annuity trust details 186 Funded charitable remainder trust details Funded CRT Description Created On Charitable Remainder Trust Dec 312010 Startof Year Start of Year Market Value Cost Basis Annual Payment Amount is only accessible when Annuty is selected from the Type ist Annual Payment Trust Payment Type Amount Payment Frequency Annuity v 0 5 00 Monthly Payment Period Termin Years Term Certain 10 Figure 156 Trust Details dialog box showing qualified charitable remainder trust details Funded charitable lead trust details Trust Tax Non Grantor Rate Payment Distribution Charitable Lead Trust v v 40 00 Annuity v Trust Annual Payment Payment Amount Payment Frequency Payment Period are a Indicates that the 0 Monthly Term Certain v grantor wil not receive a StartofYear Start of Year Present Value Of h ble dedu fi Market Value Cost Basis Remainder Interest gift Created On charta eduction for 0 0 0 Dec 31 2010 the donation Beneficiaries Rejo Rat Figure 157 Trust Details dialog box showing charitable lead trust details Enter beneficiary details for a funded trust You can enter trust income and remainder beneficiaries and allocate a percentage of the trust to each beneficiary This procedure assumes you are already on the Trust Details dialog box Beneficiaries tab which is accessible from the Set Goals section Estate Planning
118. efault values exist clicking this button deletes what you have entered without replacing it Determining the clients investor profile When using NaviPlan Premium with Ibbotson Asset Allocation a questionnaire is used to determine your clients investor profile NaviPlan suggests an asset mix appropriate for clients with that profile This suggested asset mix is used as an asset allocation target a model to achieve throughout the plan If you do not agree with the investor profile determined by the questionnaire results you can select an investor profile manually but you still must fill out the questionnaire first You can also modify the suggested asset mix The purpose of selecting an investor profile is to identify the model portfolio suggested asset mix that is most appropriate for your clients Note If you are using NaviPlan Premium with user defined asset allocation go to the Plan Management section Asset Allocation category Profile page and then skip to step 5 To generate a proposed portfolio follow these steps 1 Go to the Plan Management section Asset Allocation category Questionnaire page A list of questions appears to help you determine your clients investor profile 2 Enter your clients responses to all the questions a lt D Scoring Settings Different investors have different risk tolerances Much of the difference stems from time horizon That is someone with a
119. eld enter a unique name or account number to identify this account holding 4 From the Account Type list select the tax category of the account for example Non Qualified or IRA 5 From the Owner list select the owner of the account 6 In the Market Value field enter the current market value of the account If the account is a non qualified simple account complete the Basis field OR If the account is a qualified account with holdings click the link under Basis to open the Account Details dialog box In the Qualified Basis field enter the amount of the after tax contributions 7 From the Asset Class Weightings list select an asset class if the account is fully weighting in one asset class OR If the account is weighted in multiple asset classes select 42 Manual Classification from the Asset Class Weightings list The Asset Class Weightings Details dialog box opens Assign percentages to various asset classes to equal 100 and then click OK If you have the Ibbotson Asset Allocation option you can search for asset class weightings See Searching the asset classifier database on page 73 8 If you re entering an account with holdings see Entering holdings on page 43 From the Account Details dialog box accessed by clicking the Details button you can e Stop a portion of an account from being included in asset reallocation by entering either the percentage or the dollar value of the amount to
120. enjoyment should be entered as lifestyle assets To enter real estate assets follow these steps 1 Go to the Enter Financial Data section Net Worth category Assets Liabilities page To add anew real estate asset click Add Real Estate The new data entry row appears If applicable enter the market value and rental income net of property taxes for the real estate asset To enter additional details for an existing real estate asset click Details The Real Estate Details dialog box opens Community Description Owner Real Estate Joint v Portion not Po Depreciable Depreciation Purchase Purchase S or of Amount per Number of Date Amount Purchase Amount Year Years Dec 312010 0 0 0 0 Market Cost Valuation Value Basis Date 0 0 Aug 9 2011 Rental Information Additions Sale Information Return Rates Rental Expenses Rental or of Net Rental Annual Rental Income Rental Income Frequency Income Growth Rate Start Date End Date Delete 0 0 Monthly v 0 0 00 Aug9 2011 Death 2nd X Add Income Expense Figure 27 Real Estate Details dialog box Enter the purchase and valuation details of the real estate asset Go to the Rental Information tab and then enter the rental income net of property taxes expenses frequency growth rate etc For properties that have rental income from multiple sources click Add Income Expenses to add another data entry row To enter the cost of additions ma
121. entage of that expense that insurance needs to cover 9 If your clients anticipate additional long term care expenses under Additional Long term Care Expenses click Add LTC Expense and then enter the expense details in the fields that appear 10 For expenses that occur when long term care begins the Start Date field displays LTC You can enter a later start date if necessary 173 11 You can change the end date by editing the Number of Years or the End Date fields 12 Goto the Income Adjustments During LTC tab All incomes entered into NaviPlan Select for this client and received by the client during the long term care period appear on this tab Assumptions LTC Expenses Income Adjustments During LTC Asset Availability Instructions Existing Incomes Description Frequency Amount Start Date End Date Infl Add l Owner in LTC H y 100 Figure 142 Set Goals section Long term Care category Client Objectives page Income Adjustments During LTC tab Level 2 Plan 13 In the Owner in LTC field specify the percentage of the income available to the client or co client during long term care 14 Go to the Asset Availability tab Assumptions LTC Expenses Income Adjustments During LTC Asset Availability Instructions Investment Accounts Available During Account Name LTc Not Available Joint savings Non Qualified David s IRA Susan s IRA Lifestyle Assets Asset Name Liquidate at LTC Not Ava
122. equired minimum distribution payments on the pre 1987 portion of the account will be delayed until retirement or age 75 whichever is later 8 If the client s retirement date is after age 702 the milestone is defined on the Plan Management section Assumptions category Milestones page and the client is permitted to delay required minimum distributions beyond this age select the Delay RMDs to Retirement check box Note If the client s retirement begins before age 701 this check box does not appear This step does not apply to IRA spousal IRA Roth IRA Roth 401 k and Roth 403 b accounts 50 51 If the Delay RMDs to Retirement check box is not selected NaviPlan Premium ensures that contributions to the plan cease no later than the year in which the client turns 70 and that RMDs will begin in the year in which the client turns 70 even if the client s retirement age has been defined as older than 70 For Other Salary Deferral Generic Employer Paid Plan or Generic Self Employed Plan select the Treat As Deferred Compensation Plan i e no RMDs check box These account types do not require minimum distributions Savings Strategy Return Rates Qualified Account Setup Account Fee Setup Primary Beneficiary Susan Contingent Beneficiary Estate Multi Generational Waive early withdrawal penalties Treat As Deferred Compensation Plan i e no RMDs Delay RMDs to Retirement State taxable RMD Payment Fre
123. eral Account Index Index Payment Partial Payments Rate AIR Override per 1000 Settlement 0 00 100 00 100 00 Variable Subaccounts Variable Post Annuitization Payment Partial Payments Annual M amp E Fee AIR Override per 1000 Settlement Add Deferred Annuity lt Previous Entry NextEntry gt Figure 46 Annuity Details dialog box Payout Options tab showing a variable annuity with Amount Certain income option 4 Select the start date for the annuity and the payment frequency If the payments are to be made at the end of the selected payment period select the At End Of Period check box 5 If the annuity uses the Term Certain income option enter the number of years the annuity will pay out OR If the annuity uses the Amount Certain income option enter an amount in the Payment per 1000 field OR If the annuity uses the Life Income income option enter the guaranteed number of years the annuity will pay out 6 For variable annuities if payouts from the General Account are indexed select the Index Payment check box and then enter a value in the Index Rate field 7 If the annuity uses the Life Income income option and you want to change the Payment per 1000 amount select Override and then enter a new amount 8 For variable annuities enter an assumed interest rate AIR for the General Account 9 If the entire value of the annuity will not be redeemed enter the percentage of value that will be used f
124. ered for all business entities except for C corporations 38 To enter the activity for a business entity follow these steps 1 In the Business Entity Details dialog box go to the Activity tab Bale Information Return Rates AMT Income Expenses Distributions Adjustments Frequency 0 0 0 0 Annual v Infl Add l Total 0 00 0 00 Add Business Entity lt Previous Entry NextEntry gt OK Figure 29 Business Entity Details dialog box Activity tab 2 In the Income field enter the dollar value of the income generated by the business entity asset This amount will not affect the clients personal cash flow 3 In the Expenses field enter the dollar value of expenses incurred by the business entity This amount will not affect the clients personal cash flow 4 In the Distributions field enter the amount that will flow into this year s cash flow to fund the current year tax liability 5 If applicable enter an amount in the AMT Adjustments field This amount is a tax item only It can be positive or negative and does not affect the clients personal cash flow The amount entered in AMT Adjustments will be reported as passive activities in the Income Tax Details report in the AMT section of the report 6 From the Frequency list select the frequency of the income 7 If the activity is to be indexed to inflation select the Infl check box and then if applicable enter a percentage The
125. et by Calculated As Amount Waiting Period Benefits Period Social Sec None 3 Months v 65 Yearsof Age v Premiums Cease Cease Payer Amount Frequency atAge onDate Infl Add l David v 25 Monthly v 65 Ret Owner 0 00 Add Disah ty Insurance h lt Previous Entry Next entry _ Figure 96 Disability Insurance Details dialog box Level 2 Plan 7 Enter the remaining details about the policy 8 If the disability insurance policy benefits will be offset by Social Security disability benefits select the Offset by Social Sec check box This check box is used for informational purposes only Note Clicking z next to Add Disability Insurance opens a list where you can select New Disability Insurance or Copy of Current If you select Copy of Current NaviPlan creates a copy of the current policy Use this when you have similar items to add to avoid re entering data You can view or edit other disability insurance policies by clicking Previous Entry or Next Entry Entering long term care insurance policies 120 To enter your clients existing long term care insurance policies follow these steps 1 Go to the Enter Financial Data section Insurance Coverage category Insurance Coverage page Under Long term Care Insurance default long term care insurance policies appear When you create a new plan NaviPlan creates a default entry for each client minimizing data entry To add a long ter
126. etails As well as the usual funding details for the funded GRT you must also enter income distribution details Funded GRT If the Jn Kind check box is selected and Description Grantor eq the income earned by the trust assets is Grantor Retained Trust David not enough to cover the trust payments an in kind transfer makes up the balance ee coe carat elem of the payment If it is not selected trust 0 a E assets may be sold to cover trust a payments resulting in tax consequences Annual Payment Trust Payment Type Amount Payment Frequency Annuity v 0 Monthly Payment Period Term in Years Term Certain v 10 Figure 154 Trust Details dialog box showing grantor retained trust details Funded rolling grantor retained annuity trust details NaviPlan Premium supports the modeling of a series of short term GRATs where the annuity payments of previous GRATs fund future GRATs automatically Setup GRAT Series Funded Rolling GRAT Created On Description Grantor End of Year Roling GRAT Wayne y 20tt IRC 7520 GRATsin GRAT Termin Total Years Payment Rate Series Years Remaining Frequency __ 1 00 2 L 2 Final Payment Transfer In Kind To Account Beneficiaries Return Rates gt Instructions R inder B ficiari Click the Add Beneficiary button to create a new row Add Beneficiary gt Pro ata Figure 155 Trust Details dialog box showing rolling grantor retain
127. etails for the appropriate account The Account Details dialog box opens Go to the Return Rates tab Account Details Account Details Investment Portfolio Description Account Type Owner New account IRA v David v Market Qualified Decedent s Value Basis Inherited Date of Death 0 0 Aug 9 2011 Holdings Savings Strategy Redemptions Qualified Account Setup Account Fee Setup v Override Pre Retirement Retirement Interest 0 00 0 00 Dividends 1 83 1 83 Capital Gains 7 57 7 57 Tax Free 0 00 0 00 Deferred Growth 0 23 0 23 Total 9 63 9 63 Standard Deviation 23 64 23 64 lt 4 Previous Entry NextEntry gt Figure 38 Account Details dialog box Return Rates tab 4 Select the Override check box and then revise the return rates and standard deviations Setting up beneficiaries for a non qualified account You can specify primary and contingent beneficiaries for non qualified accounts 49 To set up beneficiaries follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page Under Qualified and Non Qualified Accounts click Details for the appropriate non qualified account The Account Details dialog box opens Go to the Beneficiaries tab Savings Strategy Redemptions Return Rates Account Fee Setup Primary Beneficiary g Clie Contingent Beneficiary Julia v 1 Previous Entry Next Entry gt Figure 39 Account Details dialog box Benef
128. evel 2 This procedure only applies if you are using the Detailed Tax method NaviPlan Select automatically calculates many tax credits and deductions based on the information you enter in client files and plans You can enter any applicable credits or deductions that are not automatically calculated by NaviPlan Select on the Enter Financial Data section Tax Details category Tax Details page The clients cash flow funds these transactions Unused charitable donations alternative minimum tax carryforward credits and capital loss carryovers are entered in the Plan Management section Assumptions category To avoid entering tax credits or deductions more than once review the income tax reports available from the Reports menu To enter tax deductions follow these steps 1 Go to the Enter Financial Data section Tax Details category Tax Details page 122 Instructions Misc Tax Deductions Description Owner Type Amount Start Date End Date Details Delete Below the Line Dedu David wv Below the Line Deduction v 0 Jan 12011 GH Death Owner B x Misc Tax Credits Description Owner Type Amount Start Date End Date Details Delete Refundable Tax Cre David v Refundable Tax Credit v 0 Jani2011 Death Owner EF X Add Credit 7 Figure 99 Enter Financial Data section Tax Details category Tax Details page Level 2 Plan 2 To enter a deduction click Add Deduction and then select either Above the
129. event of death Enter a unique description for each expense and then enter all appropriate data Note Lump sum needs entered on the Client Co client Objectives page are also listed here 6 Under Estate Expenses Naviplan lists estate expenses previously entered on the Set Goals section Estate Planning category Estate Expenses page 7 To indicate when accounts are to be made available for survivor and estate needs complete the procedure Assigning asset availability if both clients die on page 162 Using the Income Coverage Analysis method if both clients die The Income Coverage Analysis option must first be selected on the Set Goals section Survivor Income category Both Objectives page See Analyzing insurance needs if both clients die Level 2 on page 156 To use the Income Coverage Analysis method follow these steps 1 Go to the Ongoing Income Needs tab 160 Assumptions Ongoing Income Needs JLump Sum Needs Asset Availability gt Instructions Current Income Level Calculator Household Pre tax Income tocover Amount x 0 0 Add to Support for Dependents Support for Dependents End Description Dependent Frequency Amount Age Start Date End Date Infl Add l Delete Ongoing Expenses Julia v Annual v 96 800 21 Jan 12012 Jan 12019 Y 0 00 X Add Support for Dependent Education Expenses Number Annual to Description Name Start Age of Years Amount Cover College Education Julia 18
130. fication Redemptions Jp Redeem Amount it RedeemFrom All or Frequency Penalties StartDate EndDate Infl Add l Dese 150 Monthly v Aug 9 2011 Aug 12012 mH 0 00 X 500 Monthly v Ret Co die m Death Co dan V 0 00 X Substantially Equal Periodic Payments SEPP Use the Choose Account list below to select an account and then dick Add SEPP Strategy to create a new strategy Choose Account v Add SEPP Strategy Figure 87 Enter Financial Data section Strategies category Redemptions page Level 2 Plan Detailed Tax method showing redemptions 3 In the Amount or field enter either the percentage of the account to redeem or an amount to redeem periodically based on the selection from the Frequency list OR To redeem the entire account as a lump sum select the Redeem All checkbox 4 From the Frequency list select how often the redemptions will occur 5 If applicable for qualified accounts select the Waive Early Withdrawal Penalties check box to exclude penalties due if the asset is withdrawn early 6 In the Start Date field enter the date the redemption should start 7 In the End Date field enter the date the redemptions should end Note The End Date field is not accessible if Redeem All or Lump Sum is selected 8 To index the strategy for inflation select the Infl check box To index by an amount greater or less than the default inflation rate enter a different percentage in th
131. fit lt PreviousEntry NextEntry gt Figure 80 Defined Benefit Pension Details dialog box Details tab Level 2 Plan Benefit Formula method 98 oh 10 In the Description field enter a unique name for the pension From the Member list select the pension owner Enter either the Benefits Start Age or the Benefits Start Date Enter the percentage of pension benefits to be paid to the surviving spouse when the pension owner becomes deceased The Benefit Reduction for Suvivor Coverage field becomes accessible Enter the percentage in this field If the pension is based on an income under Linked Incomes select the check box es for the appropriate income s These check boxes only appear if incomes are entered in the plan Enter information from the available pension documents Level 2 gt If a pension is linked to a salary and if under Benefit Payout Options the Method of Payout is set to Life Income the benefits that will be paid in the first year appear under Estimated Annual Benefit when Benefits Begin Click the Benefit Payout Options link Additional fields appear From the Method of Payout list select Life Income or Lump Sum 11 12 13 If you select Lump Sum you must also select a Transfer Payout to destination To transfer the lump sum payment to an IRA select an IRA from the list or select New IRA The default name for the new IRA asset is Transfer From lt description of pension gt The newly
132. fying a loan 105 106 NaviPlan Premium calculates the regular loan payments required for liabilities entered in the plan You can modify the principal of an existing loan either by making additional principal payments over and above the calculated regular loan payments or if the loan is either an interest only or last period payment type by adding to the principal Debt modification strategies can be entered in the following locations e Enter Financial Data section Strategies category Debt Modification page e Liability Details dialog box Debt Modification tab for an individual liability To modify the principal of a loan follow these steps 1 Go to the Enter Financial Data section Strategies category Debt Modification page OR Go to the Enter Financial Data section Net Worth category Assets Liabilities page click the Details button for a liability and then go to the Debt Modification tab Savings Debt Modification Redemptions Deficit Coverage Surplus instructions Direct Outstanding Increase FundsTo Amount Amount Frequency StartDate End Date Principal Infl Add l Delete Mortgage 125 000 0 Annual v Jan 12011 p m 0 00 X Choose Liability v Add Debt Modification To view or edit how surplus funds are directed dick Surplus Cash Usage Surplus Cash Usage Figure 86 Enter Financial Data section Strategies category Debt Modification page Level 2 Plan Detailed Tax meth
133. gs of the portfolio Select the Optimize option if you want to use the Ibbotson Mean Variance Optimizer to generate a new portfolio based on an efficient frontier graph 25 Note If you do not have Ibbotson Asset Allocation or you do not have permission to use mean variance optimization the Customize Asset Mix button will not appear on the Profile page Editing Asset Class Weightings The Weightings option is only available on the Profile page Note If you do not have the user permission to override the asset class weightings this option is not available To edit asset class weightings follow these steps 1 If applicable scroll to the bottom of the Profile page 2 Click Customize Asset Mix and then select Weightings Asset Class Weightings v Override default asset dass weightings Class Class Class Name Percentage Class Name Percentage Large Cap Growth Equity 11 00 Large Cap Value Equity 14 00 Mid Cap Equity 9 00 Small Cap Equity 6 00 US REITs 3 00 International Equity 14 00 Emerging Markets Equity 3 00 Long Term Bonds 5 00 Intermediate Term Bonds 12 00 Short Term Bonds 10 00 High Yield Bonds 4 00 International Bonds 6 00 Cash 3 00 Total 100 00 OK Cancel Figure 20 Asset Class Weightings dialog box 3 Select the Override default asset class weightings check box and then enter the desired weightings The total must equal 100 4 Click OK The Asset Class Weightings dialog box closes The Pr
