There should be an option to convert a brokerage account to a Roth IRA

QPWQPW Member ✭✭✭✭
Currently if you have a brokerage account, you can set it to be tax free in the account details. Once you do that there a button appears that lets you change it to an Traditional IRA or a 401K type account. But there isn't an option to change it to a Roth IRA.

Changing it to a Roth IRA should be one of the options.
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  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited October 2018
    From C. D. Bales:



    "Changing it to a Roth IRA should be one of the options."



    That sounds like it might be a good idea.



    Can you provide evidence to demonstrate the advantage such an option would make available to Quicken users?
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • QPWQPW Member ✭✭✭✭
    edited September 2018
    mshiggins said:

    From C. D. Bales:



    "Changing it to a Roth IRA should be one of the options."



    That sounds like it might be a good idea.



    Can you provide evidence to demonstrate the advantage such an option would make available to Quicken users?

    I would say the "evidence" is in the fact that there is already a way to convert a brokerage account to an IRA or 401K type account.

    If that option is needed then clearly changing to a Roth IRA is just as needed.

    It certainly doesn't happen all the time, but people do make mistakes and setup their investment accounts as a brokerage account when they really needed it to be a retirement account.  And this function allows them to correct that.  But not for Roth IRA and the only reason that exception can be there is because this was put in so long ago that there weren't Roth IRAs.

    This just to bring an existing function into the modern world.

    BTW I can give "not so common use case" since I just hit it.

    If you are importing using a QIF file for an investment account and you don't precreate the account, it will be created as a brokerage account.  From there other than deleting it and starting over, in Quicken 2017 and below there is no path to a Roth IRA.

    Note in the 2018 release of Quicken this is not really a problem any more, so maybe even getting rid of the whole conversion function might make sense.

    In the 2018 release of Quicken you can move investment transactions from one account to another.  So when I ran into this I just created a new Roth IRA account and moved the transactions from the old account to it.
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited September 2018
    mshiggins said:

    From C. D. Bales:



    "Changing it to a Roth IRA should be one of the options."



    That sounds like it might be a good idea.



    Can you provide evidence to demonstrate the advantage such an option would make available to Quicken users?

    "If that option is needed then clearly changing to a Roth IRA is just as needed".


    My question was not about the need for the conversion (I'm not necessarily opposed to the idea - just trying to understand the benefit of the result). But since you mention it, there are also SEP IRAs, Simple IRAs, and Keough IRAs - which Quicken also does not provide conversions to.


    My question was: what is the advantage (in Quicken) to having an account designated as a Roth IRA. How does Quicken treat Roth IRAs, Traditional IRAs, other IRAs and plain tax-deferred accounts differently? What would Quicken users be gaining from this new feature?


    An example of how Quicken does not treat Roth IRAs differently from Traditional IRAs is that both are designated as "tax deferred", despite the fact that there is no deferred tax on Roth IRAs. Perhaps in support of that assumption, Quicken also sets up the same "Tax Schedule" info for both Traditional and Roth IRAs.


    [Currently, you probably need to change the Tax Schedule info for Quicken Roth IRAs even when created from scratch; it's a fairly small one-time problem, but why is it necessary since Quicken should "know" the difference between Traditional and Roth IRAs?]


    The only difference I can find is that the Edit Account Details dialog displays the IRA "type" - but that seems like a very small, and relatively obscure, benefit.


    [Note: when downloading, Quicken allows me to link my real-world Roth IRA account to a Quicken Traditional IRA account.]


    I was hoping you knew of some additional benefits.


    [Roth IRA accounts have been around since 1997 and Quicken "conversions" from tax-deferred brokerages to traditional IRAs have been around since at least Q2004 (which was very close to the first Quicken version to offer the distinction between Traditional and Roth IRAs when creating an account); so Quicken has had plenty of time to provide a conversion to Roth IRAs. Seems curious that they haven't done so before.]


    [One might even ask why Quicken IRAs are always investment accounts: not all real-world IRAs are investment accounts. I've often wondered if it would be worth changing "IRA" (including all its variations) into an account characteristic (similar to "tax-deferred") rather than requiring it to be an investment account type.]
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited September 2018
    mshiggins said:

    From C. D. Bales:



    "Changing it to a Roth IRA should be one of the options."



    That sounds like it might be a good idea.



    Can you provide evidence to demonstrate the advantage such an option would make available to Quicken users?

    One benefit to designating your Roth IRA as such is the tax treatment for Roth IRA distributions are correctly handled in the Lifetime Planner.
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • QPWQPW Member ✭✭✭✭
    edited September 2018
    mshiggins said:

    From C. D. Bales:



    "Changing it to a Roth IRA should be one of the options."



    That sounds like it might be a good idea.



    Can you provide evidence to demonstrate the advantage such an option would make available to Quicken users?

    I see I didn't understand the question.  Ms. Higgins provided the answer I would have.

    And I will add that getting the difference between an "IRA/tax free" and "Roth IRA" is more important than say getting the difference between a Traditional IRA and a Simple IRA correct.  These two are taxed the same, but a Roth IRA isn't taxed at all.
    So it can make a big difference in taxes and retirement planning if you get it wrong.
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited September 2018
    mshiggins said:

    From C. D. Bales:



    "Changing it to a Roth IRA should be one of the options."



    That sounds like it might be a good idea.



    Can you provide evidence to demonstrate the advantage such an option would make available to Quicken users?

    From C. D. Bales:


    "One benefit to designating your Roth IRA as such is the tax treatment for Roth IRA distributions are correctly handled in the Lifetime Planner."


    Good point.


    Since Quicken assigns the same Tax Schedule treatment to Traditional IRAs and Roth IRAs, I wonder: Does the Lifetime Planner utilize the Tax Schedule to determine how to handle retirement accounts? Or does it use the "Account type".


    Also, Quicken provides a different Tax Schedule treatment for Simple IRAs, SEP IRAs and Keough IRAs; wouldn't that be a legitimate reason for wanting to be able to convert to a Simple, SEP or Keough IRA?
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited September 2018
    mshiggins said:

    From C. D. Bales:



    "Changing it to a Roth IRA should be one of the options."



    That sounds like it might be a good idea.



    Can you provide evidence to demonstrate the advantage such an option would make available to Quicken users?

    My guess would be the LTP uses "account type".
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • QPWQPW Member ✭✭✭✭
    edited September 2018
    mshiggins said:

    From C. D. Bales:



    "Changing it to a Roth IRA should be one of the options."



    That sounds like it might be a good idea.



    Can you provide evidence to demonstrate the advantage such an option would make available to Quicken users?

    Also, Quicken provides a different Tax Schedule treatment for Simple IRAs, SEP IRAs and Keough IRAs; wouldn't that be a legitimate reason for wanting to be able to convert to a Simple, SEP or Keough IRA?
    .
    Yes they probably should also be included.

    On the Roth IRA that is in fact the only account type that I see affecting the Life Time Planner's treatment of it (and it is the account type from what I can see, and why it is critical to have it set right).

    Which makes sense to me because even though there are different rules about how you contribute and do deductions for the other IRA types, when it comes to taking money out, you will see that all the other IRA types get taxed the same way.  As in they get taxed at your current tax rate.
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