Buying & Selling Funds in a 529 Plan

Unknown

I sold all the shares of two funds in a 529 plan and bought shares in 3 new funds.  This is showing as a realized gain in my Quicken reports, and I don't want it to, since I'm still restricted in the 529 fund -- it's not like I received the money.  Is there a way to work around this in Quicken?

Jim_Harman

Which reports are showing this as a capital gain?

The Tax reports (Capital Gains and Schedule D) do not include tax deferred accounts by default and thus should not be showing capital gains in these accounts. If the 529 account is included in these reports, go to the Account Details and make sure Tax Deferred is checked.

By default, the other Investing reports (Investing Activity for example) include all your investing accounts and thus show the capital gains for tax deferred accounts, even though the gains are not taxable. If you want to exclude an account from one of these reports, click on the gear at the top right of the report, click on Accounts, and un-check the account.

Unknown

Jim Harman said:

Which reports are showing this as a capital gain?

The Tax reports (Capital Gains and Schedule D) do not include tax deferred accounts by default and thus should not be showing capital gains in these accounts. If the 529 account is included in these reports, go to the Account Details and make sure Tax Deferred is checked.

By default, the other Investing reports (Investing Activity for example) include all your investing accounts and thus show the capital gains for tax deferred accounts, even though the gains are not taxable. If you want to exclude an account from one of these reports, click on the gear at the top right of the report, click on Accounts, and un-check the account.

Thanks for the reply.  I run year end itemized categories reports and that's where it's showing up.  I suppose I can just exclude that account from the report but it's not ideal.  It is marked as a Tax Deferred account.

Tom Young

To elaborate on Jim Harman's absolutely correct answer...

When you sell securities in tax deferred or non-taxable accounts you absolutely DO, in a very real sense, recognize capital gains or losses.  That's what they are, irrespective of the statutory (i.e., US tax law), requirements for reporting those gains and losses on your income tax return. 

So when you want to see how you're doing, investments-wise, over your entire portfolio, you generate reports that include all "investment" Accounts.  When you want to see what investment activity needs to be reported on your income tax return, you exclude the tax deferred and non-taxable Accounts.  Both ways of looking at your investment activity are entirely correct for their selected purpose.

Jim_Harman

Jim Harman said:

Which reports are showing this as a capital gain?

The Tax reports (Capital Gains and Schedule D) do not include tax deferred accounts by default and thus should not be showing capital gains in these accounts. If the 529 account is included in these reports, go to the Account Details and make sure Tax Deferred is checked.

By default, the other Investing reports (Investing Activity for example) include all your investing accounts and thus show the capital gains for tax deferred accounts, even though the gains are not taxable. If you want to exclude an account from one of these reports, click on the gear at the top right of the report, click on Accounts, and un-check the account.

If you just want to include money added to or removed from the account in your reports, you can exclude the account but include the transfers under Categories.

Another option would be to exclude capital gains from the report, but that would affect all your accounts.