134. gs strategies lt Previous Entry Next Entry f OK J Cancel Figure 67 Income Details dialog box Level 2 Plan Enter detailed information If you are entering a salary bonus or self employed income type that is linked to a defined benefit pension or is excluded from either group disability insurance Social Security or Medicare tax calculations or savings strategies click the Other Options link if necessary and then make the appropriate selections From the Income Details dialog box you can add another income by clicking z next to Add Income and then selecting New Income or Copy of Current if you select Copy of Current NaviPlan creates a copy of the existing income You can view or edit other incomes by clicking Previous Entry or Next Entry Entering Social Security benefits Level 1 To enter Social Security benefits into the plan follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page 2 Click the Social Security Details link Instructions Client Co Client Benefit Method Select a Social Security method Benefit Formula Use this method to automatically calculate Social Security benefits based on the annual income entered on the Cash Flow page Estimate Benefit Use this method to enter benefit amounts directly from a Social Security Statement Currently Receiving Benefits Use this method to enter benefit amounts that the client is currently receivi
135. hat cannot be readily changed or eliminated by the clients such as utility bills and rent payments Expenses that flow into retirement years appear on the Set Goals section Retirement category Retirement page These retirement expenses also appear on the Cash Flow page under Expenses 7 From the Expense Details dialog box you can add another expense by clicking z next to Add Expense and then selecting New Expense or Copy of Current If you select Copy of Current NaviPlan creates a copy of the existing expense You can view or edit other expenses by clicking Previous Entry or Next Entry Entering surplus expenses While the clients plan may be projected to have surplus cash this surplus often does not materialize because the clients have underestimated their regular expenses or incurred unexpected expenses such as car repairs that use up this projected cash surplus If you think the plan s projected surplus is unrealistic NaviPlan Premium allows you to use up the projected cash surplus by entering a surplus expense strategy To enter surplus expenses follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page When you create a new plan NaviPlan automatically populates a default entry under Surplus Expenses 101 b Instructions Incomes Expenses Description Member Amount Details Delete Description David s income David v 75 000 yr BF X Housing e g utilities
136. he amounts automatically To use this feature follow these steps a Click the Fill Values link b From the Column to Fill list select the column of values you want to fill c Enter the criteria you want NaviPlan to use to calculate the amounts d Click Fill Entering a benefit formula pension To enter a Benefit Formula pension income follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page Under Defined Benefit Pensions you can enter defined benefit pensions When you create a new plan NaviPlan creates a default estimate benefit pension for each client Any pensions that were entered on the Set Goals section Retirement category Retirement page appear under Incomes Instructions Incomes Expenses Description Amount Details Delete Description David s income 75 000 EF xX Housing e g utilities repairs Susan s income 60 000 BF X Food David s bonus 7 000 Br X Transportation g gas insurance Entertainment e g restaurants m Personal e g clothing hobbies Other e g child care travel Add Expense Add Income Other Expenses Description Type Amount Social Security Mortgage Principal and Interest 1 000 mo Social Security Details College Education Education 6 000 yr Defined Benefit Pensions Surplus Expenses Amount of Start Description Member Type or Details Delete Description Surplus Year End Year Detsis Delete David s pe
137. he date the SEPP will start From the Frequency list select the payment frequency From the Distribution Method list select the method of payment If applicable select Pro Rate First Last Payments To specify the life expectancy table to use for calculating payments and an interest rate click Details The SEPP Strategy Details dialog box opens SEPP Strategy Annual Account Distribution Description Amount Start Date Frequency Distribution Method David s IRA Oct 11 2011 Annual v Amortization Pro Rate First Last Beneficia 72 t Interest ry Payments Life Expectancy Table Date of Birth Rate Single Life Expectancy v N A 2 0 00 3 PK Figure 37 SEPP Strategy Details dialog box For more information about the SEPP Strategy Details dialog box click Help 2 In the SEPP Strategy Details dialog box click OK to save the SEPP details The dialog box closes In the Account Details dialog box click OK to save the SEPP strategy The Account Details dialog box closes Overriding calculated return rates for accounts 48 NaviPlan Premium calculates an overall return rate for an account based on the return rates and dollar value of the holdings in the account You can override the return rates for any account To override calculated return rates for an account follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page Under Qualified and Non Qualified Accounts click D
138. he following year 4 If you expect lump sum needs under Additional Lump Sum Needs click Add Lump Sum Need and then enter the details of the need in the fields that appear 5 Once all lump sum needs are entered go to the Annual Income Needs tab Assumptions Lump Sum Needs Annual Income Needs Income Available Asset Availability Instructions Annual Income Needs Income Need Description Member pre tax Frequency Start Date End Date Infl Add l Delete Lifestyle Expenses David v 5 000 yr Annual wi Jani12012 Ret Owner v 0 00 X Add Annual Income Need Education Goals Number Annual to Description Name Start Age of Years Amount Cover College Education Julia 18 4 10 000 100 Figure 137 Set Goals section Disability Income category Client Co client Objectives page Annual Income Needs tab Level 2 Plan Income Coverage Analysis method selected 169 6 If you anticipate annual income needs under Annual Income Needs click Add Annual Income Need and then enter the pre tax income need details in the fields that appear 7 Under Education Goals enter the percentage of education goals the disability income will need to cover This section is only available if education goals are entered in the plan 8 Once all annual income needs are entered go to the Income Available tab Disability insurance policy benefits Social Security benefits salaries rental income and pensions from the non d
139. he life insurance needed to replace income lost from the death of the client or co client This method is independent of the rest of the plan 4 To change the survivor s retirement age for the life insurance calculation go to the Assumptions tab select the Override the Retirement Age for the Survivor check box and then enter the retirement age or date The default values originate from the 147 Plan Management section Assumptions category Milestones page 5 To change the survivor s life expectancy for the life insurance calculation select the Override the Survivor Life Expectancy check box and then enter the life expectancy age or year The default values originate from the Plan Management section Assumptions category Milestones page 6 Under ROR on Cash Flow Surpluses amp Liquidations enter return rates vie To override the tax rates shown select the Override Tax Rates check box and then enter the tax rates you wish to use Changing the tax rate here only affects the survivor s tax rates for life insurance calculations It does not affect rates used in the rest of the plan The default values on this page originate from the Plan Management section Assumptions category General page Note The state tax rate is added to the displayed average marginal and long term capital gains tax in income tax calculations State tax deductions at the federal level are considered 8 Complete one of the following
140. hese steps 1 Go to the Enter Financial Data section Strategies category Surplus page 2 If the clients will be saving some or all of the cash flow surplus from the Choose Account list under Surplus Savings select the account or annuity to which you want to save surplus funds and then click Add Surplus Savings Strategy A new data entry row appears 112 Savings Debt Modification Redemptions Deficit Coverage Surplus Instructions Surplus Savings Direct Surplus To of Surplus Start Year End Year Non qualified annuities Joint Non Qualified 100 00 2011 fA Ret ist T Non qualified annui Add Surplus Savings Strategy Surplus Expenses of Start Description Owner Surplus Year End Year Delete Surplus Expense Joint v 0 00 2011 fi Death 1y n X Add Surplus Expense To view or edit how surplus funds are directed dick Surplus Cash Usage Surplus Cash Usage Figure 91 Enter Financial Data section Strategies category Surplus page Level 2 Plan Detailed Tax method Enter the percentage of surplus income the clients will save to the selected account and then enter the time frame for the strategy Repeat steps 2 3 until all surplus savings strategies are entered Note Ensure that the total percentage of surplus savings entered for the same year is not greater than 100 If the clients will be spending some or all of the remaining cash flow surplus under Surplus Expenses edit
141. hey allow you to copy the estate distribution details from one spouse to the other spouse Add Trust Create QDOT CST gt General Bequests gt Asset Bequests Figure 163 Set Goals section Estate Planning category Estate Strategy page after the Convert to Detailed button is clicked Note Before setting up a general bequest asset bequest or testamentary trust go to the Assumptions page and review the estate distribution details 3 On the Estate Distribution tab you can set up general bequests asset bequests and testamentary trusts e Click the type of trust or bequest you want to create and then click the Add Trust Add General Bequest or Add Asset Bequest button e Select the appropriate type from the list and then enter the details of the trust or bequest 4 To change assumptions about how assets will be disposed of after death go to the Asset Estate Details tab and then enter the asset estate details 194 only These settings do not affect life expectancy options in other reports Estate Distribution Asset Estate Details Gifting Trusts Living Trust Non Qualified and Lifestyle Probate Admin Not Available Primary Contingent Asset Name Market Value New Owner Fees Fees ForEstate Needs Beneficiary Beneficiary Joint savings Non 15 000 v Julia v Susan s saving No 5 000 v Estate v Real Estate Joint 500 000 v v 520 Thomas St J 300 000 v v Qualified and Ann
142. hin an open plan go to the Notes menu and then select Add Note The Notes dialog box opens Figure 178 Notes menu Add Note Notes dialog box 2 Enter the text into the dialog box and then use the formatting buttons where applicable Note A spelling checker is not available You can copy and paste plain text from Microsoft Word into the Notes dialog box Graphics are not supported To view and print all notes that were entered for this plan follow these steps 1 On any page within an open plan go to the Notes menu and then select View All Notes The Notes Summary dialog box opens Notes Summary The following is a list of all notes that were entered Assumptions gt General User defined Note Nov 15 2011 Client requests more information about Figure 179 Notes menu View All Notes Notes Summary dialog box 2 To edit the notes click Details The Notes dialog box opens where you can edit the information 3 To print the notes click Print 218 Index 5 529 plans entering 52 A accessing Help 5 support 5 account fees setting 52 accounts allocating to goals 139 beneficiaries 49 entering 41 entering savings strategies 45 overriding calculated return rates 48 regular savings strategies 105 setting account fees 52 setting up qualified 50 setting up redemptions 46 63 setting up SEPP strategies 47 accumulation goals entering 125 AMT capital loss carryovers 15 AMT carryforward c
143. iciaries tab joint analysis From the Primary Beneficiary list select the primary beneficiary Note For plans using a joint analysis the Primary Beneficiary is always the surviving client From the Contingent Beneficiary list select the contingent beneficiary Setting up a qualified account This procedure applies to qualified accounts other than 529 plans For instructions on setting up a 529 plan see Setting up a 529 plan or Coverdell account on page 52 Note The options available on the Qualified Account Setup tab are dependent on the Account Type selected To set up a qualified account follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page 2 Under Qualified and Non Qualified Accounts click Details for the appropriate qualified account 3 Go to the Qualified Account Setup tab 4 Select the primary and contingent beneficiaries 5 If income with respect to a decedent IRD taxes are not applicable select the Multi Generational check box If this check box is selected the asset will pass to the beneficiary and not to the client or co client Estate taxes may be due but IRD taxes will be avoided 6 To waive early withdrawal penalties for an account or a fixed or variable annuity select the Waive early withdrawal penalties check box 7 If the plan type is 403 b in the Pre 1987 Account Balance field enter the value of the plan on December 31 1986 R
144. ick OK Enter the remaining details of the life insurance policy Note Clicking z next to Add Life Insurance opens a list where you can select New Life Insurance or Copy of Current If you select Copy of Current NaviPlan creates a copy of the existing life insurance policy Use this when you have similar items to add to avoid re entering data You can view or edit other life insurance policies by clicking Previous Entry or Next Entry Viewing and defining future values and premiums of a life insurance policy Level 2 117 To view and define the premium schedule the future value of any death benefits and the prospective cash surrender value of an insurance policy on an annual basis follow these steps 1 2 Go to the Enter Financial Data section Insurance Coverage category Insurance Coverage page Click the Details button for the life insurance policy The Life Insurance Details dialog box opens to the Details tab Go to the Future Values tab On this tab you can view the modal premiums death benefits and estimated cash surrender values for each year Future Benefits v Modify the Calculated Values Modal Accumulated Age Year Premium Death Benefit Estimated CSV Withdrawals Liabilities Liability 2011 30 375 000 S 2012 300 375 000 2013 300 375 000 2014 300 375 000 2015 300 375 000 2016 300 375 000 2017 300 375 000 2018 300 375 000 2019 300 375 000 2020 300 375 000 51 2021 300 375 000
145. ilable Residence Joint Lifestyle Real Estate Assets Asset Name Liquidate at LTC Not Available Rental property Joint Real Estate Education Specific Accounts Account Name 529 plan 529 Plan for Julia Figure 143 Set Goals section Long term Care category Client Objectives page Asset Availability tab Level 2 Plan 15 Under Investment Accounts select one of the following options for each account e Available During LTC if the account is available for long term care needs immediately when the client enters long term care 174 175 e Not Available if the account is not available for long term care needs 16 Under Lifestyle Assets Real Estate Assets and Business Entity Assets select one of the following options for each asset e Liquidate at LTC to sell the asset if a client enters long term care e Not Available to hold the asset during the client s long term care period The Education Specific Accounts section is for information purposes only and cannot be modified The list includes 529 plans Coverdell accounts and UTMAs UGMAs Chapter 9 Entering the clients estate plan In NaviPlan Premium you can use the Estate Planning module to enter detailed information about the clients existing estate plan If you want to examine various estate planning scenarios that might meet the clients estate needs see Entering estate planning scenarios in the Level 1 and Level 2 Plan A
146. ile investing the remainder of their assets for growth Bucketing retirement assets in this way allows you to demonstrate the concept of shifting these resources into stable vehicles as well as growing the pool of managed assets over time 1 To model a bucketing strategy go to the Bucketing tab and then complete the following steps a Click the Estimate button this will open the Distribution Bucket Estimator calculator b Enter the number of years over which the bucket investment account will cover needs and click Ok c The amount determined by the calculator will appear in the Target Balance field d Enter the remaining details of the bucketing strategy Liquidation Order Redemptions CBucketing Distribution Bucket Target Balance Asset Class Return future Infl Add l Weightings Rates Estimate 88 112 vi 0 00 Cash v 1 02 fa Figure 106 Liquidation Strategies dialog box Bucketing tab Overriding the proposed investor profile for a goal Level 2 Plans 131 You can review the proposed investor profile for the plan on the Plan Management section Asset Allocation category Profile page to see if it is appropriate for the goal If not to override the proposed portfolio follow these steps 1 Go to the Set Goals section Retirement Education or Major Purchase category lt goal gt page 132 2 Click the Asset Allocation button The Asset Allocation Details dialog box open
147. informational purposes only and do not affect the plan but will be included in client reports Enter your clients responses to the questionnaire and then click OK to close the Estate Questionnaire dialog box Entering funded trusts 180 Funded trusts are trusts that are currently in place and funded For example if your clients have established a credit shelter trust but both spouses are still living the trust has not been funded and would not be entered here In the case of an irrevocable life insurance trust ILIT if a life insurance policy was transferred to the trust in a previous year then the trust is considered funded and should be entered on the Set Goals section Estate Planning category Funded Trusts page If the life insurance policy will be transferred in the current plan year or in a future year the trust is not considered funded and should not be entered here You can enter the following types of funded trusts e Credit shelter trusts CST e Irrevocable trusts e Irrevocable life insurance trusts ILIT e Qualified terminable interest property trusts QTIP e Qualified personal residence trusts QPRT e Marital trusts e Generic testamentary trusts e Family limited partnerships FLP e Grantor retained annuity trusts GRAT e Grantor retained trusts GRT e Charitable remainder trusts CRT e Charitable lead trusts CLT These trusts can only be entered in plans created using the Detai
148. ing included in asset reallocation follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page 44 Click the Details button The Account Details dialog box opens On the Holdings tab in the Hold field enter either the percentage or the dollar value of the specific holding that should be excluded from asset reallocation Entering savings strategies for accounts 45 Savings strategies can be set up either when entering an account or at a later time To define regular savings or contributions to an account follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page Under Qualified and Non Qualified Accounts click Details for the appropriate account The Account Details dialog box opens Go to the Savings Strategy tab 4 Click Add Savings Strategy A new data entry row appears Account Details Investment Portfolio Description Account Type Owner Goal Funding IRA IRA v David v Retirement v Market Qualified Decedent s Value Basis Inherited Date of Death 0 Holdings Savings Strategy JRedemptions Return Rates Qualified Account Setup Account Fee Setup Amount or of Salary Pre tax Post tax Frequency StartDate End Date Infl Add l Delete 250 0 00 Monthy Y Jan12011 amp Ret Owner v 0 00 X Add Savings Strategy Add Account lt 4 Previous Entry NextEntry gt Figure 34 Account Details di
149. ing Benefits Use this method to enter benefit amounts that the client is currently receiving Figure 74 Social Security Details dialog box Eligible Dependents tab Level 2 Plan Estimate Benefit method selected 9 Click OK The Social Security Details dialog box closes 92 Entering current Social Security benefits Note This option is only accessible when the client reaches age 62 on or before the plan date or the client is currently disabled check box selected on the Milestones page If the client is receiving a Social Security benefit based on a deceased spouse do not enter the benefit in the Social Security Details dialog box Instead enter it under Incomes by clicking Add Income and then selecting Social Security from the list see Entering regular or lump sum incomes on page 83 To enter Social Security benefits that the client or co client is currently receiving because they are retired or disabled follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page 2 Under Social Security click the Social Security Details link The Social Security Details dialog box opens 3 Go to the Client or Co Client tab and then select Currently Receiving Benefits gt Instructions Client Co Client Benefit Method Select a Social Security method Benefit Formula Use this method to automatically calculate Social Security benefits based on the annual income entered o
150. ing one of two methods Current Rebalanced or Current Not Rebalanced When Current Rebalanced is selected NaviPlan assumes the accounts are regularly rebalanced to maintain their allocation and applies the weighted average rate of return to accounts that are linked to goals When Current Not Rebalanced is selected NaviPlan assumes the portfolio is never rebalanced and the weighted average return fluctuates as the allocation adjusts as per market conditions By default NaviPlan uses the setting defined on the User Preferences Plan Settings dialog box Current Portfolio Setting tab User Preferences menu Plan Settings To change the portfolio balancing method for the plan follow these steps 1 Go to the Plan Management section Assumptions category Current Portfolio Setting page 14 Assumptions David Lee and Susan Lee New plan Level 2 Current Portfolio Setting apital Loss Carryovers AMT Carryforward Unused Charitable Donations Back Next gt This option rebalances the accounts linked to a goal and uses the weighted average rate of return of the linked assets Current Not Rebalanced This option does not rebalance the accounts linked to a goal Each account linked to a goal maintains a separate rate of return Figure 8 Plan Management section Assumptions category Current Portfolio Setting page 2 Do one of the following Current Rebalance the accounts linked to a goal a Reba
