Common Workflow

This section describes how Catalyst is commonly used to bring tax clarity to your financial decisions. You can use this as a jumping off point to find the best way to use Catalyst to answer your big questions.

Generate your questions

Catalyst works best when you have a question in mind. As a financial professional, your client may have asked you “I need to fund a down payment for a new home, where should I pull the funds?”. As an individual coming up on RMDs, you may ask “How much will I pay in taxes if I do a Roth conversion this year?”

You do not need to have every nuance in mind, you will find that starting to see some results will help generate more questions as you go.

Gather data

A great part of Catalyst is it’s ability to be flexible with how specific your input data is. You may be looking for a very quick, rough estimate. You might be looking to get an estimate within a few dollars for your tax payment or anywhere in between. Catalyst allows for flexibility in data entry so you choose how much data you have available or want to gather.

For example, for a rough estimate, you might simply enter “I make $90k in pension income, $35k in social security, interest is around $5k, and I have $10k in dividends this year.” The actual values are probably not actually those nice round numbers, but the final estimate will give you a good picture either way.

You also might choose to get the numbers exactly – “My pension income for the year is $87,337, social security is $33,955, interest last year was $4,652, and my dividends are $9,811.”

Catalyst is happy to give you an estimate either way.

Create a Projection

First, choose the client you are working with. You can use the Search Clients box to choose an existing client, or just type in a new client name if this is the first time.

Enter your base Projection data. Remember, your base data should be the known and expected income, without any questions (like Roth Conversions) added in.
In our example, the Pension, Social Security, Interest, and Dividends income will be received regardless of our decision on Roth Conversions, so it should all be entered.

Add Scenarios for your questions

Start adding Scenarios. You may have only one question to start, or you may have multiple.
Each time you ‘Add Scenario’, the input fields will default to what you entered for the Base Projection. You can then modify these values for each question. Typically you add new information that was not in the Base Projection, but you may want to ask something like “What if I got a raise at work?” and increase your W2 Income for a particular Scenario.
For our example, perhaps you’re really not sure how much you want to do in Roth Conversions. You can throw in 3 Scenarios with $30k, $50k, and $70k as options and see how each one comes out.

Review results

Once you haved asked your known questions, spend some time and look at the results. What stands out to you? What values are changing between Scenarios? Did something new appear?
You will typically find only a few small changes from Scenario to Scenario and can assess how they impact your taxes and what decisions you may want to make.
For our example, perhaps you found that the $70k Roth Conversion Scenario pushed you up into a higher IRMAA tier.

Add more Scenarios as needed

Using our example, perhaps the $30k Roth Conversion was low, but the $50k was a little high for your needs.
You can keep iterating and adding more Scenarios to tune in the value as you go.

Repeat throughout the year

For Catalyst Plus and Catalyst Personal users, you should consider reviewing your Scenarios throughout the year.
Often a user will run some projections early in the year to get a sense of their taxes and some actions that might be taken.
They will then update those numbers as the year gets closer to ending, feeling more confident in their numbers and the options available.
They can then run update those with final, more precise values at the end of the year.