Previously Incurred Investment Activity

• Previously incurred investment income is investment income accrued before the valuation date for each asset in the plan.
  • The total amounts entered apply to all assets in the plan. These amounts are used by NaviPlan to calculate start-of-year market values for the assets in the plan.
  • This dialog box also displays any previously paid account fees for plans using the Detailed Tax method.
  • By default, NaviPlan displays the account fees paid from January 1 of the plan year up to the Plan Analysis Date.

• For accounts with a midyear valuation date, it is assumed that the start-of-year market value is the same as the market value as of the valuation date. Account growth is not calculated until the month specified as the valuation date.
• NaviPlan uses each account’s rate of return to estimate the investment income earned on non-qualified accounts from the start of the year to the month prior to the valuation date. The estimated amount, which includes all non-qualified accounts, is considered accrued investment income.
• Investment income calculations include two periods:
  • Accrued investment income from January to the month previous to the valuation date
  • Non-accrued investment income from the valuation date to the end of the year
• NaviPlan calculates taxes on the total investment income (both accrued investment income and the asset growth starting in the month specified as the valuation date). Using accrued investment income may affect cash flow in the first plan year.
• Accrued investment income is an aggregate amount including all non-qualified accounts. Accrued investment income is not reinvested into the accounts. Only after-tax income earned on each account since the valuation date is reinvested.
• Accrued investment income displays the collective amount by return type, but it is calculated for each non-qualified account individually.
• All accrued investment income is included for tax purposes.
• All of the investment income (accrued income as well as the amount for the remainder of the year) is shown in the Income (for taxes) – Investment line in the Income Tax Summary report. Income is broken down by type, such as interest or dividends.
• Any taxes owing on the accrued investment income (that is, the income earned prior to the valuation date entered) are paid from the clients’ cash flow, not from the investments.

• In a joint analysis, accrued investment income is normally assigned evenly between the client and co-client. However, if the Owner is a dependent the accrued investment income is distributed as follows:

Owner dependent of	<client>	<co-client>
Both clients or Other	50%	50%
<client>	100%	0%
<co-client>	0%	100%

• NaviPlan sets certain data fields by default. In some cases, these defaults are based on system calculations; in others, they are simply good working assumptions. Select Override to make these fields editable so that you can replace any data that is inappropriate for your clients' plan.

<return types>

• Investment income received from all non-qualified assets in the plan before the assets’ valuation dates.
  Note: These fields can only be edited when the Override check box is selected.

Qualified Proceeds

• Taxable investment income received from all qualified assets in the plan before the assets’ valuation dates, for example, redemptions from IRAs.
  Note: This field can only be edited when the Include income above in cash flow check box is selected.

Include income above in cash flow

• If selected, NaviPlan includes the investment income in cash flow. A separate cash flow appears for each type of investment return.
• If this check box is cleared, NaviPlan assigns an amount to offset the total of the added investment incomes. The income does not affect the clients’ cash flow.

Notes:

• Previously paid account fees are available only in plans that use the Detailed Tax method.
• Annual account fees paid on joint account are split between the client and co-client.

Deductible Account Fees: Paid from Cash Flow

• Annual account fees paid from cash flow by the client and co-client.

Deductible Account Fees: Paid from Account

• Annual account fees paid from accounts by the client and co-client.

Non-Deductible Account Fees

• Non-deductible annual account fees paid by the client and co-client.