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QWin: How to rebalance shares in 401k without showing sale of shares as Capital Gain

unknown

I recently re-balanced my 401k by selling some of the shares of one investment and buying shares of another. Quicken shows the sale as a capital gain and this causes the annual gain figures for the one investment to inaccurate. How should I show the transfer from one investment to the other without Quicken showing it as a capital gain.

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unknown

There may be confusion about a CG event and a reportable CG. An event is a mathematical fact. Reporting is a policy question. Is the account where these investments reside registered with Quicken as tax-deferred?

unknown

Your 401K account should be designated as a "tax deferred account" in the account settings.

This will then NOT report any rebalancing (sells and buys) as a taxable event.

unknown

My account in Quicken is shown as tax deffered.

unknown

The issue here is when I pull up a year to date quarterly investing activity report, the transactions in question show up in the Realized Gains section of the report and in the Long term CG section. This skews the actual market value gain/loss for the quarter. All that transpired was a transfer of value from one investment to another within the 401k account, ie: sold X amount of shares in ZZZ and invested the proceeds in BBB shares. The sale of the ZZZ shares caused Quicken to show that as a Long Term Capital Gain even though that is not the case.

Jim_Harman

The investing Activity report is summarizing just that - investing transactions, not their tax impact or the performance of your investments.

If you held ZZZ for more than one year and sold it for more than you paid for it, then indeed you did realize a capital gain. The fact that you then purchased something else does not alter this.

If you want to see the performance of your 401(k) account, I suggest you look at the Investment Performance report, subtotal by account and choose Last 12 months as the date range. Note that this report will look odd for the defauly Year to date and other periods of less than 1 year, because it is effectively assuming that the shorter term performance will continue for a full year.