QWin 2015 Premier (R12): How to treat IRA fund/security/institution transfers in Quicken?

Unknown

2015 Premiere R12

After accounting for IRAs in single security mutual funds over a long period of time, I moved the money to new funds at new a new financial institution where they were then invested in new securities. 

Would you agree that I should treat this as a cash transfer?  If so, how do I maintain my cost basis?

q_lurker

Cost basis is a very defined, by-security number, not by account.  When you sell some shares and buy new shares, those new shares have their own cost basis independent of any prior holdings.  

It may be possible for you to more simply re-set your account to reflect the new financial institution, then sell the old holding and buy the new holding, all in the same account.  That avoids the cash transfer.  

If you choose to go the new account route, I have still found it better to transfer the shares to the new account, then do the Sells and Buys, rather than transfer cash.  When you transfer cash between IRA accounts in Quicken, the program typically asks about the Contribution Year for the new addition to the receiving account.  That is an non-applicable question.  I am not particularly aware of any ramifications to that question or to Quicken treating the transfer as a new contribution, but I still try to avoid that circumstance.  The Shares Transferred approach supplies that avoidance.  

Unknown

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

Unknown

I just discovered that the troublesome "contribution" assignment of the incoming transfer is triggered by settings in the "tax schedule" set up in the account set up screen. This can be changed if one wishes to transfer money that is not a contribution offering a less esoteric solution to the above issue.

q_lurker

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

Do you know whether Quicken keeps a tax basis anywhere as well?

Not to my knowledge.  But I do not do anything with the Tax Planner module in Quicken which is where that type of detail might arise.  Quicken does expect you to keep traditional IRA money in separate accounts from Roth IRA money, but as far as I can tell or recall, there is no provision for a tax-basis to the traditional IRA accounts.  

these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

I understood that and yes, these are non-taxable transactions simply because they are in tax-deferred accounts.  My point on the accounts though was that IF the original account was 100% converted into the new account, it is not mandatory that you create a new Quicken account.  You would have the option to change the account attributes from the original account (financial institution and account number) to the new account (new FI and account number).  

I don't think your step 2 - Create a deposit ...  will avoid the contribution consideration.  The only way I know to avoid that contribution consideration is through a transfer of shares.  That can happen either as outlined in your linked discussion through a MM fund or fictional cash security, or as I suggested by transferring the actual securities from the original account (not selling them in that account) and then actually (in Quicken) selling them in the new account to fund the new purchases in the new account.  Since these are all non-taxable transactions, neither account will be reporting sales to the IRS.  

Unknown

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

If "deposit" is shown rather than "contrib" in the "action" field of the destination account as verified, wouldn't that imply that Quicken is no longer classifying the transaction as a contribution?

mshiggins

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

Why do you think your IRA has a tax basis? Did you make non deductible contributions?

Unknown

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

Yes, my wife and I have a couple of Roth accounts. Also, I think I get your point that traditional or deductible IRAs have no basis but if I'm not mistaken, isn't a distinction made between invested funds and appreciation in the case of early withdrawals?

Unknown

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

Actually, I've made non-deductible IRA contributions to mine and my wife's IRAs for many years.

So yes, tracking the tax basis IS important for me.

volvogirl

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

No difference in cost and appreciation. If you took a deduction when you contributed (and don't have a tax cost basis) then when you take a withdrawal or distribution or convert it to a ROTH IRA it all comes out as 100% taxable as ordinary income and may push you into a higher tax bracket. You don't get to take any Capital Gains treatment on it.

Unknown

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

gmalis1: What's the difference between non-deductible contributions and contributing to a Roth IRA? Is it just the account it's held in and how that account is defined by the broker?

volvogirl

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

Here's some info on Traditional vs ROTH

The main difference is that you might qualify to deduct a Traditional IRA contribution now when you make it  (if you aren't covered by an employer retirement plan) and it grows tax deferred until you take it out.   Then you pay tax on it when you take a distribution.

ROTH IRA contributions are not deductible now and they grow tax free (not differed) and will NOT be taxable when you take a distribution.

See IRS Pub 590a IRA Contributions
https://www.irs.gov/pub/irs-pdf/p590a.pdf 

Here is IRS Topic 451 expalining IRA Accounts
http://www.irs.gov/taxtopics/tc451.html#skiptocontent 

You can’t make regular contributions to a traditional IRA in the year you reach 701⁄2 and older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.

Unknown

Bill said:

Hi q.lurker. Thanks for responding!

To clarify my situation, these are different IRA accounts at different institutions holding different securities. So, I guess what I actually have are non taxable sales and purchases.

Since posting this question an hour ago, I am coming to realize that the cost basis of the source security is totally irrelevant and that there is absolutely no reason to need it. What is possibly relevant is the tax basis of my IRA. I had been thinking about the tax basis of the IRA account as being related to the cost basis but now see they are totally different things. I happen to use Turbotax which keeps the tax basis. Do you know whether Quicken keeps a tax basis anywhere as well?

I too am inclined not to want to create a "contribution" by using a cash transfer but a new account and a sale can be used without triggering this quirk. See: https://getsatisfaction.com/quickencommunity/topics/ira-transfer-from-one-ira-to-another

Actions:

1. Sell the shares in the original account but keep the cash there.
2. Create a deposit in the new account that identifies the source account in the category field.
3. This creates a "withdrawal" in the source account.

The treatment seems esoteric but I think it leaves all in order and, as long as I'm correct, clean and easy once you get it.

Thanks!