151. ings Strategy tab 4 If you are entering savings for a variable annuity enter the percentages to be directed toward the general account and the subaccounts Click Add Savings Strategy A new data entry row appears Variable Annuity Description Account Type Owner Annuitant Beneficiary Income Option TRA IRA v David David Susan Amount Certain General Account Subaccounts Market Qualified Valuation Market Pre Annuitization Value Basis Date Value Cost Basis Annual M amp E Fee Goal Funding 0 0 Aug 9 2011 0 00 Subaccounts Payout Options Savings Strategy Redemptions Return Rates Qualified Account Setup General Subaccounts Direct Savings to 50 50 Amount or of Salary Pre tax Post tax Frequency StartDate End Date Infl Add l Delete 250 0 00 Monthly Y Jan12011 Ret ist 0 00 X Add Savings Strategy a Figure 49 Annuity Details dialog box Savings Strategy tab showing an IRA Enter either the dollar amount or percentage of income to be contributed along with the frequency of the savings contribution Ensure dollar values under 25 are entered with a dollar sign or they are assumed to be percentages For certain qualified annuities to have the employee contribute the maximum amount as the federal limit increases enter max in the appropriate Salary field 7 Enter the start and end dates of the strategy To index the strategy for inflation select the Infl check box To inde
152. iption Add t Move Up Move Down Enter the steps involved in implementing the plan Action Plan D ipti Add t Move Up Move Down Figure 173 Results section User defined Text category User defined Text page 6 210 To edit an existing entry click the appropriate Details button to reopen the User Defined Text Entry dialog box for that entry To reorder entries within a category click the Move Up or Move Down buttons Repeat steps 2 7 until all your entries are complete Generating client and progress reports Client report Financial Needs Assessment Asset Allocation Financial Needs Summary Retirement Distribution Summary Financial Needs Analysis 211 The following client reports are available in NaviPlan Select for Level 1 and Level 2 Plans and are accessible from the Results section Client Reports category Client Report page Description This report provides an overview of the clients current financial situation and indicates whether the clients goals are attainable This report demonstrates the effects that the clients time horizon risk tolerance and asset allocation have on their portfolio returns The clients portfolio is calculated based on their existing accounts and related holdings This report provides an overview of your clients current financial situation with special emphasis on their retirement goal Typically this report is used when the recommended
153. isabled client are listed Assumptions Lump Sum Needs Annual Income Needs Income Available Asset Availability Instructions Income Available During Disability Description Member Income Type Frequency Amount Start Date End Date Infl Add l casi Delete E Br David s pension David v Life Income 0 May 12035 mov 0 00 Br E mv Br Susan s income Susan wv Salary v Annual v 60 000 Jan 12012 Ret Owner HY 0 00 Eg Other Taxable David v Other Taxable Monthy v 0 Ret Owner GA Death Owner mi v _ 0 00 E amp F Add Disability Income Figure 138 Set Goals section Disability Income category Client Co client Objectives page Income Available tab Income Coverage Analysis method selected 9 Enter any additional incomes that the client or co client will receive during disability 10 To add a new row click Add Disability Income 11 To indicate when assets are to be made available during the disability period complete the procedure Indicating when accounts are to be made available on page 170 Note To delete any changes and revert to the disability incomes that were created on the Enter Financial Data section Cash Flow category Cash Flow page click Reset Indicating when accounts are to be made available On the Set Goals section Disability Income category Client Co client Objectives page Asset Availability tab for either the Goal and Expense Analysis method or the Income C
154. it 80 00 yr EF X Surplus Expense 0 00 2011 mi Death 1m EF X Susan s pension Susan Y Estimate Benefit 80 00 yr Br Lx Add Surplus Expense Add Benefit Pension 7 Figure 77 Enter Financial Data section Cash Flow category Cash Flow page Level 2 Plan showing Defined Benefit Pensions 2 Enter each client s annual pension amount in the Amount or fields 3 To add a new pension click the Add Benefit Pension button and then select Add Estimate Benefit The Defined Benefit Pension Details dialog box opens Defined Benefit Pension Details Instructions Benefits Benefits Payable Linked Incomes StartAge StartDate to Survivor May 12035 0 V David s income 80 0 Infl Add l Total Est Benefit Amount in today s 0 00 Benefit Payout Options Benefit Payout Options Method of Benefits Vested Earliest Retirement Age appear only in Level 2 Plans Payout Survivor Analysis Survivor Analysis Life Income v Account Transfer Payout to Details es F Add Benefit f lt 4 Previous Entry NextEntry gt Figure 78 Defined Benefit Pension Details dialog box Details tab Level 2 Plan Estimate Benefit method 4 In the Description field enter a unique name for the pension 5 From the Member list select the pension owner 95 96 10 11 12 13 14 Enter either the Benefits Start Age or the Benefits Start Date Enter the percentage of pension benefits t
155. ities check box for the client and or co client Under ROR on Life Insurance Proceeds enter the return rates that apply to insurance proceeds Disability insurance analysis Level 1 144 1 Go to the Set Goals section Disability Income category Disability Income page Va N Disability Income Instructions Disability Insurance Analysis to Include If David becomes Disabled v If Susan becomes Disabled Objectives Percentage of lifestyle and 100 medical expenses to cover David Susan Cover Major Purchase Goals v v Pay Off Outstanding Liabilities v v Figure 116 Set Goals section Survivor Income category Disability Income page Level 1 Plan Under Disability Insurance Analysis to Include select the appropriate If lt client co client gt becomes Disabled check box to model the scenario for the client or co client Note For the purposes of the disability insurance analysis NaviPlan Premium assumes that the client and co client do not become disabled at the same time Under Objectives enter the percentage of lifestyle and medical expenses to cover This is the percentage of current expenses that are expected to continue after the disability of the client or co client This feature allows you to illustrate a change in cash flow expense needs if one of the clients becomes disabled The default is 100 but the percentage can be changed For disability insurance non qualified asse
156. its Monitor income tax changes and capital loss carryovers If you are using the Detailed Tax method additional income tax reports are available View details of goals and goal savings Compare goal needs with current and projected goal funding View summaries for each goal Compare current and suggested asset mixes asset class weightings and the efficient frontier If you are using Ibbotson asset allocation examine risk score and questionnaire results Analyze the effects of death disability long term care and insurance on cash flow Analyze the effects of asset redemptions at death during disability and for long term care Stand alone report categories Estate Planning Fact Finder Needs vs Abilities Capital Accumulation and Redemption Deficit Coverage Monte Carlo 200 Examples of the tasks you can perform Compare estate planning scenarios View a synopsis report of estate data entered in the plan Monitor gift and trust activity Analyze the effects of taxes on the estate planning scenario View asset distribution details View an input summary and prepopulated Fact Finder Compare goal type needs with abilities to meet those goals all goals of the same type are grouped together in the same graph Analyze the accumulation and redemption of capital used to fund a goal type or all goals Compare deficit coverage assets to deficit coverage sells Detailed Tax method only Analyze th
157. lanced weighted average is applied to all accounts linked to the goal as per their investor profile Current Not Prevent accounts linked to a goal from Rebalanced rebalancing accounts linked to a goal maintain a separate rate of return Entering capital loss carryovers Level 2 15 A capital loss occurs when an asset is sold for less than its cost basis If losses in a particular year exceed the allowable capital loss deductions for that year they can be carried forward to later years until completely used This planning strategy can help reduce taxes When using the Average Tax method clients can offset capital losses against capital gains each year Upon the death of a client or co client a capital loss cannot be carried over to the estate to the surviving client or to the beneficiaries NaviPlan Premium does not apply the 3 000 ordinary income offset rule When using the Detailed Tax method the capital loss carryovers from one client are used to offset capital gains incurred by the other client Also the 3 000 ordinary income offset rule applies To enter a capital loss carryover follow these steps 1 Go to the Plan Management section Assumptions category Capital Loss Carryovers page for MIRE Ws es ANes ea E Notes Planning Assistant Calculators z Reports General Milestones Current Portfolio Setting AMT Carryforward Unused Charitable Donations Next S eunen The Short Term AMT and Long
158. lect one of the following options for each asset e Liquidate Immediately to sell the asset immediately if disability occurs e Liquidate At Retirement to sell the asset at retirement if disability occurs e Not Available to hold the asset during disability The Education Specific Accounts section is for information purposes only and cannot be modified The list includes 529 plans Coverdell accounts and UTMAs UGMAs 171 Assessing long term care needs Level 2 Long term care refers to services provided to people who can no longer take care of themselves Long term care insurance policies are available to cover anticipated expenses should long term care be required To enter data and assess needs for the client or co client follow these steps 1 Go to the Set Goals section Long term Care category Client Co client Objectives page 2 Under Objectives select If lt client co client gt is in Long term Care Client Objectives Co dient Objectives gt Instructions Objectives v If David is in Long term Care LTC Expenses Income Adjustments During LTC Asset Availability Age at StartofLTC 80 in the year 2050 LTC period years Firy The Tax Rates section only appears if you are using the Average Tax method If a ROR on Surpluses amp Liquidations tax rate has been changed ne Capital Deferred an arrow and note appear 6 00 6 00 0 00 0 00 0 00 0 00 2 Assumption is that David dies at the end
159. led Tax method that include the optional Advanced Estate module To enter a funded trust of any kind follow these steps 1 Go to the Set Goals section Estate Planning category Funded Trusts page s Funded Trusts Gifting Growth amp History Estate Expenses Estate Strategy Instructions Funded Trusts Income Income Income Market Total Trust Description Trust Type to David toSusan toHeirs Value Return Tax Rate Detsils Repon Delete Irrevocable Trust Irrevocable Trust 100 25 000 0 00 40 00 Er B x Credit Shelter Trust Credit Shelter Trust 100 0 105 000 0 00 40 00 EF B xX Add Trust 7 Figure 145 Set Goals section Estate Planning category Funded Trusts page 2 Under Funded Trusts click the Add Trust button and then select the applicable trust type The Trust Details dialog box opens 3 Enter the details of the trust The fields to be completed will vary depending on the type of trust being added To see the varying trust details in the Trust Details dialog box for each of the trusts see Figure 146 to Figure 157 immediately following this procedure 4 On the Beneficiaries tab under Remainder Beneficiaries select a beneficiary from the Add Beneficiary list and then enter the percentage of the remainder income attributable to the beneficiary Alternatively to split the remainder equally among all beneficiaries click Pro rata 5 If the trust has income beneficiaries and if any trust income is to go to
160. lifestyle assets entering 30 return rates 31 sale information 31 liquidation order defining 129 long term care insurance entering policies 120 goals Level 1 142 145 goals Level 2 172 lump sum income entering 83 major purchase goals 136 marital trusts 184 milestones entering Level 1 9 entering Level 2 12 Monte Carlo reports 200 NaviPlan Select phone support 5 resources 5 updates 6 user manual series 2 version 6 Needs vs Abilities report 200 net worth entering 29 reports 199 notes adding personal 217 P payout options annuitized annuities 61 fixed annuites 58 60 variable annuites 58 60 pension income Benefit Formula 97 entering 94 Estimate Benefit 94 Peterson s Undergraduate Database 134 phone support 5 plan assumptions entering 7 Planning Assistant opening 206 reports 207 using 205 portfolio balancing preferences setting 13 current not rebalanced 14 current rebalanced 14 portfolios setting up 22 proposed portfolio overriding for goal Level 2 131 Q QTIPs 183 qualified accounts setting up 50 qualified annuities setting up 66 qualified personal residence trust 184 qualified terminable interest property trusts entering 183 R redemption strategies adding 129 setting up 46 63 107 Index refresh report 202 regular income entering 83 report settings assigning 200 duplicating 202 hiding 201 redisplaying 201 refresh 202 report types stand alone Asset Allocation 1
161. m care insurance policy click the Add LTC Insurance button A blank data entry row appears under Long term Care Insurance Select the person insured by the policy If applicable enter the benefit amount and monthly premium of the listed insurance policies To enter additional details for an existing long term care insurance policy click the Details button for that policy The Long term Care Insurance Details dialog box opens showing additional details for the individual policy Long term Care Insurance Details Company LTC Insurance Insured Effective Date David wv jJani2011 Benefits Payable Benefit During Benefit Before Daily Amount LTC Indexed LTC Indexed Infl Add l Infl Add l 125 vj 2 00 Y 2 00 Applicable Period Waiting Period Benefit Period after starting LTC after starting LTC 90 Days v 4 Years v Premiums Cease Cease Payer Amount Frequency atAge on Date Infl Add l David v 75 Monthly v z 0 00 If blank premiums cease on daim of LTC Add LTC Insurance f lt 4 Previous Entry NextEntry gt Figure 97 Long term Care Insurance Details dialog box Level 2 Plan Enter the remaining details about the policy Note Clicking z next to Add LTC Insurance opens a list where you can select New LTC Insurance or Copy of Current If you select Copy of Current NaviPlan creates a copy of the current policy Use this when you have similar items to add to avoid re entering data
162. mix of your clients existing portfolio to NaviPlan s suggested asset mix You can also see the differences in expected rates of return expected standard deviation efficient frontier etc and make appropriate recommendations 18 Viewing asset allocation assumptions If you are using NaviPlan Select with the Ibbotson Asset Allocation option asset allocation assumptions asset classes investor profiles and model portfolios are already set up for you You can view but not edit these assumptions If you do not have the Ibbotson Asset Allocation option see Setting up user defined asset allocation on page 19 Note Before you can view asset allocation assumptions for the plan you must complete the questionnaire Plan Management section Asset Allocation category Questionnaire page 19 To view asset allocation assumptions for the plan follow these steps 1 Go to the Plan Management section Asset Allocation category Profile page 2 On the Profile page click Settings The Asset Allocation Settings dialog box displays the asset classes and their settings Asset Classes Investor Profiles Portfolios gt Instructions Asset Classes Capital Deferred Standard Description Interest Dividends Gains Growth Tax Free Total Deviation 9 630 10 760 11 240 13 870 9 140 11 060 14 700 4 130 3 610 2 940 7 950 3 860 2 490 Figure 12 Asset Allocation Settings dialog box
163. mp Susan 5784 Financial Needs Summary Plan Nov 15 2011 14 37 4 Processing Delete All Figure 177 Client Report Monitor dialog box To use the Client Report Monitor follow these steps 1 Generate a client or progress report or from the Reports menu select Client Report Monitor The Client Report Monitor dialog box opens Do one of the following List all reports Clear the Show only reports for this plan check box for which you The dialog box updates and expands the list of have access reports View a Click the link for a report with the Completed status complete report The report opens using the format specified on the User Preferences menu User Preferences System Settings dialog box Report Format tab Delete a report Click the Delete button for the applicable report or click the Delete All button to delete all listed reports and then click OK for the message that appears 3 Click Close The Client Report Monitor dialog box closes Any reports that have not yet generated will continue to process while you work in other areas of NaviPlan If needed you can generate additional reports while other reports are being processed NaviPlan generates each report independently 216 Adding notes for your own personal use 217 In NaviPlan Premium you can add notes for yourself that are not seen by the clients To enter personalized text for reports follow these steps 1 On any page wit
164. must select the modules you want to use The selected modules determine the types of goals you can enter in the plan In each plan you can only use the financial planning modules that are selected on the Plan Management section Modules category Modules page In this chapter Retirement goal assumptions 125 Defining retirement goals 126 Defining education goals 133 Defining major purchase goals 136 Defining an emergency fund goal 137 Allocating accounts to goals 139 Retirement goal assumptions 125 In NaviPlan Premium retirement is treated as a goal rather than just a period of time You can identify a specific need allocate accounts to fund it and then see the resulting shortfalls and savings NaviPlan makes recommendations to achieve the retirement goal without taking cash flow into consideration for example NaviPlan may recommend that the clients save 1 000 per month even when the clients do not have that amount available in their cash flow NaviPlan accumulates annual cash flow surpluses and deficits from the plan date until retirement At retirement any surplus or deficit accumulated in pre retirement returns to zero Surpluses generated during retirement are accumulated and used as the first source of funding should a deficit occur during that period Retirement date assumptions NaviPlan assumes that the retirement period begins on January 1 of the year in which the first client retires and ends on December 3
165. n Net Worth category Accounts page Assets Liabilitie Annuities Equity Compensation Asset Class Weightings gt Instructions To edit investment income earned before the valuation date for all non qualified accounts dick Previously Incurred Investment Activity Previously Incurred Investment Activity To enter amounts for any previous Roth conversions that occurred prior to the plan date Aug 9 2011 and for 2010 conversions where the election was made to defer the tax over 2011 and 2012 dick Previous Roth Conversions Previous Roth Conversions Qualified and Non Qualified Accounts Account Market Asset Class Return Savings Description Type Owner Value Basis Weightings Rates Strategies Holdings Deis Delete David s IRA IRA v David v 50 000 0 0 00 0 Add wx Add Account Simple Account Investment Portfolio itribution for all plan goals dick Goal Funding Mutual Fund Cash Account Figure 32 Enter Financial Data section Net Worth category Accounts page 2 Under Qualified and Non Qualified Accounts click Add Account NaviPlan creates a simple account without holdings OR Click x next to Add Account and then select an account type from the list If you select Simple Account NaviPlan creates an account without holdings If you select Investment Portfolio Mutual Fund or Cash Account NaviPlan creates an account with holdings and the Account Details dialog box opens 3 In the Description fi
166. n Withdrawals as Needed is selected To enter savings strategies that apply to the annuity complete the procedure Entering savings strategies for accounts on page 45 To override the default return rates that apply to the annuity complete the procedure see Overriding calculated return rates for accounts on page 48 To set up a qualified annuity complete the procedure Setting up a qualified annuity on page 66 In the Annuity Details dialog box you can e Create a new annuity by clicking 7 next to Add Deferred Annuity and then selecting either an annuity type or Copy of Current e View or edit another annuity by clicking Next Entry or Previous Entry Entering annuity subaccounts Variable annuities are made up of one general account and multiple subaccounts The total of all subaccounts appear in the Market Value field under Subaccounts To enter an annuity subaccount follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page 2 Click Details for the appropriate variable annuity The Annuity Details dialog box opens to the Subaccounts tab 3 On the Subaccounts tab enter a unique description of the subaccount and all relevant information 4 If you are using asset class weightings classify the asset class weightings for each subaccount as explained in Defining asset class weightings on page 72 Entering payout options for annuities 58 The payout
