FactorTraditional PlanGolden Plan
Yearly Tax Deducted from Account ValuePersonal Retirement Assets for a Traditional Plan are taxed each year on realized capital gain, dividend, and interest distributions from the mutual funds held in the managed account. In Golden Analytics projections, taxes at the applicable rates are deducted from the distributions before reinvestment. The reinvested amount after tax increases the cost basis referred to below. The account is rebalanced each year, and capital gains or losses may be realized.Personal Retirement Assets for the Golden Plan are held in a no-load variable annuity, and are therefore not taxed on investment returns from the underlying variable annuity mutual funds. The cost basis remains constant at the original invested amount. The variable annuity is rebalanced each year, but capital gains and losses are not currently taxed.
Calculation of Retirement Income before Tax at Income Start AgeFor the Traditional Plan, Golden Analytics assumes the managed account is surrendered and the after tax proceeds (after any capital gains tax) are applied to purchase an annuity certain with 20 years of guaranteed payments. The cost basis is further increased to reflect the net amount paid.For the Golden Plan, Golden Analytics assumes the variable annuity is exchanged income tax free to the 20-year annuity certain. The same annuity purchase rates are assumed for the Traditional and Golden Plans.
Yearly Taxes Deducted from Annuity Payout to Determine Spendable Retirement IncomeFor the Traditional Plan, under annuity rules, payments under the annuity certain are taxed at ordinary income rates, although a portion of each payment is received tax free as a return of principal. The higher cost basis of the Traditional Plan is used to calculate the excluded amount.For the Golden Plan, the original cost basis is used in determining what portion of annuity payment is received as a tax-free return of principal. Thus, in most cases a higher portion of annuity certain payments are taxable under the Golden Plan.
Advisory and Transaction FeesFor the Traditional Plan, the annual advisory fees are assumed to be 1.25% per year and to be representative of the fee on accounts under $250,000 charged by independent RIA’s. No transaction fees are assumed in the Traditional Plan. Golden Analytics will review these assumed fees periodically.For the Golden Plan, the annual advisory fees are assumed to be .50% and to be representative of the fee on accounts under $250,000 for online/800# managed account mutual fund programs. The variable annuity fees are assumed to be .35% per year and to be representative of fees under no load variable annuities. No transaction fees are assumed in the Golden Plan. Golden Analytics will review these assumed fees periodically.
Risk ManagementBased on the risk profile of the individual, Golden Analytics sets the allocation among Model Portfolios of Passive Equity, Active Equity and Fixed Income Model Portfolios. The account is rebalanced annually among the Model Portfolios to the original allocation.The allocation and rebalancing among the equity and fixed income Model Portfolios are the same for the two plans. At income start age, an income stream is locked in by assuming purchase of conversion/exchange to an annuity certain.