Scenario lifetime penalties

Sum of penalties over the projection.

Field: Lifetime penalties Unit: US dollars Basis: nominal dollars Computed by: Engine Status: Complete chain

Appears in: scenarios-page (Headline "Lifetime penalties")

Calculation records

• Scenario lifetime tax and penalties Composition record, justified by derivation

  Purpose: Total each scenario side's annual tax and annual penalties as two separate channels.

  Statement: scenarios/comparison.ts#compareScenarioPlans separately sums nominal annual YearResult.tax and YearResult.penalties for each scenario side, then places each baseline/proposal total in its comparison cell without mixing the two channels.

  Formula: lifetimeTax_s = sum over years y of tax_{s,y}; lifetimePenalties_s = sum over years y of penalties_{s,y}

  • tax_{s,y}: Side s, year y published tax (unit: nominal USD) (domain: nonnegative)
  • penalties_{s,y}: Side s, year y published penalties (unit: nominal USD) (domain: nonnegative)

  Timing: every projection year of each side

  Rounding: none stated

  Limits:

  • Penalties are excluded from tax by the result-type contract, so folding them into the tax channel changes both totals, and the delta belongs to the separate comparison-cell identity rather than to these side totals. The worksheet's annual tax and penalty rows for both sides are supplied as ProjectionResult literals at the simulate seam; the aggregation and the comparison assembly are the real functions.

  Provenance: derived by codex, implemented by claude.

  Independent review: cursor

  Gates (6 of 6 pass): fixture registers a test: pass; pins resolve: pass; families exist: pass; worksheet exists: pass; mutation receipt exists: pass; provenance independent: pass

  Worksheet: scenario-lifetime-tax-and-penalties.md Mutation receipt: scenario-lifetime-tax-and-penalties.mutation.md

  Evidence tests: comparisonCells.evidence.test.ts

  Implemented in: comparison.ts

  Is the number of: scenario-lifetime-tax, scenario-lifetime-penalties

  Feeds: scenario-comparison-cell

Records that feed this number

• Annual penalties: early withdrawal plus the IRC 4974 excise Composition record, justified by derivation

  Purpose: The two penalty channels a year composes, and why neither is part of tax.

  Statement: projection/internal/types/result.ts#YearResult.penalties is composed by projection/internal/annualFundingCandidateEvaluation.ts#annualFundingCandidateEvaluation as projection/internal/annualFundingWithdrawalEffects.ts#annualFundingWithdrawalEffects reporting penaltyExcludingRmdShortfallExcise plus the IRC 4974 excise from rmd/rmdShortfallExcise.ts#computeRmdShortfallExcise. The early-withdrawal rate is 10 percent on pre-age-59-and-a-half taxable traditional withdrawals, inherited distributions are never subject to it, and the excise prices max(0, required - distributed by deadline) at the stated rate, whose post-SECURE-2 default is 25 percent, once for each obligation. In the calendar year a surviving spouse's election to treat an inherited IRA as her own takes effect, after the year of the owner's death, that IRA owes only its owner RMD (Treas. Reg. 1.408-8(c)(3)) and leaves the beneficiary's same-decedent group ((e)(2)(i)), so projection/internal/annualInheritedIraDistributions.ts#annualInheritedIraDistributions puts it in no beneficiary obligation. Penalties stay outside tax, AGI and MAGI. Units: nominal USD per year. Rounding: none.

  Formula: penalties = penaltyExcludingRmdShortfallExcise + rmdShortfallExciseTax; early = 0.10 x penalizable traditional; excise = rate x max(0, required - distributed)

  • penalizable traditional: Taxable pre-59.5 traditional withdrawal (unit: usd) (domain: nonnegative; 0 for inherited accounts)
  • required: Required minimum for the obligation (unit: usd) (domain: nonnegative)
  • distributed: Distributed by the statutory deadline (unit: usd) (domain: nonnegative)
  • rate: IRC 4974 rate (unit: 1) (domain: 0.25 default from 2023)

  Timing: once per accepted funding evaluation in the projection year

  Rounding: none

  Limits:

  • Asserted twice. At the two component producers: annualFundingWithdrawalEffects reports 2,000 of penaltyExcludingRmdShortfallExcise on the worksheet's 20,000 pre-59.5 taxable traditional withdrawal, and computeRmdShortfallExcise prices the worksheet's 12,000 required against 4,000 distributed as an 8,000 shortfall and a 2,000 excise at the default 25-percent rate with no relief elected. And as the published penalties of a real simulatePlan 2026 row that carries both channels at once: a 50-year-old whose only portfolio is a traditional IRA and whose 16,000 of required lifestyle plus the 2,000 excise drive a need-based withdrawal of exactly 20,000 under a zero-rate test calculator, alongside an inherited Roth account whose completed five-year deadline observation (opening benefit 12,000, 4,000 distributed by the 2026 deadline) prices the excise without replaying any cash
  • Plan assumptions beyond the worksheet's inputs for that ledger year: filing single in KY at a zero state rate with a zero-rate test tax calculator, so tax is 0 and the whole need is spending plus penalties; the test asserts the 10-percent rate relation W = S + excise + 0.10 W closes at exactly 20,000
  • The worksheet's fourth wrong reading is asserted as a rule: the same withdrawal-effects call on an inherited traditional account reports a zero penalty
  • Restated 2026-09-30 and reviewed by Grok the same day: in an election year the elected IRA enters no beneficiary obligation. Asserted in simulate.spousalElectionYearOwnerRmd.test.ts on a 75-year-old spouse whose mid-2026 election takes effect: the owner RMD of 4,065.04 (100,000 / 24.6) is paid by 1,000 before the election and 3,065.04 after and is the one obligation, and the beneficiary figure of 6,689.19 (99,000 / 14.8) stays on the account's evidence as the trigger only, so the excise is 0 and not the 1,672.30 a second, unpaid obligation would charge

  Provenance: derived by codex, implemented by claude.

  Independent review: grok

  Gates (6 of 6 pass): fixture registers a test: pass; pins resolve: pass; families exist: pass; worksheet exists: pass; mutation receipt exists: pass; provenance independent: pass

  Worksheet: tax-penalties-annual.md Mutation receipt: tax-penalties-annual.mutation.md

  Evidence tests: annualFundingCandidateEvaluation.evidence.test.ts

  Implemented in: result.ts; annualFundingCandidateEvaluation.ts; annualFundingWithdrawalEffects.ts; rmdShortfallExcise.ts; annualInheritedIraDistributions.ts

  Is the number of: tax-penalties-annual

  Feeds: portfolio-need-annual, display-total-spending-annual, display-tax-plus-penalties-annual, scenario-lifetime-penalties

Engine source: engine/src/scenarios/comparison.ts (ScenarioHeadlineComparison.lifetimePenalties (sum of YearResult.penalties))