167. n the Cash Flow page Estimate Benefit Use this method to enter benefit amounts directly from a Social Security Statement Currently Receiving Benefits Use this method to enter benefit amounts that the client is currently receiving CDE Dependents Current Benefits Benefit Current Monthly Start Date Benefit Amount Infl Add l Total David Aug 2011 0 yY 4 0 00 Figure 75 Social Security Details dialog box Details tab Level 2 Plan Currently Receiving Benefits method selected 4 Go to the Details tab and then enter the benefit start date amount and adjust for inflation 5 Go to the Eligible Dependents tab 6 Select the appropriate check box es to link each dependent to the client for Social Security purposes 93 gt Instructions Client Co Client Benefit Method Select a Social Security method Benefit Formula Use this method to automatically calculate Social Security benefits based on the annual income entered on the Cash Flow page Estimate Benefit Use this method to enter benefit amounts directly from a Social Security Statement Currently Receiving Benefits Use this method to enter benefit amounts that the dient is currently receiving Details Eligible Dependents vid Figure 76 Social Security Details dialog box Eligible Dependents tab Level 2 Plan Currently Receiving Benefits method selected 7 Click OK The Social Security Details dialog box closes Entering pension i
168. n the Period years field enter how often the future values change 118 g Click Fill The future values that you specified are modified automatically Entering disability insurance policies 119 To enter your clients existing disability insurance policies follow these steps 1 Go to the Enter Financial Data section Insurance Coverage category Insurance Coverage page Under Disability Insurance default disability insurance policies appear 2 To add a disability insurance policy click the Add Disability Insurance button and then select a policy type The new disability insurance policy item appears at the bottom of the current disability insurance list 3 Select the person insured by the policy 4 To change the policy type from the Policy Type list select another option 5 If applicable enter the monthly benefit amount and premium of the listed insurance policies 6 To enter additional details for an existing disability insurance policy click the Details button for that policy The Disability Insurance Details dialog box opens showing additional details for the policy gt Instructions Details Description Policy Type Insured Policy Owner Effective Date David s DI policy Individual Disability v David v David v Dec 312010 Benefit Details Benefit Amount of Salary FlatDollar Benefit Frequency Taxable Benefit Infl Add l 2 3 000 Monthly v 0 00 Maximum Indexed Benefit Dollar Offs
169. nallocated Joint savings Non Qualified 15 000 0 0 15 000 Susan s IRA 50 000 100 0 529 plan David 529 Plan for Julia 10 000 10 000 David s 401k 75 000 100 0 150 000 125 000 0 25 000 Figure 113 Goal Funding dialog box Click OK to close the Goal Funding dialog box All accounts allocated toward the goal appear on the Retirement Education Major Purchase or Emergency Fund pages under lt goal gt Accounts To expand or collapse this information click the lt goal gt Accounts link The market value of each account displayed under lt goal gt Accounts reflects the market value for the account and not the actual amount allocated to the goal Any accounts not allocated to a goal appear under Unassigned Accounts To view or edit account liquidation strategies Liquidation Strategies Retirement Accounts 125 000 Market Linked Asset Class Description Account Type Owner Value Basis Linked Amount Weightings ROR Savings Susan s IRA IRA Susan 50 000 0 100 50 000 Unclassified 0 00 1 David s 401K 401K David 75 000 0 100 75 000 Unclassified 0 00 0 Unassigned Accounts 15 000 Market Unassigned Asset Class Description Account Type Owner Value Basis Unassigned Amount Weightings ROR Savings Joint savings Non Qualified Joint 15 000 0 100 15 000 Undassified 0 00 1 Figure 114 Set Goals section Retirement category Retirement page showing Retirement Accounts and Unassigned acco
170. nalyzing client goals user manual In this chapter Entering estate planning assumptions 177 Entering funded trusts 180 Entering gifting growth and history 190 Entering estate expenses 192 Entering estate strategies 193 176 Entering estate planning assumptions You can enter estate planning assumptions regarding your clients life expectancy estate distribution death taxes fees and wills Using the Estate Questionnaire you can enter additional assumptions to save in the plan Assumptions entered in the Estate Questionnaire do not affect plan results but will be included in client reports To enter estate planning assumptions follow these steps 1 Go to the Set Goals section Estate Planning category Assumptions page E Funded Trusts Gifting Growth amp History Estate Expenses Estate Strategy gt Instructions Life Expectancy Scenarios David Susan Age Year Age Year Reports Life Expectancy 51 2021 55 2026 v Alternate Life Expectancy 56 2026 50 2021 Year Assumed first death Reports 2011 David v Simultaneous Death State Death Taxes State Death Taxes are calculated as a percentage of the Federal Taxable Estate David Susan State California State California vV Override Override Current Maximum Federal Amount 2001 Credit Amount Current Maximum Federal Amount 2001 Credit Amount Infl Add l Infl Add l Sor 1l Sor Y 1 Percentages are applie
171. ncome NaviPlan Premium estimates pension income using one of two pension calculations Estimate Benefit and Benefit Formula Use the Estimate Benefit pension method if the pension details are unavailable Use the Benefit Formula pension method if the pension details are available Entering an estimated benefit pension To enter an Estimate Benefit pension income follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page Under Defined Benefit Pensions you can enter defined benefit pensions When you create a new plan NaviPlan creates a default estimate benefit pension for each client Any pensions that were entered on the Set Goals section Retirement category Retirement page appear under Incomes on this page 94 Pa N b Instructions Incomes Expenses Description Member Amount Details Delete Description David s income David v 75 000 BF xX Housing e g utilities repairs Susan s income Susan v 60 000 BF xX Food David s bonus David 7 000 r BF X Transportation e g gas insurance Entertainment e g restaurants m Personal e g dothing hobbies Other e g child care travel Add Expense 7 Other Expenses Description Type Mortgage Principal and Interest College Education Education Surplus Expenses Amount of Start Description Member Type or Details Delete Description Surplus Year End Year Details Delete David s pension David Y Estimate Benef
172. ndent of status 11 overriding tax filing status 11 disability income goals Level 2 164 additional annual income 167 Capital Accumulation and Redemption report 200 capital loss carryovers 15 anai neorneneeds 160 asset availability 170 assumptions 165 currently disabled 164 Goal and Expense Analysis 165 cash flow calculations 79 entering 79 reports 82 199 Cash Flow report 102 charitable remainder trust 187 classifying asset class weightings income available 170 Income Coverage Analysis 168 lump sum needs 167 168 accounts 72 holdings 43 114 Client Report Monitor Online using 215 client reports Asset Allocation 211 customizing 209 Financial Needs Analysis 211 Financial Needs Assessment 211 ongoing expenses 165 disability insurance entering policies 119 goals Level 1 142 144 objectives Level 2 165 duplicating reports 202 Financial Needs Summary 211 E generating 211 213 economic factors 7 Retirement Distribution Summary 211 editing asset class weightings Level 2 74 user defined text 209 education accounts entering 52 conventions user manual 4 education costs searching 134 correlations setting up 20 education goals Coverdell accounts entering 52 defining 133 credit shelter trusts 182 determining costs 134 emergency fund goals defining 137 139 D estate expenses 192 estate planning debt modification 105 assumptions 177 modifiying loan payment 106 difvine 1 Sead ae estate expenses 192
173. ng Social Security Benefits Estimate Monthly Eligible for Spousal Retirement Benefit Benefits if applicable v David v Figure 68 Social Security Details dialog box Level 1 Plan Benefit Formula selected 3 Go to the Client or Co Client tab 4 Select a benefit method to use for Social Security calculations e Benefit Formula Benefits are calculated automatically by NaviPlan Select based on the clients incomes e Estimate Benefit Benefit amounts taken from the clients Social Security Statements are entered into NaviPlan Select e Currently Receiving Benefits If the client is age 62 on or before the plan date or is disabled select to enter the amount the client is currently receiving The default method in NaviPlan Select is Benefit Formula 5 If the client is eligible to receive spousal Social Security benefits select the Eligible for Spousal Benefits check box 6 If you want to switch to the Estimate Benefit method select the Estimate Benefit check box and then enter the clients benefit amounts and the starting age for retirement benefits If applicable NaviPlan Select automatically calculates the values under Survivor with eligible children based on the values entered 86 Social Security Details gt Instructions Benefit Formula Estimate Benefit Select a Social Security method Use this method to automatically calculate Social Security benefits based on the a
174. ng after this date Guaranteed Payments are annual withdrawals that are guaranteed Withdrawal for the life of the owner If Joint is selected as the owner Benefit payments are guaranteed until the first owner dies Payments are guaranteed even if the value of the annuity s accounts are depleted 57 10 11 If you are entering a fixed annuity enter the market value of the annuity the cost basis or qualified basis as applicable the valuation date the pre annuitization return rate and the assumed interest rate after the annuity begins paying out AIR If you are entering a variable annuity enter the general account market value cost basis and valuation date If you are entering an annuitized annuity enter the balance of the cost basis or qualified basis If you are entering a variable annuity follow these steps a On the Subaccounts tab enter annuity subaccounts as explained in Entering annuity subaccounts on page 58 The total of the market values entered for the variable subaccounts appears in the Subaccounts Market Value field under Variable Annuity b If you are using asset class weightings define the asset class weightings of the subaccounts as explained in Defining asset class weightings on page 72 To enter payout options that appliy to the annuity complete the procedure Entering payout options for annuities on page 58 Note The Payout Options tab does not appear when the income optio
175. ng the tax rates here only affects the tax rates for disability insurance calculations It does not affect rates used in the rest of the plan The default values on this page originate from the Plan Management section Assumptions category General page 9 Complete one of the following procedures e Working with the Goal and Expense Analysis method on page 165 e Working with the Income Coverage Analysis method on page 168 Working with the Goal and Expense Analysis method The Goal and Expense Analysis option must be selected on the Set Goals section Disability Income category Client Co client Objectives pages To use the Goal and Expense Analysis option follow these steps 1 Go to the Ongoing Expenses tab 165 Assumptions Ongoing Expenses Additional Annual Income Lump Sum Needs Asset Availability gt Instructions Annual Expenses Percentage of lifestyle and medical expenses to cover 85 Use to Expense Amount Defaults Cover Housing e g utilities repairs 30 000 v Food 12 000 v Transportation e g gas insurance 24 000 v Education Expenses Number Annual to Description Name Start Age of Years Amount Cover College Education Julia 18 4 10 000 100 Surplus Strategy Percent surplus spent Percent surplus saved Analysis Surplus Assume surplus is spent Additional Expenses Click the Add Additional Expense button to create a new row Add Additional Expense Figure 133 Set Goal
176. nnual to Description Name Start Age of Years Amount Cover College Education Julia 18 4 10 000 100 Surplus Strategy Percent surplus spent 0 Percent surplus saved 100 Analysis Surplus Assume surplus is spent Additional Expenses Click the Add Additional Expense button to create a new row Add Additional Expense Figure 119 Set Goals section Survivor Income category Client Co client Objectives page Ongoing Expenses tab Level 2 Plan Goal and Expense Analysis method selected 4 If education expenses exist in the plan under Education Expenses enter the percentage of education expenses to be covered in the event of death 5 Under Surplus Strategy enter the applicable amounts in the Percent surplus spent and Percent surplus saved fields The surplus strategy applies throughout the life insurance analysis The Percent surplus spent and Percent surplus saved fields control what NaviPlan Premium does with any cash flow surplus during survivorship For example when one client dies you expect the survivor to incur a cash flow surplus of 10 000 You also expect the survivor to spend 25 of this surplus on miscellaneous costs and invest the remaining amount For this example you would enter 25 in the Percent surplus spent field NaviPlan automatically saves the remaining 75 into a non qualified account when survivorship occurs 6 Under Analysis Surplus select or clear the Assume surplus is spent check box as requi
177. nnual income entered on the Cash Flow page Use this method to enter benefit amounts directly from a Social Security Statement D Currently Receiving Benefits Use this method to enter benefit amounts that the cient is currently receiving V David Monthly Benefits From Social Security Statement Start Retirement Benefits Event Retirement May 2035 Figure 69 Social Security Details dialog box Level 1 Plan Estimate Benefit selected 87 7 Repeat steps 4 to 6 for the other client 8 Click OK The Social Security Details dialog box closes Entering Social Security benefits Level 2 In NaviPlan Premium you can either calculate the clients future Social Security benefits based on the Social Security formula or enter their benefit amounts directly from their Social Security Statements Calculating Social Security benefits using the Benefit Formula method To calculate Social Security benefits using the Benefit Formula method follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page 2 Under Social Security click the Social Security Details link The Social Security Details dialog box opens 3 Go to the Client or Co Client tab and then select Benefit Formula gt Instructions The Benefit Formula method Qent cacik is selected by defaut Benefit Method Select a Social Security method Benefit Formula Use this metho
178. nnuity as a lump sum select the Redeem All check box 5 From the Frequency list select how often the redemptions will occur 6 If applicable for qualified annuities select the Waive Early Withdrawal Penalties check box to exclude penalties due if the asset is withdrawn early 7 In the Start Date field enter the date the redemption should start 8 In the End Date field enter the date the redemptions should end Note The End Date field is not accessible if Redeem All or Lump Sum is selected 9 To index the strategy for inflation select the Infl check box To index by an amount greater or less than the default inflation rate enter a different percentage in the Add field Note The Infl check box is not accessible when Redeem All or Lump Sum is selected or a percentage of the annuity is entered in the Amount field 10 Click OK to save the redemption strategy The Annuity Details dialog box closes Setting up a SEPP strategy for an annuity Level 2 Detailed Tax 64 You can enter a substantially equal periodic payments SEPP strategy for certain qualified annuities If an annuity does not qualify for SEPP redemptions the Substantially Equal Periodic Payments SEPP section of the Annuity Details dialog box does not appear Note Only one SEPP strategy can be added to an annuity To set up a SEPP strategy follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page
179. nsion David vY Estimate Benefit 80 00 yr r x Surplus Expense 0 00 2011 GH Death ljm BF X Susan s pension Susan Y Estimate Benefit 80 00 yr BP xX Add Surplus Expense Add Benefit Pension 7 Cash Flow Report Figure 79 Enter Financial Data section Cash Flow category Cash Flow page Level 2 Plan Defined Benefit Pensions 2 To add a new pension click the Add Benefit Pension button and then select Add Benefit Formula 97 Pension Details gt Instructions Future Benefits Pension Details Benefit Formula Benefits Benefit Reduction Start Benefits Payable for Survivor Description Member Age Start Date to Survivor Coverage Linked Incomes Susan s pension Susan v 62 May 12035 0 Susan s income Benefits Participation per Year Start Date of Service Jan 12011 2 0000 Infl Addl Total Index at 0 00 Total Years of Toa Pensionable Max of Service 70 Maximum Indexing Yo Number of Years for Average Salary Estimated Annual Benefit when Benefits Begin Method of Payout Benefits Vested Earliest Retirement Age Payout Amount Survivor Analysis Survivor Analysis Beneft Payout Options and Life Income v Account Transfer Payout to Details or Early Retirement Early Retirement appear only in Level 2 Plans Penalty per year for Min Retirement Age for Normal Retirement Age 65 Early Retirement 0 00 Unreduced Benefits Override Min Retirement Age Add Bene
180. ntered on the Enter Financial Data section Cash Flow category Cash Flow page such as salaries e Calculates income from annuitized annuities entered on the Enter Financial Data section Net Worth category Annuities page e Adds up equity compensation in the form of stock options or restricted stock that has proceeds directed to cash flow as entered on the Enter Financial Data section Net Worth category Equity Compensation page e Adds up special income such as the tax free proceeds of any new loans redemptions from assets used to fund goals income from trusts as well as the proceeds from life disability and long term care insurance policies Special incomes are not entered on the Enter Financial Data section Cash Flow category Cash Flow page but instead are calculated by NaviPlan based on information entered in other parts of the plan For example when a loan is entered on the Enter Financial Data section Net Worth category Assets Liabilities page NaviPlan automatically counts the loan principal as special income Calculates the clients scheduled cash outflows for the year 1 Calculates the income tax due on asset returns based on the income tax method selected When the Detailed Tax method is selected in the plan NaviPlan applies bracketed federal taxes that consider an extensive number of deductions and credits When the Average Tax method is selected in the plan depending on the as
181. ntering Level 1 86 224 entering Level 2 88 entering current benefits 93 Estimate Benefit 91 stand alone reports 199 202 Asset Liabilities 77 Cash Flow 102 Insurance 121 state death taxes 178 strategies debt modification 105 deficit coverage 110 redemptions 107 regular savings entering 105 SEPP 108 summary reports 199 support accessing 5 surplus strategies surplus expenses 110 112 surplus savings 110 111 survivor income analysis Level 1 142 survivor income analysis Level 2 ongoing income needs 160 survivor income goals Level 2 146 156 annual income needs 152 asset availability 154 162 assumptions 147 157 Goal and Expense Analysis 148 159 Income Coverage Analysis 151 160 lump sum needs 153 159 161 ongoing expenses 148 159 survivor s income 154 survivor income insurance goals Level 1 142 goals Level 2 146 T tax credits entering Level 2 122 tax deductions entering Level 2 122 tax details 114 tax filing status overriding 11 tax options 11 81 trust reports generating 188 U updates to NaviPlan Select 6 upgrading asset allocation 28 user defined text customizing 209 user manual conventions 4 series 2 UTMA account entering 53 V variable life insurance policy 116 version of NaviPlan Select 6 Index 225 NaviPlan Select User Manual Level 1 and Level 2 Plans Entering client data and goals 226
182. ntities appear only in Level 2 Plans when the Detailed Tax method is used and when the Business Planning module is included in the plan Add Business Entity Add Liability Assets Liabilities Report Figure 23 Enter Financial Data section Net Worth category Assets Liabilities page Level 2 Plan Detailed Tax method 2 To add a lifestyle asset click Add Lifestyle Asset and then select an asset type from the list If applicable enter the market value of the listed lifestyle asset To enter additional details for the asset click the corresponding Details button The Lifestyle Asset Details dialog box opens 30 31 Details Purchase Community Description Type Owner Date Property 520 Thomas St Residence v Joint vi Dec 312010 Purchase Current Current Start of Year Amount Market Value Value As Of Market Value Cost Basis 0 0 Aug 9 2011 0 0 Property Taxes Current Tax Amount Frequency Value As Of Infl Add Deductible 0 Annual M Jan 12011 4 0 00 v Sale Information Sell Direct After Tax Asset Sale Date Proceeds To Sale Information appears only in Projected Value Projected Level 2 Plans as of Sale Dates Buying Power Before Tax After Tax Before Tax After Tax 0 0 0 0 Return Rates Override H 500 000 Deferred Standard Growth Deviation Pre Retirement 0 Retirement jatak Select Copy of Current to create a copy of the existing asset Do this to avoid re en
183. o a goal appear under Unassigned Accounts Clicking the links expands or collapses the information Defining major purchase goals 136 A major purchase is any large expense for which your clients need to save money For example a sailboat a new roof for the house or a wedding are all major purchases Use the Major Purchase module to ensure your clients have enough money to fund all their major purchase goals To define a major purchase goal follow these steps 1 Go to the Set Goals section Major Purchase category Major Purchase page To create a new major purchase goal under Major Purchase Objectives click the Add Major Purchase Objective button and then select an objective type Note For all major purchase objective types other than the Expense type the new asset is added to net worth and appears in the Enter Financial Data section Net Worth category in the year the purchase occurs For example a new vehicle or second residence can increase net worth whereas a wedding or vacation cannot Enter a unique description for the goal and then complete the required fields Specify whether the cost will be indexed to meet inflation A Major Purchase Instructions Major Purchase Objectives Target Asset Projected Description Type Member Date Amount Infl Add l Amount Allocation Details Delete Vehicle Vehicle Joint w Oct12015 amp 30 000 v 0 00 33 765 YyY x Add Major Purchase Objective
