You have the ability to account for dividends in the Boldin Planner
A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares. Dividends are typically distributed from a company's profits and are a way for companies to share their earnings with investors. They are often paid on a regular basis, such as quarterly or annually.
In taxable accounts, these distributions are subject to tax, while in IRAs or 401(k)s, taxation is deferred until withdrawal. All distributions/withdrawals from these accounts are taxed as ordinary income, whether they are principal, capital appreciation, or dividends.
To account for dividends in an after tax account, you'll enter your dividend yield. The yield should be included in your total return for the account.
For example: Your total average annual return is 6%, consisting of 4% capital appreciation and 2% dividend yield
Rate of Return: Enter 8% optimistic and 4% pessimistic
Dividend Yield: Enter 2% for the annual dividend yield (we do not allow for optimistic and pessimistic dividend yield)
By default, dividends will be reinvested which will increase the balance and the cost basis of the account in your plan projections. They will also be assumed to be qualified dividends meaning any associated capital gains tax will be included in your capital gains tax modeling each year as per IRS regulations.
Charting Dividends are also integrated into several other tools provided by Boldin. In the Roth Conversion Explorer, dividends are treated as qualified dividends and incorporated into the capital gains tax modeling. They are also accounted for in the Lifetime Income Projection tool, under the "Other Income" category. For a detailed breakdown, users can navigate to Insights > Income and Expenses.
Dividends will display as Dividends on the Insights > Savings > Contributions and Investment Returns chart
Dividends will display as Realized Gains on the Gross Taxable Income by Source chart
Please see this article for more information regarding after-tax accounts.
Display of Dividend Income in Boldin Tools
Roth Conversion Explorer: This tool shows dividends as qualified dividends, which are incorporated into the capital gains tax modeling. Federal and state income taxes are also accounted for in this feature, and the turnover rate reflects long-term capital gains.
Income and Drawdowns Screens: Dividends, by default, are set to be reinvested and do not appear as direct income. Instead, they are included in charts like "Savings Contribution and Returns" and "Gross Taxable Income by Source."
Lifetime Income Projection: In the Lifetime Income Projection tool, dividends are part of the "Other Income" category alongside other investment incomes like interest and windfalls. Users can refine this information under Insights > Income and Expenses.
Troubleshooting and Tips
Why might dividends be hard to locate?: Dividends may appear aggregated with elements like realized gains or broader income groupings.
How to verify dividend inclusion?: Use the "Insights" section to confirm that dividends are accurately categorized in taxes and income projections.
Summary
Boldin ensures that dividend income is comprehensively integrated across financial tools. While it may not always be labeled explicitly, it contributes to broader income, tax, and investment calculations. Familiarizing yourself with the presentation and category structure helps in accurate financial tracking.