Best method for tracking deferred compensation manually?

jrm

Hi.

Quicken Premier 2015 R15.1 Windows 7 PC.

I am looking to track deferred compensation manually. The pertinent details...

-a portion of salary is deducted and set FI. 
-FI tracks by unit and price (similar to one of my IRAs)
-Employee can select either an "at-retirement" disbursement or use a "flexible disbursement date" account, and may have a total of 5 of the latter
-If the company provides any matches they always go into the "at-retirement" disbursement

In year one (current year) we're using a flexible disbursement date (call it FLEX1). If participating next year, we could choose to defer into this same account (FLEX1) , or into the "at-retirement" (call it RETIRE), or into a different flexible disbursement date (FLEX2... FLEX5)

I envision from the FI perspective that it could look something like this...

employee
--> RETIRE
-------> 5 units @ $10
--> FLEX1
-------> Investment1 200 units @ $5
-------> Investment2 10 units @ $8
--> FLEX2
-------> Investment1 100 units @ $5
-------> Investment3 300 units @ $9

I have a variety of Q investment accounts set-up so I have used 401k/IRA accounts, mutual fund accounts, and brokerage accounts and within the latter types for differing purposes.

I believe that it is not possible for me to have one Quicken (brokerage) account that enables me to track the same investment (investment1 in my example above) with the ability to subtotal by FLEX1, FLEX2 etc., so that I can see the total amounts that will be available for each of the distribution dates.

In order to track it in one account, I'm thinking I'd need to have Investment1 actually as two securities (Investment12024 and Investment12026) to manage the subtotals. And, since I am doing this manually, I can manage the unit pricing.

Does that seem viable?

Or, should I be making this cleaner and creating a separate Q brokerage account for each distribution type and allow my securities to be singly identified?

In otherwords,
Q Acct FI RETIRE
Q Acct FI FLEX1
Q Acct FI FLEX2
Q Security retirement
Q Security Investment1
Q Security Investment2

where Investment 1, in my scenario above would show up in the two different Q accounts?

I may be over thinking this, but my goals are 
1) track the dollars leaving the paycheck
2) track the total amount of funds that will be available at the future date payout


Thanks for any help you can provide.

Bill44

I was doing something similar years ago in a deferred account. Setup an IRA. Make the initial purchase the name of the security, the number of shares and the cost. In your paycheck the category is the Deferred Account; When you get your statements or you can look online, make the purchases of each security the same as the brokerage company.

Any questions feel free to ask.

Jim_Harman

If you set up multiple accounts, you only need to have one set of securities so updating the share prices will be simpler.

You should think about what options in Quicken you want to use for these accounts. It will depend on the tax treatment of dividends and capital gains distributions in the accounts, and how you want to think about them.

For example, for an account that will only distribute at retirement you might set set the account details/display options/Account intent to Retirement and others to Investment. 

The Tax deferred option for these accounts will prevent distributions from messing up your tax reporting.

Also since money in these accounts is typically "off limits" to you until the set date, you might choose "Keep this account separate" in the display options to keep the accounts out of your tax reporting, asset allocation, net worth, and other reports. (not sure if this is available or works the same in 2015)

jrm

Jim Harman said:

If you set up multiple accounts, you only need to have one set of securities so updating the share prices will be simpler.

You should think about what options in Quicken you want to use for these accounts. It will depend on the tax treatment of dividends and capital gains distributions in the accounts, and how you want to think about them.

For example, for an account that will only distribute at retirement you might set set the account details/display options/Account intent to Retirement and others to Investment. 

The Tax deferred option for these accounts will prevent distributions from messing up your tax reporting.

Also since money in these accounts is typically "off limits" to you until the set date, you might choose "Keep this account separate" in the display options to keep the accounts out of your tax reporting, asset allocation, net worth, and other reports. (not sure if this is available or works the same in 2015)

As you concurred, setting up multiple accounts lets me track the securities only once, and therefore minimize the update for security price if I have the same security across multiple distribution dates. 

I follow your thought about changing the classification of the account based on where I might want them, i.e. displaying as retirement vs investment (I've had to change that for at least one other of my accounts.)

You are correct, the money is off-limits until the set date, whether that's in the retirement distribution account of a flexible account with a date in the future. Although there is limited ability to change the distribution time frame. I hadn't thought about the keeping it out of the net worth using "keep separate." I guess one other component to think through with that is the "no guarantee" of the funds if company went belly up.

I've never used the "keep separate" although I do know how to get there. I probably should be using it for other accounts as well... such as my kids accounts. They've always shown up in the Net Worth (at least in the account column) but I've mentally removed their value. If I choose to use this, do I have the ability to select the accounts to add back in to a report that would otherwise exclude them?

Lastly, your comment about the tax deferred nature, are you also suggesting, as Bill did, that I utilize a tax deferred account within Quicken?

While the accounts are off-limits, the gains, dividends, etc.,  are tax deferred. At the time the funds become available, as they are currently set-up, it will pay out in a lump sum. (The flexible accounts only allow this option. The retirement account could be set up to disburse over a set time.) Therefore, at the time they become viable, the account will liquidate and while there will be a taxable event, it will be taxable income. Therefore, I think, using the tax-deferred account won't screw up the Quicken accounting in the tax regard.

That said, at this point, I don't use the Quicken reports for my tax reporting, nor import to Turbo Tax. I use my FI data and compare with Quicken to confirm it matches my expectation. That said, I could see in the nearer future the possibility of going back to doing our own taxes, and then I would probably want to ensure that Quicken is handling the data in th manner that I wish.

jrm

Bill said:

I was doing something similar years ago in a deferred account. Setup an IRA. Make the initial purchase the name of the security, the number of shares and the cost. In your paycheck the category is the Deferred Account; When you get your statements or you can look online, make the purchases of each security the same as the brokerage company.

Any questions feel free to ask.

I thought I had posted a comment and a follow-up question, but at least I'm not seeing it. So, if for some reason this is a duplicate, my apologies.

While I knew I was looking at deferred comp, I was thinking brokerage. I hadn't thought about the advantages of using an Quicken IRA account for this purpose. So, thank you for commenting that was how you did it. In terms of your process, yes, that is what I was intending, regardless of what type of Quicken account. It is the same way I currently manage other transfer out of the paycheck.

I do have a question. While I have both Quicken IRA and 401k/403b account types set-up, I've never really thought about the difference in how Quicken handles them. I do know with the latter, that you have the ability to "update" the 401k based off the last statement.

Do you know if Quicken actually treats them differently behind the scenes, in terms of reporting or otherwise? As I just typed that, I do think Quicken prompts to ask what year the IRA contribution is for. But, what I'm driving at, is there a reason to select the IRA vs a 401k Quicken account?

Thanks.

jrm

I created a Quicken IRA account. Edited  the paycheck and entered the deferral amount as a pre-tax deduction and select the new IRA account as the category. (The paystub handles this as a negative number in the hours and earnings, however, Quicken will not allow a negative amount in the salary  section.)

I complete the payroll entry and than am prompted with the IRA pop-up indicating that I am making a contribution prior to April 15 and wants to know to which year I wish to attribute the contribution. This made me wonder if I will be limited in contributions once I hit the current year max. 

So, I am now going to test this out using a 401K Quicken account.