184. o be paid to the surviving spouse when the pension owner becomes deceased NaviPlan does not calculate any discounts if this election is chosen If the pension is based on an income under Linked Incomes select the check box es for the appropriate income s These check boxes only appear if incomes are entered in the plan Enter either a percentage of the pension owner s final salary in the of Final Salary field or the estimated pension amount in today s dollars in the Est Benefit Amount field Click the Benefit Payout Options link Additional fields appear From the Method of Payout list select Life Income or Lump Sum If you select Lump Sum you must also select a Transfer Payout to destination To transfer the lump sum payment to an IRA select an IRA from the list or select New IRA The default name for the new IRA asset is Transfer From lt description of pension gt The newly created asset can be further defined by clicking Account Details To transfer the lump sum payment into the clients cash flow on the pension owner s benefit start date select Cash Flow Enter the remaining details of the pension Go to the Future Benefits tab The future pension payouts and pension adjustments appear To override the displayed items select Modify the Calculated Values and then enter the benefits you want to use Instead of entering an amount for each year on the tab you can use the Fill Values feature to fill in t
185. od 2 From the Choose Liability list select the loan you want to modify 3 Click the Add Debt Modification button A new data entry row appears 4 In the Amount field enter the amount to add to the existing payment 5 Enter the frequency time frame and the inflation rate for the strategy If you select the Increase Principal check box the value in the Amount field will be used to increase the principal of the loan This option can only be used with interest only and last period payment loans If you do not select the Increase Principal check box the value in the Amount field will be used to reduce the principal of the loan Entering redemptions Redemptions and substantially equal periodic payment SEPP strategies previously entered for accounts appear on the Redemptions page You can modify existing strategies and add new ones Entering redemption strategies 107 You can enter a redemption strategy for any account deferred annuity or stock option to redeem the asset over a period of time or you can redeem an asset in full as a lump sum To set up a redemption strategy follow these steps 1 Go to the Enter Financial Data section Strategies category Redemptions page All existing redemption strategies in the plan appear 2 Under Redemptions from the Choose Account list select the account to which you want to add a redemption strategy and then click Add Redemption Strategy Savings Debt Modi
186. of the plan The default values on this page originate from the Plan Management section Assumptions category General page 6 Go to the LTC Expenses tab to enter daily long term care expenses Existing expenses that continue into the LTC period appear under Annual Expenses Any insurance premiums or loan payments payable during long term care are included on this tab and cannot be edited Assumptions LTC Expenses Income Adjustments During LTC Asset Availability Instructions Annual Expenses Long term Care Survivorship Percentage of lifestyle and medical expenses to cover 50 85 Long term Care Survivorship Annual Use Use Description Amount Start Date End Date Defaults to Cover Defaults to Cover Personal e g clot 7 200 Jan 12011 Death Client v v Additional Long term Care Expenses Daily Number Description Expense Type Amount Start Date of Years End Date Indexed Delete LTC Expense Qualified Medical v 150 LTC E 4 Death Client Y 0 00 X Add LTC Expense Figure 141 Set Goals section Long term Care category Client Objectives page LTC Expenses tab Level 2 Plan 7 Under Annual Expenses enter the percentage of lifestyle and medical expenses that will continue while the client is in long term care and during survivorship The percentage entered will be used as the default 8 To change the default percentage for specific expenses clear the Use Defaults check box and then enter the perc
187. ofile page updates to display the new weightings To revert to the original asset class weightings click Customize Asset Mix and then select Revert to Defaults Using the Optimize calculation The Optimize option is only available on the Profile page To constrain the recommended asset classes but still generate an optimal recommended asset mix follow these steps 1 If applicable scroll to the bottom of the Profile page 2 Click Customize Asset Mix and then select Optimize Efficient Frontier Current Rebalanced Suggested Asset Mix A Assumed Asset Mix Similar Risk to Current e Similar Return to Current ak Conservative A Moderate Conservative wy Moderate eh Moderate Aggressive m Aggressive Rabe of Return 14 18 22 26 30 4 Standard Deviation Risk Portfolio Statistics Suggested Asset Mix Override Standard Deviation Class Class Similar il Class Name Percentage Class Name Percentage Return i Large Cap Value Equity 31 78 Small Cap Equity 6 16 to Emerging Markets Equity 19 76 Long Term Bonds 23 06 Current Current Current Suggested Implemented Intermediate Term Bonds 8 51 High Yield Bonds 4 47 Return 3 61 3 61 5 90 9 04 au International Bonds 6 27 d Individual Constraints Figure 21 Optimize dialog box The Optimize dialog box displays the Efficient Frontier graph also known as the Mean Variance Optimization graph Mean variance optimization is the process of identifying po
188. ogress report follow these steps 1 Go to the Results section Client Reports category Client Report page OR If you are generating a progress report go to the Results section Progress Report category Progress Report page P ani R Client Report amp Instructions Include Alternatives In Reports Reports Report Name Template Financial Needs Assessment 2 Current Template Y Select Document Sections Asset Allocation 2 Default Template V Select Document Sections Financial Needs Summary 2 Default Template V Select Document Sections Retirement Distribution Summary 2 Default Template w Select Document Sections Financial Needs Analysis 2 Default Template Y Select Document Sections Figure 174 Results section Client Reports category Client Report page 2 To include alternative plans in the client reports click Include Alternatives In Reports and then select the alternative plans to include Note The current and recommended plans are always included Include Alternatives In Reports gt Instructions Scenario Scenario Name Current Current Plan Recommended Proposed Alternative 1 Alternative A Alternative B Figure 175 Include Alternatives In Reports dialog box 3 If applicable select a template to use for the report 4 Click the Select Document Sections button for the report you want to generate The Select Document Sections dialog box opens 212 21
189. olicies 114 Viewing and defining future values and premiums of a life insurance policy Level 2 117 Entering disability insurance policies 119 Entering long term care insurance policies 120 Generating the Insurance report 121 Entering tax credits and deductions Level 2 122 Entering life insurance policies 114 To enter your clients existing life insurance policies follow these steps 1 Go to the Enter Financial Data section Insurance Coverage category Insurance Coverage page Under Life Insurance default life insurance policies appear Insurance Coverage gt Instructions Life Insurance Description Insured Policy Type Beneficiary Premium Details Delete Life Insurance David v Term 10 Life 0 Susan v 0 mo BF X Life Insurance Susan Y Term 10 Life 0 David v Simo X Add Life Insurance Disability Insurance Description Insured Policy Type When you create a new Group STD David w Group STD d plan NaviPlan ceates Group STD Susan Group STD j j i default entries for each Group LTD David Group LTD j j dient minimizing data entry Group LTD Susan w Group LTD Add Disability Insurance 9 Long term Care Insurance Daily Benefit Description Insured Amount Premium Details Delete LTC Insurance David v 0 SO0 mo BF X LTC Insurance Susan 93 0 0 mo BF X Add LTC Insurance Insurance Coverage Report Figure 93 Enter Financial Data section Insurance Coverage category Insurance Cover
190. om the Lifestyle Asset Details dialog box you can e Create a new lifestyle asset by clicking 7 beside Add Lifestyle Asset and then selecting an option from the list e View or edit another lifestyle asset by clicking Next Entry or Previous Entry New lifestyle assets appear on the Assets Liabilities page under Lifestyle Assets To generate the Assets Liabilities report go to the Assets Liabilities page and then click the Assets Liabilities Report button Entering liabilities 32 You can enter many types of liabilities including mortgages loans credit cards and other debts Once entered you can link a liability to a lifestyle asset To enter debt modification strategies for existing liabilities see Modifying a loan on page 105 To enter liabilities follow these steps 1 Go to the Enter Financial Data section Net Worth category Assets Liabilities page Gssets Liabiities Accounts Annuities Equity Compensation Asset Class Weightings To enter additional liability detais click the Details button gt Instructions Link Interest i is Delete Description Balance Rate Payment to Asset Details Description Details Residence E Mortgage 7 00 0 00 mo Residence v 2nd Residence amp Mortgage 2 7 00 0 00 mo None v amp Car Loans 5 00 0 00 mo Other Per E Personal Loans 8 00 0 00 mo None 2i Other Debt 12 00 0 00 mo None v Personal Use Property Other Personal Assets Add
191. on b Select an account and then click Add Redemption Strategy Additional data entry fields appear c To redeem the entire account select the Redeem All check box d To exclude penalties for early withdrawals select the Waive Early Withdrawal Penalties check box e Enter the remaining details of the redemption strategy a Click the Substantially Equal Periodic Payments SEPP link Liquidation Strategies Liquidation Order gt Redemptions _ Pro Rate First Last Start Date Frequency Distribution Method Payments Detsils Delete Oct 182011 Annual Required Minimum Distribution v E x iv Add SEPP Strategy Figure 105 Liquidation Strategies dialog box Redemptions tab Level 2 Plan Substantially Equal Periodic Payments SEPP section b Select an account and then click Add SEPP Strategy Additional data entry fields appear c Enter the remaining details of the redemption strategy For more information about entering redemptions and SEPPs see Entering redemptions on page 107 130 Modeling a Bucketing Strategy In general the longer assets remain invested the more stable their returns become Furthermore it is increasingly common for clients to regularly segregate enough assets to meet needs into a conservative holding for a certain period of time while allowing the remainder of the portfolio to be invested for a longer period of time This allows you to safely cover your clients needs wh
192. on If you generated this report before this button appears as Regenerate If you are using NaviPlan Premium Online the Status column updates To view the report or view the status of other reports see Using the Client Report Monitor Online on page 215 Note In NaviPlan Premium Offline you may have to click Refresh to update the Status column 214 Using the Client Report Monitor Online 215 The Client Report Monitor allows you to continue using NaviPlan Premium when generating time intensive client reports and progress reports Each time you click the Generate button for a report NaviPlan creates a request in the Client Report Monitor and generates the report Generating reports can take between a few seconds to a few minutes The Client Report Monitor allows you to monitor your recent request and the requests for other reports You can only open reports with a Completed status The Client Report Monitor is available from all the following areas in NaviPlan Premium Online e Reports menu e Results section Client Reports category Client Report page e Results section Progress Report category Progress Report page e Workflow section Status category Status page Instructions Vl Show only reports for this plan Client Report Monitor Client Name Client ID Description Plan Name Submission Time Status Lee David amp Susan 5784 Financial Needs Assessment Plan Nov 15 2011 13 22 Completed Lee David a
193. on qualified annuities Joint Non Qualified 15 000 5 155 000 119 000 32 000 Figure 62 Goal Funding dialog box 2 For each account and goal enter any combination of percentages dollar amounts or the keyword balance to allocate funds to applicable goals Overriding previously accrued investment income 76 NaviPlan calculates the clients accrued investment income on non qualified accounts for tax purposes automatically based on the valuation date of the clients accounts To override the accrued investment income amounts follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page 2 Click Previously Incurred Investment Activity gt Instructions Previously Accrued Investment Income Override Interest Dividends Short Term Capital Gains Long Term Capital Gains Tax Free Qualified Proceeds Include income above in cash flow Figure 63 Previously Incurred Investment Activity dialog box Level 2 Plan 3 Under Previously Accrued Investment Income select the Override check box and then edit the values as required Note The estimate of investment income before the valuation date applies only to non qualified accounts 4 To include qualified proceeds that have been received by the clients before the Plan Analysis Date and are subject to tax select the Include income above in cash flow check box and then enter an amount in the Qualified Proceeds field
194. opens the About dialog box Using the tabs in this dialog box you can determine what version of NaviPlan Premium you are using and which options are installed Chapter 2 Entering plan assumptions You must enter your clients financial information into NaviPlan Select and set your plan assumptions before you can analyze the information and make recommendations Note This guide assumes that you have already used NaviPlan Premium to create a client file and to open a Level 1 or Level 2 Plan For information about creating and managing client files see the NaviPlan Premium User Manual Introduction NaviPlan Premium bases its calculations on specific assumptions you define In this chapter Entering general assumptions 7 Setting milestones Level 2 12 Selecting a portfolio balancing method 13 Entering capital loss carryovers Level 2 15 Entering AMT carryforward credits Level 2 16 Entering unused charitable donations Level 2 17 Setting asset allocation assumptions in individual plans 17 Entering general assumptions The Plan Management section Assumptions category General page varies depending on the plan level and the income tax method selected for the plan Changing economic factors To change basic economic factors such as the inflation rate follow these steps 1 Go to the Plan Management section Assumptions category General page Assumptions Instructions Economic Factors Annu
195. or Life Expectancy 2 appears if you are using the ROR on Cash Flow Surpluses amp Liquidations Average Tax method If a tax Capital Deferred rate has been changed an _ Total Interest Dividends Gains TaxFree Growth arrow and note appear indicating PreRetirement 6 00 1 50 1 50 1 50 0 00 1 50 the change Retirement 6 00 1 50 1 50 1 50 0 00 1 50 Tax Rates v Override Tax Rates Federal Long Term Tax Bracket State Average Marginal Capital Gains Pre Retirement 69 001 139 350 v 6 00 19 44 25 00 15 00 Retirement 69 001 139 350 v 5 00 19 44 25 00 15 00 Rate has been overridden Note The average marginal and long term capital gains tax rates shown represent federal rates The corresponding state tax rate and the federal deduction for state taxes are accounted for in the income tax calculations Figure 118 Set Goals section Survivor Income category Client Co client Objectives page Assumptions tab Level 2 Plan Average Tax method 2 To assess insurance needs under Objectives select If lt client co client gt dies 3 Select a method for analyzing insurance needs e Goal and Expense Analysis assesses the life insurance needed to cover the survivor s goals and expenses Goals and expenses at the plan level as well as additional expenses entered for the life insurance scenario are considered This analysis is integrated into the rest of the plan e Income Coverage Analysis assesses t
196. or payouts in the Partial Settlement field 59 10 For variable annuities if payouts made from the subaccounts are to be calculated separately from the general account select Variable Payments and then enter the applicable details under Variable Subaccounts Entering payout options for an annuity with a guaranteed withdrawal benefit Variable and fixed annuities can have an Income Option of Guaranteed Withdrawal Benefit The Payout Options details are different from the options described in Entering payout options for variable and fixed annuities on page 58 To specify payout options for an annuity with a Guaranteed Withdrawal Benefit income option follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page 2 Click Details for the appropriate variable or fixed annuity The Annuity Details dialog box opens 3 From the Income Option list select Guaranteed Withdrawal Benefit 4 Go to the Payout Options tab Subaccounts Payout Options Savings Strategy Return Rates Guaranteed Withdrawals Have Started Contract Information Contract Max Lifetime Min Age Step up Step up Step up Frequency Date Withdrawal for Guarantee Feature Eligibility Year in years Dec 31 2010 5 00 65 v 2011 1 i Withdrawal Information Withdrawal Withdrawal Amount Current Benefit Base Start Date as of Maximum Benefit Base Growth Rate Ret ist 2 100 00 0 0 00 2 D
197. ortfolio based on an efficient frontier graph For more detailed instructions see Using the Optimize calculation on page 25 Note The proposed portfolio is only modified for the goal not for the entire plan Also for a retirement goal the proposed portfolio is only modified for the selected period To identify the accounts that will fund the clients goal see Allocating accounts to goals on page 139 Defining education goals For families with children saving early for future education goals is vital to ensure the family is able to afford the rising cost of post secondary education To define an education goal follow these steps 1 Go to the Set Goals section Education category Education page 133 gt Instructions Education Objectives Start Start Education Annual Number Projected Asset Description Name Age Year Infl Add l Calculator Cost ofYears Cost Allocation Details Delete College Education Julia 18 2016 V 200 P 10 000 4 55 009 B x Add Education Objective To view or edit account distribution for all plan goals click Goal Funding Goal Funding gt Education Accounts 5 000 gt Unassigned Accounts 12 500 Figure 108 Set Goals section Education category Education page Level 2 Plan 2 To create a new goal under Education Objectives click the Add Education Objective button and then enter the details of the goal 3 To search the Peter
198. overage Analysis method you can indicate when assets are to be made available 1 Go to the Asset Availability tab 170 Assumptions Lump Sum Needs Annual Income Needs Income Available Asset Availability gt Instructions Investment Accounts Available Available At Starting At Account Name Disability Retirement Not Available Joint savings Non Qualified Susan s IRA David s 40 i k Lifestyle Assets Liquidate _Liquidate At Asset Name Immediately Retirement Not Available 520 Thomas St Joint Lifestyle Real Estate Assets Liquidate Liquidate At Asset Name Immediately Retirement Not Available Real Estate Joint Business Entity Assets The current plan does not have any business entity assets defined Education Specific Accounts Use For Account Name Education Only 529 plan 529 Plan for Julia v Figure 139 Set Goals section Disability Income category Client Co client Objectives page Asset Availability tab Level 2 Plan Detailed Tax method 2 Under Investment Accounts select one of the following options for each account e Available At Disability if the account is available for disability needs immediately when the client becomes disabled e Available Starting At Retirement if the account is not available for disability needs until retirement e Not Available if the account is not available for disability needs 3 Under Lifestyle Assets Real Estate Assets and Business Entity Assets se
199. page Level 2 Plan 2 To calculate the funds required to cover expenses that occur over a specific period select Calculate target amount and then in the Multiple field enter the number of months to cover The required amount appears in the Target Amount field NaviPlan assumes that e Regular liability payments insurance premiums and fixed expenses are covered e Income taxes Social Security and Medicare taxes are not covered e Extra lump sum payments discretionary expenses savings strategies estate planning gifts gift taxes GSTT and 10 early redemption from qualified plan taxes are not covered 3 To create an emergency fund goal set at a fixed amount select Specify target amount and then enter the amount 4 If you want to index the emergency fund to inflation select the Infl check box and then enter the percentage above or below 138 inflation The inflation rate applies to both emergency fund calculation methods 5 Under Reserve asset for Emergency Fund until indicate how long the emergency fund assets are to be reserved e To have NaviPlan reserve the assets for emergency use only until retirement select Retirement At retirement NaviPlan transfers use of these assets to the retirement goal e To have NaviPlan reserve the assets for emergency use for the duration of the plan select End of Plan These assets are not available for deficit coverage or to fund any other goal 6 To edit the account
200. plied to the growth rate 5 Under Historical Data in the Taxable Lifetime Gifts field enter the amount of the taxable gifts made up to December 31 of the previous year Only the gift amount should be entered here and not the gift or generation skipping transfer taxes paid 6 Under Applicable Credit Used enter a credit amount used against gift taxes 7 Under Gift Taxes Already Paid enter the amount of gift taxes already paid up to December 31 of the previous year 8 If applicable under Lifetime GSTT Exemption Used enter the total amount of the lifetime generation skipping transfer tax 190 191 10 exemption that has been used up to December 31 of the previous year If applicable under GSTT Already Paid enter the amount of GSTT that has already been paid on prior gifts Generation skipping transfers that are above the GSTT exemption amount are taxed If the client has a deceased spouse who died after January 1 2011 and the client has filed an estate tax return under Unused Spousal Exclusion enter the additional exclusion amount to be used in estate planning calculations NaviPlan assumes that an estate tax return is properly filed following each client s death Entering estate expenses 192 On the Estate Expenses page you can enter estate expenses associated with the clients deaths Only those expenses that qualify for a deduction against the gross estate such as medical expenses in the year of death an
201. qualified accounts to goals other than retirement When using the Average Tax method only non qualified accounts can be allocated to goals other than retirement In NaviPlan Premium you can fund goals in three ways e Fixed amount Enter a fixed dollar value When a fixed amount is entered NaviPlan Select uses only that amount to fund the goal even when additional funds are available in the account e Percentage Enter a percentage e Balance Enter the keyword balance All remaining unallocated funds in the account are directed to the goal If balance is entered for more than one goal the remaining balance is distributed equally among those goals When allocating an account across multiple goals and using any of the fixed amount percentage and balance options behind the scenes NaviPlan divides the account into portions for each respective goal This split is reflected in stand alone reports and eliminates the need to manually divide an account Subsequently any savings for the account will be appropriately distributed among the goals of the account If accounts are assigned to multiple goals and the combined fixed amount percentage and balance amounts exceed the value of the account fixed amounts are funded first and the remaining funds are automatically distributed on a prorata basis gt Instructions Goal Funding College Emergency Account Name Owner Account Type Total Retirement Education Vehicle Fund U
202. quency Make Annual Payments In End of Year Market Value as of 2010 2 lt Previous Entry Next Entry gt vv a Figure 40 Account Details dialog box Qualified Account Setup tab Level 2 Plan Average Tax method Other Salary Deferral account type selected 10 To apply state taxes to the taxable portion of distributions from this account select the State taxable check box Note The State taxable check box does not appear for 457 and Roth accounts 11 From the RMD Payment Frequency list select the desired frequency If Annual is selected select the month in which the annual payment will be made 12 To change the market value used to calculate the minimum payout select the End of Year Market Value check box and then enter a new value in the field to the right Setting the account fee for an account NaviPlan Premium allows you to set a default account fee for the client on the User Preferences Plan Settings dialog box General tab User Preferences menu Plan Settings and for a plan on the Plan Management section Assumptions category General page You can also set the account fee for an individual account in the Account Details dialog box To set the account fee for an account follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page 2 Under Qualified and Non Qualified Accounts click Details for the appropriate account The Account Details dialog box
203. r Unassigned Accounts Defining an emergency fund goal An emergency fund is set up to cover unexpected expenses or to cover existing expenses during a sudden loss of income For example if the client or co client becomes unemployed the emergency fund covers the required liability payments and lifestyle expenses Clients can define one emergency fund goal per plan 137 For a joint analysis NaviPlan Premium assumes that the emergency fund goal applies to both the client and co client When a client dies NaviPlan transfers the goal to the surviving client To define an emergency fund goal follow these steps 1 Go to the Set Goals section Emergency Fund category Emergency Fund page Emergency Fund lt Back Instructions Emergency Fund Goal Calculate target amount Average Monthly Target Multiple Fixed Expenses Amount Infl Add l 3 0 X 5 450 16 350 0 00 Specify target amount Target Amount Infl Add l Reserve asset for Emergency Fund until Retirement End of Plan To view or edit account distribution for all plan goals click Goal Funding Goal Funding Market Linked Asset Class Description Account Type Owner Value Basis Linked Amount Weightings ROR Savings Joint savings 1 Non Qualified Joint 15 000 0 25 3 750 Multiple Asset 8 29 1 1 Account is assigned across multiple goals Figure 112 Set Goals section Emergency Fund category Emergency Fund
204. rategy Redemptions Return Rates TMA Jaccount Fee Setup Transfer Control UTMA Account UTMA Custodian UTMADonor of UTMA at Age v David v David j 21 Figure 43 Account Details dialog box UTMA tab 7 Select the UTMA Account check box and then from the UTMA Custodian and UTMA Donor lists select the custodian and donor 8 Enter the age at which the dependent takes control of the account from the owner Entering annuities 54 You can enter deferred and annuitized annuities directly in NaviPlan Premium Level 1 or Level 2 Plans For instructions on entering assets see Creating annuities 55 Entering annuity subaccounts 58 Entering payout options for annuities 58 Entering savings strategies for annuities 61 Setting up a redemption strategy for an annuity Level 2 Detailed Tax 63 Setting up a SEPP strategy for an annuity Level 2 Detailed Tax 64 Overriding calculated return rates for variable annuities 66 Setting up a qualified annuity 66 Creating annuities You can enter separate annuities for each of your clients investment holdings or you can group holdings together within one annuity You cannot combine qualified and non qualified holdings within the same annuity Also you cannot combine holdings owned by different people within the same annuity To enter an annuity follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page Assets Liabilities Accounts Asset Cl
205. red 149 When the check box is selected NaviPlan projects the cash flow that would have occurred in pre retirement if neither client died Any pre retirement surpluses resulting from that projection become additional pre retirement survivor expenses in the years they are projected to occur The Percentage of lifestyle and medical expenses to cover value applies to this expense just like any other regular expense 7 Under Additional Expenses click Add Additional Expense to enter any new expenses that will apply during survivorship 8 Once all ongoing expenses are entered go to the Additional Annual Income tab 9 To add an annual income that may apply during survivorship under Additional Annual Income click Add Annual Income and then enter the income details Assumptions Ongoing Expenses Additional Annual Income Lump Sum Needs Asset Availability gt Instructions Additional Annual Income Annual Description Income Type Amount Start Date End Date Infl Add l Delete Salary Salary v 0 Jan 12012 Ret Co dieni v 0 00 X Add Annual Income Figure 120 Set Goals section Survivor Income category Client Co client Objectives page Additional Annual Income tab Level 2 Plan Goal and Expense Analysis method selected 10 Once all ongoing incomes are entered go to the Lump Sum Needs tab 150 Assumptions Ongoing Expenses Additional Annual Income Lump Sum Needs Asset Availability gt Instructions
206. redits 16 analysis methods Goal and Expense 148 159 165 Income Coverage 151 160 168 annuities entering 55 entering payout options 58 60 entering savings strategies 61 entering subaccounts 58 overriding calculated return rates 66 payout options annuitized annuities 61 Index fixed annuities 58 variable annuities 58 payout options for fixed annuites 59 60 setting up qualified 66 setting up SEPP strategies 64 asset allocation Ibbotson 18 user defined 19 Asset Allocation client report 211 asset allocation upgrading 28 asset availability disability income 170 survivor income 154 162 asset class weightings classifying 44 72 116 editing 74 searching 73 asset classes setting up 19 Asset Liabilities report 30 77 assumptions AMT carryforward credits 16 asset allocation 17 capital loss carryovers 15 economic factors 7 general 7 income tax 9 inflation rate 7 milestones Level 1 9 portfolio balancing method 13 retirement date 125 retirement goal 125 tax options 11 Average Tax method 4 entering income tax rates 9 base inflation rate changing 8 beneficiaries funded trust 187 219 NaviPlan Select User Manual Level 1 and Level 2 Plans Entering client data and goals non qualified account 49 deficit coverage reports 200 benefit formula pension 97 defined benefit pension details 94 97 future benefits 99 dependent status changing 11 Bucketing 131 Detailed Cash Flow module 2 Detailed Tax method 2 4 c changing depe
207. rom the Payoff Options at Death list OR To indicate that the liability will be paid from the clients estate select Payoff at first death from estate from the Payoff Options at Death list OR To model loans that are forgivable at death for example some student loans select Insured for life from the Payoff Options at Death list This excludes the loan balance from the insurance analysis as well as from estate planning cash flow calculations 35 11 12 13 14 To enter debt modification strategies see Modifying a loan on page 105 From the Liability Details dialog box you can e Create a new liability or a copy of an existing liability by clicking L next to Add Liability and then selecting an option from the list new liabilities appear on the Assets Liabilities page under Liabilities e View or edit an existing liability by clicking Next Entry or Previous Entry To view the liability amortization schedule report for a liability on the Assets Liabilities page click the Report button beside the specific liability To generate the Assets Liabilities report click the Assets Liabilities Report button on the Assets Liabilities page Entering real estate assets Level 2 36 You can enter real estate assets that are purchased for investment purposes NaviPlan Premium includes fields for rental income and expenses Real estate assets that are purchased for the clients personal use and
208. rtfolios with the maximum expected return for a given level of risk The vertical axis plots overall return rates and the horizontal axis plots standard deviation The solid line in the graph represents the efficient frontier which is the set of portfolios that provides the highest expected returns for their respective risk levels The inputs for mean variance optimization are return rates standard deviation and the correlation coefficients of returns for each pair of asset classes The graph also accounts for any constraints applied in the Individual Constraints dialog box 3 To override the standard deviation follow these steps a Under Portfolio Statistics select the Override Standard Deviation check box to manually enter a new standard deviation Under Suggested the Risk field becomes editable b Enter the standard deviation in the Risk field Once a new standard deviation is entered the graph updates to show the manually entered standard deviation 26 Note Clicking a point on the Efficient Frontier line shows the return rate and standard deviation of that point Double clicking at a certain point on the line of the Efficient Frontier graph selects that point as the new suggested asset mix Or you can click on the line which brings up a balloon message and then press the ENTER key Use this process as an alternative to overriding the standard deviation manually 4 When generating an efficient frontier by defa
209. s lt Back Next Instructions AMT Carryforward Credit for David Form 8801 from last year s taxes 2010 AMT Minimum Tax Credit Carryforward last line of Part II Form 6251 from last year s taxes 2010 Sum of lines 1 and 10 Sum of lines 2 through 5 7 8 9 12 13 Line 34 Alternative Minimum Tax Payable line 35 Schedule D 1040 from last year s taxes 2010 Line 15 Line 16 Line 19 Schedule D Worksheet 1040 from last year s taxes 2010 Line 14 S B88 Sissies 8 AMT Carryforward Credit for Susan Form 8801 from last year s taxes 2010 AMT Minimum Tax Credit Carryforward last line of Part II Form 6251 from last year s taxes 2010 Sum of lines 1 and 10 Sum of lines 2 through 5 7 8 9 12 13 Figure 10 Plan Management section Assumptions category AMT Carryforward page Level 2 Plan Detailed Tax method 2 In each field enter the dollar value from the specified line on your clients tax returns from last year 16 Entering unused charitable donations Level 2 Note This procedure only applies if you are using the Detailed Tax method To enter unused charitable donations follow these steps 1 Go to the Plan Management section Assumptions category Unused Charitable Donations page David Lee and Susan Lee New plan Level 2 Notes Planning Assistant Calculators Reports SE en General Milestones Current Portfolio Setting Capital Loss Carryovers AMT Carryforward Unused Charita
210. s Note This button looks different for the retirement goal than for the other goals gt Instructions Modify Questionnaire Investor Profile Period Override Investment Profile Pre Retirement v Moderate Retirement Select the asset mix you would like to review Current Asset Mix Suggested Asset Mix All Retirement Accounts Qualified Retirement Accounts Non Qualified Retirement Accounts Non Qualified Annuity Retirement Accounts Large Cap Growth Equity 50 00 11 00 Large Cap Value Equity 0 00 14 00 Mid Cap Equity 0 00 9 00 Small Cap Equity 25 00 6 00 AUS REITs 0 00 3 00 aInternational Equity 0 00 14 00 Emerging Markets Equity 0 00 3 00 Qualified Retirement Accounts Expected rate of return 9 14 8 23 Expected standard deviation 18 14 12 98 Proposed investor profile Moderate Proposed time horizon Very Long Customize Asset Mix Figure 107 Asset Allocation Details dialog box Level 2 Plan retirement goal To override the asset allocation questionnaire your clients answered click the Modify Questionnaire button The Questionnaire dialog box opens Review the questionnaire and consider whether the responses are true for the goal If a different response to any of the questions would better reflect the goal select the check box next to the question and then change the response Responses you enter on this page only apply to the goal and not to the rest of the plan Click OK to close the Questionnaire
211. s funding this goal click Goal Funding For more information see Allocating accounts to goals on page 139 Note Qualified accounts cannot fund an emergency fund All accounts allocated toward the emergency fund goal appear on the Emergency Fund page under Emergency Fund Accounts The market value of each account displayed reflects the market value for the account and not the actual amount allocated to the major purchase goal Any accounts not allocated to a goal appear under Unassigned Accounts Allocating accounts to goals To assign accounts to fund specific goals or to view account distribution for all goals follow these steps 1 On the lt Retirement Education Major Purchase Emergency Fund gt page click Goal Funding The Goal Funding dialog box opens Your clients qualified accounts and annuities with the exception of 529 plans are automatically assigned to fund the retirement goal but can also fund education and major expense goals Non qualified accounts can fund any goal and can also be allocated to more than one goal Note You can also allocate accounts to goals or view account distribution for all plan goals on the Set Goals section Goal Funding category Goal Funding page 2 For each applicable account enter any combination of dollar amounts percentages or the keyword balance to allocate funds 139 140 to the applicable goals Note When using the Detailed Tax method you can allocate
212. s method e Goal and Expense Analysis assesses the life insurance needed to cover the survivor s goals and expenses Goals and expenses at the plan level as well as additional expenses entered for the life insurance scenario are considered This analysis is integrated into the rest of the plan e Income Coverage Analysis assesses the life insurance needed to replace income lost from the death of the client or co client This method is independent of the rest of the plan 4 On the Assumptions tab under ROR on Cash Flow Surpluses amp Liquidations enter return rates 5 Under Tax Rates view the tax rates to be used for any dependent owned assets Edit if necessary 6 Complete one of the following procedures e Using the Goal and Expense Analysis method if both clients die on page 159 157 158 e Using the Income Coverage Analysis method if both clients die on page 160 Using the Goal and Expense Analysis method if both clients die The Goal and Expense Analysis method must be selected on the Set Goals section Survivor Income category Both Objectives page See Analyzing insurance needs if both clients die Level 2 on page 156 To use the Goal and Expense Analysis method follow these steps 1 Go to the Ongoing Expenses tab Assumptions Ongoing Expenses JLump Sum Needs Asset Availability Instructions Support for Dependents End Description Owner Frequency Amount Age StartDate End Date Infl A
213. s savings strategies for non qualified assets 111 When entering multiple strategies of the same type for example two surplus savings strategies for each strategy NaviPlan saves or spends a percentage of the total surplus available on December 31 For example if a client has a 100 000 surplus and 50 is saved to Account A and 50 is saved to Account B both accounts receive 50 000 thus saving the full amount of the surplus In contrast when entering multiple strategies of different types for example one surplus savings strategy and one surplus expense strategy NaviPlan first allocates a percentage of the total surplus toward the savings strategy and then allocates a percentage of the remaining surplus toward the surplus expense For example a client has an 80 000 surplus a 50 savings strategy toward Account A and a 50 surplus expense strategy In this case NaviPlan saves 50 or 40 000 of the total surplus to Account A and then spends 50 of the remaining surplus or 20 000 on a surplus lifestyle expense After these strategies have been implemented the final 20 000 surplus accumulates in a surplus deficit account and is used in the following year s cash flow calculation Any cash flow surplus that exists the day before retirement is assumed to be spent Note If you want to enter surplus strategies be sure that your clients expenses have been entered accurately To enter surplus strategies follow t
214. s section Disability Income category Client Co client Objectives page Ongoing Expenses tab Level 2 Plan Goal and Expense Analysis method selected 2 Under Annual Expenses enter the percentage of lifestyle and medical expenses the disability insurance will cover The percentage entered becomes the default for the expenses listed under Expense 3 If education expenses exist in the plan under Education Expenses enter the percentage of education expenses to be covered in the event of disability 4 Under Surplus Strategy enter the percentage of the clients surplus cash flow you assume will be spent in future years and the percentage you assume will be saved These fields are especially useful if the clients expenses are understated For example in one of the years after disability occurs you expect the clients to incur a cash flow surplus of 10 000 You also expect the clients to spend 25 of this surplus on miscellaneous expenses and to invest the remaining amount For this example you would enter 25 in the Percent surplus spent field NaviPlan automatically saves the remaining 75 into a non qualified account 5 If you want surpluses in the plan to be removed before performing the insurance analysis select the Assume surplus is spent check box This assumption adjusts for account 166 expenses that have not been entered into the plan or when expenses are understated When the Assume surplus is spent check box is
215. s strategies for accounts Setting up a redemption strategy for an account Level 2 Detailed Tax Setting up a SEPP strategy for an account Level 2 Detailed Tax Overriding calculated return rates for accounts Setting up beneficiaries for a non qualified account Setting up a qualified account Setting the account fee for an account Setting up a 529 plan or Coverdell account Entering an UTMA or UGMA account Entering annuities Creating annuities Entering annuity subaccounts Entering payout options for annuities Entering savings strategies for annuities Setting up a redemption strategy for an annuity Level 2 Detailed Tax Setting up a SEPP strategy for an annuity Level 2 Detailed Tax Overriding calculated return rates for variable annuities Setting up a qualified annuity Entering equity compensation Entering stock options Level 2 Entering restricted stock awards Level 2 Defining asset class weightings Searching the asset classifier database Editing asset class weightings Level 2 Funding goals Overriding previously accrued investment income Entering previous Roth conversion amounts Generating the Asset Liabilities report Chapter 4 Entering cash flow information Cash flow calculations Entering regular or lump sum incomes Entering Social Security benefits Level 1 Entering Social Security benefits Level 2 Entering pension income 41 43 45 46 47 48 49 50 52 52 53 54 55 58 58 61 63 64 66 66 69 69 71
216. s to the Asset Allocation Assessment FA Refers to the Financial Assessment Indicates that the step or paragraph applies to Level 1 Plans only Indicates that the step or paragraph applies to Level 2 Plans only Indicates that the step or paragraph only applies when you are using the Average Tax method Indicates that the step or paragraph only applies when you are using the Detailed Tax method NaviPlan Premium resources Phone support Advicent Solutions provides several resources to help you use NaviPlan Premium In addition to telephone support you can access resources from within NaviPlan and Online The following table shows some of the resources available and where to find them Advicent resource Help Functional documents Knowledge Base Description and location The quickest way to get information about any command dialog box or item within NaviPlan Premium is to use the application Help To access Help click the Help button at the top of the NaviPlan Premium window Help includes a glossary of terms Functional documents explain NaviPlan Premium functionality underlying assumptions and results calculations You can access functional documents by searching the Knowledge Base at http knowledge eisi com The Knowledge Base is a database comprised of the following resources Support issues Functional documents Learning guides Help videos Frequently asked questions FAQs
217. set Allocation module is selected on the Plan Management section Modules category Modules page click the Asset Allocation button For more information see Overriding the proposed investor profile for a goal Level 2 Plans on page 131 for more information Note If you are using user defined asset allocation asset classes and investment profiles must first be created in the Plan Management section See Setting up user defined asset allocation on page 19 To model retirement expenses follow these steps 1 Under Calculate Retirement Expenses do one of the following To calculate the retirement expense based on Total annual after Select the percentage of the current tax salaries estimated after tax salary option and then enter the percentage of the current estimated after tax salary the clients will want to receive during retirement Current annual Select the percentage of the current lifestyle lifestyle expenses expenses option and then enter the percentage of current lifestyle expenses you expect the clients to have during retirement A specific annual Select the specific amount option and then amount enter the amount the clients want to receive annually during retirement To add a calculated retirement expense to the plan click the Add to Retirement Expenses button The expense and additional data entry fields appear under Retirement Expenses Under Retirement Expenses enter details for
218. set types NaviPlan uses average short term capital gains long term capital gains or marginal tax rates entered under Tax Rates on the Plan Management section Assumptions category General page 81 The default marginal average and capital gains tax rates displayed on the Plan Management section Assumptions category General page for each income range are average federal and state rates If you want to use the tax rates that apply in a particular state enter those rates on the General page under Tax Rates You can change the default state tax rate for all new plans on the User Preferences Plan Settings dialog box General tab accessed from the User Preferences menu Plan Settings Deducts amounts such as qualified contributions or tax deductible interest from the clients taxable income from other sources and then depending on the income tax method selected applies the average tax rate or bracketed federal tax rate if using the Detailed Tax method to calculate income tax liability generated by sources other than taxable portfolios Note Deductible amounts are calculated by NaviPlan based on the information entered in the plan You do not have to specifically enter them anywhere Adds all the clients expenses for the year including the following e Expenses entered on the Enter Financial Data section Cash Flow category Cash Flow page e Expenses associated with goals entered in
219. sis option must first be selected on the Set Goals section Disability Income category Client Co client Objectives page To use the Income Coverage Analysis method follow these steps 1 Goto the Lump Sum Needs tab 168 Assumptions Lump Sum Needs JAnnual Income Needs Income Available Asset Availability Instructions Pay Off Outstanding Liabilities Outstanding Description Principal Mortgage 123 677 Major Purchase Goals to Description Amount Target Date Cover Vehicle 30 000 Oct 12015 0 Additional Lump Sum Needs Click the Add Lump Sum Need button to create a new row Add Lump Sum Need Figure 136 Set Goals section Disability Income category Client Co client Objectives page Lump Sum Needs tab Level 2 Plan Income Coverage Analysis method selected 2 Under Pay Off Outstanding Liabilities select any existing loans that will be paid off in the event of disability Note This option is only available if liabilities exist in the plan and if on the Enter Financial Data section Net Worth category Assets Liabilities page Liability Details dialog box Details tab the Payoff Options at Death selection is Transfer to survivor or Payoff at first death from estate 3 Under Major Purchase Goals enter the percentage of any goals that will be paid for in the event of disability This section is only available if major purchase goals are entered in the plan with a start date after January 1 of t
220. son s Undergraduate Database Data source Peterson s Databases copyright 2011 Peterson s a division of Thomson Learning All rights reserved for college specific education expenses click the Education Calculator button The Search Education Costs dialog box opens 4 Under Education Search Criteria select the state in which the school is located and or enter the school name and then click Search The search results appear under Search Results Search Education Costs gt Instructions Education Search Criteria Use the search criteria to access the Peterson s Undergraduate Database for college specific education expenses State School Name California san Search Use wildcards in your search Search Results gt Instructions San Bernardino Valley College San Bernardino CA Expense Options 1 San Diego Christian College El Cajon CA In State Tuition San Diego City College San Diego CA 5 668 San Diego Mesa College San Diego CA In State Tuition Room San Diego Miramar College San Diego CA 17 076 San Diego State University San Diego CA m San Diego State University Imperial Valley Campus Calexico CA Out of State Tuition San Francisco Art Institute San Francisco CA 16 828 San Francisco Conservatory of Music San Francisco CA Out of State Tuition Room San F 28 236 elta College Stockton CA San Joaquin Valley College Visalia CA San Joaquin Valley College Bakersfield CA
221. ss Weightings Options select Use Asset Classifier Search 4 Under Search enter the search criteria and then click Search The results of the search appear under Results If you are unsure of all the letters in a symbol or name insert an asterisk for wildcard searches For example to search for assets that begin with br enter br in the Ticker Symbol field 5 Under Results select the appropriate asset and then click OK The Asset Class Weightings Details dialog box closes and NaviPlan updates the Asset Class Weightings field Editing asset class weightings Level 2 74 In addition to editing asset class weightings from the asset s dialog box you can also edit asset class weightings for any account annuity stock option and restricted stock on the Asset Class Weightings page To edit the asset class weightings of an existing asset follow these steps 1 Go to the Enter Financial Data section Net Worth category Asset Class Weightings page Funding goals 75 Assets Liabilities Accounts Annuities Equity Compensation Asset Class Weightings gt Instructions Assets Selected Asset Summary Account David s IRA Account Description Account Type Owner Market Value Holdings David s IRA IRA David 50 000 Equities Asset Class Weightings Class Class Class Name Percentage Class Name Percentage Large Cap Growth Equity 0 00 Large Cap Value Equity 40 00 Mid Cap Equity 0 00 Small Cap Equity 30 00
222. sset bequests click Convert to Detailed Note The Convert to Detailed button does not appear if the simple will estate distribution has already been converted to a detailed estate distribution OR To convert a simple will estate distribution to a detailed estate distribution and automatically create a marital and a credit shelter trust click Convert and Create Marital QDOT CST The trusts are created automatically 193 Note Marital only appears if one or both the clients are US citizens QDOT only appears if one or both of the clients are resident aliens Assumptions FundedTrusts Gifting Growth amp History Estate Expenses Estate Strategy D Instructions FLM E Total Taxes 121 693 1 0M E Net to Heirs 1 159 986 I Net to Charity 0 Net to Heirs and Charity 1 159 986 Life Expectancy David 2021 Estate Planning Life Expectancy 0 Edit Life Expectancy El Susan 2026 Estate Planning Life Expectancy 0 The life expectancy settings selected here apply to all estate planning scenarios and are used for comparison purposes only These settings do not affect life expectancy options in other reports Estate Distribution Client Estate Distribution Co cient Asset Estate Details Gifting Trusts Copy information from co dient Clear all Click the Add Trust button to create a new row These buttons only appear if the Specify by Order of Death option is selected on the Assumptions page under Fstate Distribution Selection T
223. st Value Basis olings Savings Strategy Return Rates Beneficiaries Account Fee Setup Market Hold Valuation Asset Class Return Description Symbol Value l is Date Weightings Rates Delete Mutual funds 20 000 0 Sep 82011 Large Cap ValueEquY 10 76 X Bonds 10 000 Yo 0 Sep8 2011 Intermediate TermEY 3 61 X Add Holding Classify Reset Symbols Figure 33 Account Details dialog box Holdings tab Level 2 Plan 3 If you have the Ibbotson Asset Allocation option in the Symbol field enter a symbol for the holding and then click Classify NaviPlan enters the description and asset class weighting for the symbol You can also search the database for a symbol as explained in Searching the asset classifier database on page 73 OR If the holding is fully weighted in one asset class select the asset class from the Asset Class Weightings list OR If the holding is weighted in multiple asset classes select Manual Classification from the Asset Class Weightings list The Asset Class Weightings Details dialog box opens Assign percentages to various asset classes to equal 100 and then click OK 4 To manually set the return rates for the holding click the Return Rates link to open the lt holding gt Return Rates dialog box Select Override and then change the appropriate return rates and standard deviations Entering a hold on a holding within an account To stop a specific portion of a holding within an account from be
224. strategy In the Start Date field enter the date the SEPP will start From the Frequency list select the payment frequency From the Distribution Method list select the method of payment St a ga If applicable select Pro Rate First Last Payments 108 7 To specify the life expectancy table to use for calculating payments as well as an interest rate click Details The SEPP Strategy Details dialog box opens SEPP Strategy Details Amount Start Date Frequency Distribution Method N A Oct 11 2011 Annual v Amortization Beneficiary 72 t Interest Payments Life Expectancy Table Date of Birth Rate 5 Single Life Expectancy v N A 2 0 00 3 Figure 89 SEPP Strategy Details dialog box For more information about the SEPP Strategy Details dialog box click Help 2 109 Setting the deficit coverage order Detailed Tax method You can select the order in which accounts and account types are redeemed to cover pre retirement deficits To specify the pre retirement deficit coverage order follow these steps 1 Go to the Enter Financial Data section Strategies category Deficit Coverage page Savings Debt Modification Redemptions Deficit Coverage Instructions Pre Retirement Deficit Coverage Order Select to specify the order in which to v Redeem from accounts to cover deficits in the pre retirement period redeem account types the order in which accounts are Fcits Non Qualifie
225. surpluses and deficits 1 Allocates any cash surplus according to the clients surplus savings strategies Each strategy is fully funded before any surplus cash is allocated to the next one entered If these strategies do not use up all the surplus cash the remainder is carried forward to the next year and accumulates as a surplus deficit To ensure that pre retirement cash flow surpluses do not affect the retirement goal calculations this account is reset to zero when the first client retires any surplus cash that exists the day before retirement is assumed to have been spent You can view the clients cash flow surpluses deficits and asset redemptions in the Itemized Cash Flow Projection for Family report Reports menu Cash Flow Details and the Accumulation and Redemption of Retirement Capital graph Reports menu Capital Accumulation and Redemption Retirement 2 Keeps track of any pre retirement cash flow deficits Before the clients retire any cash flow deficit accumulates from year to year until it is canceled out by an equivalent cash surplus 3 During retirement redeems assets at the end of the year to cover the retirement goal By default funds are used in the following order a Any reinvestment of income from non qualified assets that would be made at year end b Non qualified assets in the following order i Ratio of adjusted cost basis to market value as of the end of the year from the
226. survivor income analysis Level 1 142 grantor retained trust 185 graphs generating 199 202 H Help accessing 5 hold entering on a holding 44 holdings entering 43 Ibbotson asset allocation 18 Income Coverage Analysis method 147 151 157 160 168 income tax rate assumptions Average Tax method 7 9 income tax reports 199 incomes pensions 94 regular or lump sum entering 83 221 NaviPlan Select User Manual Level 1 and Level 2 Plans Entering client data and goals retirement 128 Social Security benefits Level 1 86 Social Security benefits Level 2 88 inflation rate base 7 base rate changing 7 Historical Rate graph 8 insurance coverage 114 117 insurance goals disability Level 1 144 disability Level 2 165 disability income Level 2 164 long term care Level 1 145 long term care needs 172 survivor income Level 1 142 survivor income Level 2 146 insurance policies disability 119 life insurance 114 long term care 120 insurance reports 121 199 insurance goals Level 1 142 investor profiles overriding 131 setting up 21 irrevocable life insurance trust 183 irrevocable trust 182 L liabilities 32 liability details entering 33 life expectancy age 12 graph 9 13 milestones Level 1 9 life insurance adding variable subaccounts 116 survivor income 156 life insurance goals Level 1 142 222 life insurance policies entering 114 future values and premiums Level 2 117
227. t Details dialog box showing fields for a 529 plan Note If the donor and the distributions beneficiary are the same person assets from the 529 plan are included with the donor s estate 6 Complete the remaining fields as required Entering an UTMA or UGMA account UTMA Uniform Transfers to Minors Act and UGMA Uniform Gifts to Minors Act accounts allow your clients to gift money to their dependent s NaviPlan considers UTMA and UGMA accounts to be non qualified accounts These non qualified accounts can fund future education costs You must assign a dependent as the owner of the account and then you can designate a client as the account custodian To set up an UTMA account follow these steps 1 Go to the Enter Financial Data section Net Worth category Accounts page 2 Click Add Account A new data entry row appears 53 3 From the Account Type list select Non Qualified 4 From the Owner list select the dependent 5 Click Details for the appropriate non qualified account The Account Details dialog box opens 6 Go to the UTMA tab Account Details Investment Portfolio Community Asset Class Description Account Type Owner Property Weightings Goal Funding New account Non Qualified v Matthew v wv Unallocated Market Value Hold Basis Date The U7MA tab is available 0 0 00 0 Aug 9 2011 only if the account is non qualified and the owner is Add Holdings a dependent Savings St
228. te EndDate Infl Add l Deise Susan s IRA 4 200 0 00 2 00 Monthly v Jan 12011 Ret Owners V 0 00 x Choose Account v Add Savings Strategy To view or edit how surplus funds are directed click Surplus Cash Usage Surplus Cash Usage Figure 85 Enter Financial Data section Strategies category Savings page Level 2 Plan Detailed Tax method Under Non Qualified or Qualified from the Choose Account list select the account to which you want to add a savings strategy and then click Add Savings Strategy Enter all the details of the clients savings plan including the amount or percentage frequency and the time frame of savings Note If the savings amount was entered as a percentage of salary the Infl check box is inaccessible and the savings are indexed by the Infl percentage indicated for the salary If you ve entered a savings amount that changes with inflation on an annual basis select the Infl check box If the amount is to change with inflation plus or minus a certain percentage select the Infl check box and then enter the rate above or below inflation For example if inflation is 3 and the savings should be increased by 5 enter 2 in the Add field To view or edit how surplus funds are directed click Surplus Cash Usage In the Surplus Cash Usage dialog box select a method and then use the Move Up and Move Down buttons to reorder the list Modi
229. te a new plan NaviPlan creates default entries for housing food transportation entertainment personal and other expenses Any expenses that were entered on the Set Goals section Retirement category Retirement page also appear Add Income Social Security Social Security Details Defined Benefit Pensions Member David Description David s pension Add Benefit Pension 7 E Cash Flow Report Under Other Expenses NaviPlan lists expenses such as liabilities and insurance that have already been entered into the plan Member David v Amount 75 000 yr 60 000 yr Details Delete Y x Br X Susan v David 7 000 yr BF X Additional expense types are available when you are using the Detailed Tax method and the Detailed Cash Flow module Amount or 80 00 yr Details Delete a x Type Estimate Benefit Expenses D ipti Housing e g utilities repairs Food Transportation e g gas insurance Entertainment e g restaurants m Personal e g clothing hobbies Other e g child care travel Amount 2 500 mo 1 000 mo 2 000 mo 1 000 mo 750 mo 2 000 mo RRE Add Expense 7 Other Expenses D ipti Mortgage College Education Type Principal and Interest Education 1 000 mo 6 000 yr Surplus Expenses of Start Description Surplus Year Surplus Expense 0 00 2011 End Year Details Delete Death i m BF X Add Surplus Expense Figur
230. ter you have entered your clients financial information and goals into a plan you can prepare and generate results When you are satisfied with the results you can generate professionally designed client reports that you can distribute to your clients In this chapter Generating stand alone reports and graphs After you have entered your clients financial information and goals you can verify the results by generating stand alone reports and graphs NaviPlan Premium provides a large selection of reports and graphs from the Reports menu Level 2 Plans have access to a larger number of reports than Level 1 Plans Stand alone report categories Examples of the tasks you can perform Keep reports that you use frequently readily available Cash Flow Asset Allocation Insurance 199 View an action plan for the clients investments redemptions insurance and debt View a synopsis of the data entered into the plan View the results of the Planning Assistant report Compare differences between the current plan and the recommended plan View account and holding details Compare summary or detailed changes in net worth over time View composition and activity details for the clients assets and liabilities Monitor changes in cash flow activity Examine current and projected cash flow on a single or multi year basis View the effects of taxes and capital loss carryovers Monitor changes in projected surpluses and defic
231. tering data when you dd Lifestyle Asset i have similar items to add New Lifestyle Asset Copy of Current Figure 24 Lifestyle Asset Details dialog box Level 2 Plan Enter detailed information If you are entering details for a residence under Property Taxes enter the property tax information for the asset The expense will end at death or when the asset is sold Level 2 Plans only By default NaviPlan assumes that property taxes are tax deductible If property taxes are not deductible clear the Tax Deductible check box If you know the clients will be selling the lifestyle asset click the Sale Information link Additional fields appear Under Sale Information select the Sell Asset check box enter a sale date and then select an option from the Direct After Tax Proceeds To list If you select New Non Qualified NaviPlan creates a new account and opens the Account Details dialog box See Creating accounts on page 41 NaviPlan uses the selected destination for after tax proceeds from the sale of the asset NaviPlan Premium estimates the before and after tax values of the asset on the sale date as well as the buying power of those values in today s dollars To enter details regarding asset return rates click the Return Rates link If you do not want to use the default return rates and standard deviations associated with the asset under Return Rates select the Override check box and then make your changes Fr
232. the Set Goals section e Loan payments calculated by NaviPlan Premium based on information entered in the Enter Financial Data section Net Worth category e Investment expenses entered under Annual Account Fees on the Plan Management section Assumptions category General page e Savings strategies entered on the Account Details dialog box Savings Strategy tab e Life disability and long term care insurance premiums calculated by NaviPlan Premium based on information entered in the Enter Financial Data section Insurance Coverage category Note Expenses associated with goals are funded by dedicated assets while all other expenses are paid from cash flow If non qualified assets owned by the client or co client linked to an education or major purchase goal provide more funds than are 82 required by that goal the excess is used to fund the retirement goal Non qualified assets owned by dependents are excluded from funding the retirement goal 4 Adds the clients other scheduled cash outflows from strategies entered in the Enter Financial Data section Strategies category and reinvestment of income from assets Calculates the clients current year cash flow surplus or deficit Calculates the clients current year net cash flow cash inflows minus cash outflows If the cash flow is positive surplus cash exists If the cash flow is negative a cash flow deficit exists Manages cash flow
233. the credit is only available for years prior to 2005 In tax years 2013 and beyond Tax Options As Legislated selected the state death tax is calculated once again based on the maximum federal credit tables 2001 Credit Amount NaviPlan uses the maximum federal credit tables regardless of the year of death NaviPlan allows for manual entry of taxes Dollar amounts between 1 and 100 must be entered with a dollar sign otherwise they are assumed to be percentages When a dollar value is entered the Infl Add l field appears which allows the option of increasing state death taxes each year Note For some states the or field is not an option but a required field NaviPlan Premium automatically calculates the selected state death tax appropriate for the selected state The calculation method used for the state defaults accordingly to either Current Maximum Federal Amount or 2001 Credit Amount For states where inheritance taxes exist NaviPlan Select calculates inheritance taxes Under Will Details select Yes for each client who has a will and then enter the date when the will was last updated Under Additional Fees enter any additional fees such as probate and administration fees that will apply to the estate If you want to gather additional estate details to include in the client report click the Estate Questionnaire button The Estate Questionnaire dialog box opens The answers you provide here are used for
234. the data entry line created by NaviPlan If additional surplus expense strategies are needed click Add Surplus Expense Enter a description of the expense the percentage of surplus income your clients will spend the time frame for the strategy and then select the owner of the expense Repeat steps 5 6 until all surplus expense strategies are entered If any surplus remains after all applicable surplus strategies have been implemented in a given year that surplus accumulates in a surplus deficit account and is used in the following year s cash flow To view or edit how surplus funds are directed click Surplus Cash Usage In the Surplus Cash Usage dialog box select a method and then use the Move Up and Move Down buttons to reorder the list 113 Surplus Cash Usage Figure 92 Surplus Cash Usage dialog box Chapter 6 Entering insurance coverage and tax details This chapter explains how to enter your clients insurance coverage and tax details into NaviPlan Premium In the Insurance Coverage category you can enter your clients planned and existing life disability and long term care insurance If you re using the Detailed Tax method NaviPlan Premium automatically calculates many tax credits and deductions You can enter any applicable credits or deductions that are not automatically calculated by NaviPlan in the Tax Details category In this chapter Entering life insurance p
235. the plan date for the client In the case of simultaneous death enter a date in the Year field and then select the name of the client that is assumed to die first The Simultaneous Death fields do not appear in a plan without a co client To designate which life expectancy scenarios will be used for client reports select the Reports check box Up to three scenarios can be selected If this analysis is for a joint analysis under Estate Distribution Selection select one of the following options Ifyou select The selection has this effect on the estate Mirror The estate details entered will apply Wills Either Dies regardless of the order of death First Specify by Order You can enter separate data to illustrate of Death either the client or co client dying first You can also copy the estate distribution details from one client to the other client Under State Death Taxes select the applicable state for state death taxes The state selected on the Client Management section Client Information category Personal Information page is selected here by default To change the default calculation of taxes select Override and then select the method of tax calculation 179 10 11 NaviPlan calculates state death taxes in this If you select manner Current Maximum NaviPlan calculates the state death tax Federal Amount using the maximum federal credit tables However
236. the surviving client under Income Beneficiaries enter the percentage that will go to the surviving client or to other beneficiaries 6 If applicable go to the Return Rates tab and then enter the expected return rates By default the investment income is reinvested into the trust Funded trusts details The following funded trusts are available in Level 1 and Level 2 Plans when using the Average Tax method The annotations in the following images show some of the unique requirements for each trust For more information see the NaviPlan Premium Help 181 182 Funded credit shelter trust details Trust Details Funded CST GSTT Description ss Trust Tax Rate Inclusion Ratio Credit Shelter Trust 40 00 0 000 Income Member Susan v _ Non Qualified If after tax contributions were Start of Year Start of Year made to a qualified asset prior to Market Value Cost Basis the transfer of assets to this CST 105 000 0 enter the after tax balance as of the beginning of the current plan year in the Basis Qualified field Beneficiaries Return Rates Figure 146 Trust Details dialog box showing funded credit shelter trust details Funded irrevocable trust details Grantor Created On Trust Tax Rate Irrevocable Trust Other y Dec 31 2008 40 00 End Date Never years 0 0 Retirement Date David If the dient and co client will become income and remainder beneficiaries from the Grantor list select O
237. ther Details For examble if both the client and Start of Year StartofYear Transfer Income to the co client are beneficiaries of a Market Value Cost Basis Surviving Client on Death trust originally established by the DD t client s mother the selected grantor should be Other Figure 147 Trust Details dialog box showing funded irrevocable trust details 183 Funded irrevocable life insurance trust details As well as the usual trust funding details for the ILIT you must also enter the details of the life insurance benefits and premiums Grantor Trust Tax Rate Crummey Trust David vy 40 00 v Transfer Gifts to Trust Gifts to Trust Year in 2010 in 2009 2010 sl 0 Death Benefit To permt the transfer of funds to pay for life insurance premiums while Payable to Trust using the annual gift exclusion select 100 00 the Crummey Trust check box Policy Beneficiaries Return Rates Future Value id oes From the Policy Type ist select the type of insurance Policy Type s used to fund the trust The Whole Life i fields under Beneft Details and Premiums vary depending on the policy type selected 4 Previous Entry NextEntry gt Figure 148 Trust Details dialog box showing irrevocable life insurance trust details Funded qualified terminable interest property trust details Funded QTIP Description Qualified Terminable Interest Property Income P Reverse QTIP Select the Reverse QTIP Election check Se
238. tion Asset Class Description Symbol Value o Basis Date Weightings Delete New Subaccount 0 0 0 Sep 8 2011 vi X Add Subaccount lt Reset Symbols Classify If you select Copy of Current NaviPlan creates a copy of the existing annuity Use this to avoid re entering data when you have similar items to add Add Deferred Annuity Fixed Annuity Variable Annuity Copy of Current Figure 45 Annuity Details dialog box Subaccounts tab Enter a unique description to identify this annuity and then select an account type owner annuitant and beneficiary When Joint is selected from the Annuitant list and either client dies the surviving client receives the annuity payments until death When the surviving client dies the selected beneficiary receives the remaining payments Select an income option method for receiving annuity payments Calculation Amount NaviPlan calculates the duration of annuity payments Certain based on the payment amount Term NaviPlan calculates the payment per 1 000 based on Certain the number of years the annuity is set to pay out Life Income NaviPlan calculates the payment per 1 000 based on the annuitant s life expectancy and the guaranteed number of years Withdrawals Payments do not start automatically when the plan as Needed reaches the annuitization date Instead NaviPlan redeems funds from the annuity as needed to cover cash flow deficits occurri
239. trategies on page 110 for more information Generating the Cash Flow report The Cash Flow report provides a summary of all the incomes and expenses entered in the plan To generate the Cash Flow report follow these steps 1 Go to the Enter Financial Data section Cash Flow category Cash Flow page 2 Click the Cash Flow Report button The Cash Flow Report generates 102 103 i Add as Favorite Reports Window Cash Flow Report David Lee and Susan Lee Financial plan 2011 Regular Income Income Source M eM ber Applicable Amount Indexed David s income David Jan 1 2011 to Apr 30 2035 6 250 mo Inflation Susan s income Susan Jan 1 2011 to May 31 2037 60 000 yr Inflation David s bonus David Jan 1 2011 to Apr 30 2035 7 000 yr Inflation Defined Benefit Pension Plans Estimate Benefit Annual Benefit so Plan Owner David Indexed by 3 00 Pct payable to survivor 50 00 Regular Expenses ea re ee ee osn Applicable Indexed Expe pee Housing e g utilities Joint Jan 1 2011 to Apr 30 2035 2 500 mo Inflation repairs Joint Jan 1 2011 to Apr 30 2035 1 000 mo Inflation Yes Transportation e g gas Joint Jan 1 2011 to Apr 30 2035 2 000 mo Inflation Yes insurance Entertainment e g Joint Jan 1 2011 to Apr 30 2035 1 000 mo Inflation Yes restaurants movies Personal e g clothing Joint Jan 1 2011 to Apr 30 2035 750 mo Inflation Yes hobbies Other e g child care Joint Jan 1 2011 to
240. ts are available at the start of disability qualified assets are available at the start of retirement and lifestyle assets are available for the estate If the disability insurance coverage is to cover the outstanding major purchase goals in the event of the disability of one client select the Cover Major Purchase Goals check box for the client and or co client If the disability insurance coverage is to pay off all outstanding liabilities select the Pay Off Outstanding Liabilities check box for the client and or co client Long term care insurance analysis Level 1 1 Go to the Set Goals section Long term Care category Long term Care page Va U Long term Care gt Instructions Long term Care Insurance Analysis to Include If David enters LTC v If Susan enters LTC Objectives Percentage of lifestyle and medical expenses to cover Additional Daily LTC Expenses Figure 117 Set Goals section Long term Care category Long term Care page Level 1 Plan 2 Under Long term Care Insurance Analysis to Include select the appropriate If lt client co client gt enters LTC check box to model the scenario for the client or co client 145 The age at which long term care begins is based on the age of death set on the Set Goals section Retirement category Retirement page By default the client is assumed to require long term care for a period of four years starting on January 1 of the year in
241. uities Figure 164 Set Goals section Estate Planning category Estate Strategy page Asset Estate Details tab e To prevent probate from being assessed against all assets in the client s and co client s gross estate select the Living Trust check box e To prevent an asset from being liquidated to cover estate costs select the Not Available For Estate Needs check box e To specify the Contingent Beneficiary of a non qualified account at the death of the owner under Non Qualified and Lifestyle select a beneficiary from the list e To specify a beneficiary for a qualified or annuity asset at the death of the owner under Qualified and Annuities select a beneficiary from the list e To model a stretch multi generational qualified asset change the primary beneficiary to someone other than the client or co client and then select the Multi Generational check box When the asset owner dies the asset will pass to the beneficiary and IRD taxes will be avoided 5 To enter gifting strategies that exist in the clients existing estate scenario go to the Gifting tab and then enter the gifting details 195 only These settings do not affect life expectancy options in other reports Estate Distribution Asset Estate Details rusts Split Max Annual Annual Description Gifted By GiftedTo Gift Gift Exclusion Amount Start Date End Date Infl Add l Delete Regular Cash Gift David v Julia v 0 Jan 12011 GB Death Owner
242. uities stock options and restricted stock awards entered in the plan To generate the Asset Liabilities report follow these steps 1 Go to the Enter Financial Data section Net Worth category Assets Liabilities page 2 Click Assets Liabilities Report The Asset Liabilities report generates Asset Liabilities Report David Lee and Susan Lee Financial plan 2011 z Residence Sale Date N A Joint Direct After Tax Proceeds To N A Dec 31 2010 Projected Value as of Sale Dates Purchase Amount 250 000 Before Tax N A Market Value 300 000 After Tax N A Valuation Date Aug 9 2011 Growth Rate 2 00 Standard Deviation 0 00 The growth rate is a pre tax amount Portfolio Assets Market Def Std Annual Value Market Int Div es Growth Dev Total Fee Asset Name Goal Date Value E Yo KA KA 0 00 Aug 9 10 000 2 49 0 00 0 00 0 00 0 00 3 43 2 49 2011 Retirement Aug 9 50 000 0 0 65 1 81 6 34 0 00 1 29 17 67 10 09 0 00 2011 Susan s IRA Retirement Aug 9 60 000 0 0 65 1 81 6 34 0 00 1 29 17 67 10 09 0 00 2011 Liabilities Liability Name Date End Date Principal Principal Rate Payment Type Linked to Asset Mortgage Dec 312010 May 82030 125 000 125 000 7 00 Principal amp Interest 520 Thomas St Figure 65 Asset Liabilities report 3 To generate a printer friendly report click PDF or Word NaviPlan generates and opens the report in the selected format 78 Chapter 4
243. uity Compensation page To enter a new compensatory stock option follow these steps 1 Go to the Enter Financial Data section Net Worth category Equity Compensation page 2 To enter a new stock option click next to Add Stock Option and then select Non Qualified Stock Option or Incentive Stock Option The Stock Option Details dialog box opens Stock Option Details y Stock Option Details Granted Community Description Company Symbol Owner Type Grant Date Options Property David s stock option David v NSO Dec 312010 5 000 v Start of Year Current Unit Strike Price Cost Basis AMT Basis Unit Price Value As Of Value 10 00 S S 10 00 Jan 12011 Return Rates Vesting and Expiry Exercise Schedule Asset Class Annual Dividend Growth Standard Weightings Override per Unit Rate Deviation Large Cap Value Egu 0 26 Figure 55 Stock Option Details dialog box Return Rates tab 3 In the Description field enter a unique name for the stock and then complete all the required fields 4 From the Asset Class Weightings list on the Return Rates tab select an asset class if the account is fully weighted in one asset 69 class OR If the account is weighted in multiple asset classes select Manual Classification from the Asset Class Weightings list The Asset Class Weightings Details dialog box opens Assign percentages to various asset classes to equal 100 and then click OK If you have the Ibbotson Asset Alloc
244. ult NaviPlan does not restrict the asset classes or the holding percentages within each asset class To override these defaults follow these steps a Click Individual Constraints In the dialog box that opens you can set the minimum or maximum holding percentage for a single asset class Asset Class Exclusion Minimum Maximum Class Name Holding Holding Large Cap Growth Equity 0 00 100 00 Large Cap Value Equity 0 00 100 00 Mid Cap Equity 0 00 100 00 Small Cap Equity 0 00 100 00 US REITs 0 00 100 00 International Equity 0 00 100 00 Emerging Markets Equity 0 00 100 00 Long Term Bonds 0 00 100 00 Intermediate Term Bonds 0 00 100 00 Short Term Bonds 0 00 100 00 High Yield Bonds 0 00 100 00 International Bonds 0 00 100 00 Cash 0 00 100 00 v v v v v v v v v v v v v Revert to Defaults Please indicate a reason for the exdusion Figure 22 Individual Constraints dialog box b Enter the minimum and maximum holding constraints for each asset class c To exclude an asset class clear the associated check box d To return all overridden asset class weightings to the initial recommended asset class weightings click Revert to Defaults e If necessary enter any additional comments or details f Click OK to close the Individual Constraints dialog box NaviPlan applies the constraints to the plan and the Efficient Frontier graph updates 5 Click OK to close the Optimize dialog
245. um needs are expected click Add Lump Sum Need and then 153 enter the details of the need in the fields that appear 11 Go to the Survivor s Income tab Assumptions Annual Income Needs Lump Sum Neede Survivor s Income asset Availability gt Instructions Survivor s Income Description Member Income Type Frequency Amount Start Date End Date H mv Br Salary Salary v Annual v 60 000 Jan 12012 Ret Owner v 0 00 EF Add Survivor Income 1_ This income has an associated Retirement Pension Benefit Adjustment of the income amount will automatically adjust the pension value for this analysi Figure 124 Set Goals section Survivor Income category Client Co client Objectives page Survivor s Income tab Level 2 Plan Income Coverage Analysis method selected 12 To enter a new income click Add Survivor Income and then enter all appropriate data 13 To indicate when accounts are to be made available during the survivorship period complete the procedure Assigning asset availability if one client dies on page 154 Note To delete any changes and revert the survivor incomes that were created on the Enter Financial Data section Cash Flow category Cash Flow page click Reset Assigning asset availability if one client dies On the Asset Availability tab for either the Goal and Expense Analysis method or the Income Coverage Analysis method you can indicate when assets ar
246. unts 141 Chapter 8 Entering insurance goals This chapter explains how to enter insurance goals in Level 1 and Level 2 Plans Insurance goals are entered on separate pages depending on the type of insurance In this chapter Entering insurance goals Level 1 142 Entering survivor income goals Level 2 146 Analyzing insurance needs if both clients die Level 2 156 Entering disability income goals Level 2 164 Assessing long term care needs Level 2 172 Entering insurance goals Level 1 In Level 1 Plans insurance goals consist of life insurance disability insurance and long term care insurance Enter the applicable insurance information as described in the following procedures e Survivor income analysis Level 1 on page 142 e Disability insurance analysis Level 1 on page 144 e Long term care insurance analysis Level 1 on page 145 Long term care insurance analysis Level 1 on page 145 Long term care insurance analysis Level 1 on page 145 Survivor income analysis Level 1 142 1 Go to the Set Goals section Survivor Income category Survivor Income page 143 y Survivor Income Instructions Life Insurance Analysis to Include v If David dies If Susan dies Total Lump Sum Annual Ongoing Number of Expenses on Death Expenses Years If both die 10 000 60 000 10 Objectives Percentage of lifestyle and medical expenses to cover Cover Major Purchase Goals Pay Off
247. uring the survivorship period complete the procedure Assigning asset availability if one client dies on page 154 Using the Income Coverage Analysis method if one client dies The Income Coverage Analysis option must first be selected on the Set Goals section Survivor Income category Client Co client Objectives page See Entering survivor income goals Level 2 on page 146 151 To use the Income Coverage Analysis method follow these steps 1 Goto the Annual Income Needs tab 2 To calculate a percentage of current income needed during survivorship under Current Income Level Calculator enter a percentage in the to cover field and then click Add to Annual Income Needs The income need now appears under Annual Income Needs 3 To define a new annual income need that will apply during survivorship under Annual Income Needs click Add Annual Income Need and then enter all applicable data Assumptions Annual Income Needs Lump Sum Needs Survivor s Income Asset Availability Instructions Current Income Level Calculator Household Pre tax Income tocover Amount x 80 53 600 Add to Annual Income Needs Annual Income Needs Income Need Infl Description Member pre tax Frequency Start Date End Date Add l Delete Lifestyle Expenses Susan v 50 000 yr Annual wv Jani2012 amp Death Co cieM v 0 00 X Add Annual Income Need Support for Dependents End Description Dependent Frequency Amount Age
248. verride per Unit Rate Deviation Large Cap Value Equ 0 26 8 149 3 619 Figure 58 Restricted Stock Details dialog box Return Rates tab 3 In the Description field enter a unique name for the stock and then complete all the required fields 4 From the Asset Class Weightings list on the Return Rates tab select an asset class if the account is fully weighted in one asset 71 class OR If the account is weighted in multiple asset classes select Manual Classification from the Asset Class Weightings list The Asset Class Weightings Details dialog box opens Assign percentages to various asset classes to equal 100 and then click OK If you have the Ibbotson Asset Allocation option you can search for asset class weightings See Searching the asset classifier database on page 73 5 If you will not be using return rate associated with the selected asset class weighting select the Override check box and then enter the return rate values 6 When you ve finished entering the applicable details of the stock option go to the Vesting and Release tab Return Rates Vesting and Release Vesting and Release Market Value per Unit When Released Release Estimated Direct Account Market Value Unsold Schedule Vested Strategy Tax Rate Proceeds To Details Calculate per Unit Shares Dec 312010 0 00 None 0 00 After 1 year 20 00 Cashless After 2 years 20 00 Sell All After 3 years 20 00 None After 4
249. x by an amount greater or less than the default inflation rate enter a different percentage in the Add field Note The Infl check box is not accessible when a percentage of salary is entered Setting up a redemption strategy for an annuity Level 2 Detailed Tax 63 You can enter a redemption strategy for any deferred annuity type to redeem an annuity over a period of time or you can redeem an annuity in full as a lump sum To set up a redemption strategy follow these steps 1 Go to the Enter Financial Data section Net Worth category Annuities page 2 Under Deferred Annuities click Details for the appropriate annuity The Annuity Details dialog box opens 3 Go to the Redemptions tab Payout Options Savings Strategy Redemptions Qualified Account Setup Waive Early Redeem Amount Withdrawal All Sor Frequency Penalties StartDate End Date Infl Add l Delete 100 00 Lump Sum v Aug 9 2011 H x Add Redemption Strategy Substantially Equal Periodic Payments SEPP Add Deferred Annuity 1 Previous Entry NextEntry gt Figure 50 Annuity Details dialog box Redemptions tab Redemptions details Level 2 Plan Detailed Tax method 4 To redeem a portion of the annuity or all of the annuity over time in the Amount or field enter either the percentage of the annuity to redeem or an amount to redeem periodically based on the selection from the Frequency list OR To redeem the entire a
250. ystem has generated by projecting the plan into the future and extracting the relevant details This information is dynamically generated by the system and may vary from plan to plan This facility is organized into the following categories Problems 2 possible problems of which you should be aware Questions 10 questionable strategies or data values Opportunities 2 possible opportunities on which you may capitalize Reports 3 select one of the options to review the reports listed The Qualified Contribution Limits report contains information specific to retirement savings plans Here you wil find useful analysis regarding the client s qualified contributions and contribution limits The Cash Flow report contains information related to Pre Retirement surpluses and deficits This information is useful in determining the impact that the client s goals and associated savings plans wil have on their cash flow You should be aware that the system is not designed to perform detailed cash flow analysis Please refer to the Cash Flow report for more details The Net Worth report contains information on the accumulation and or depletion of assets over time It displays both assets and liabilities and the net value or difference at the end of the current year Figure 170 Planning Assistant dialog box 2 From the Settings menu select the plan type you want to analyze The Current option is based on the plan in which you are working The R

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