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What are "Earnings Gain/Loss" downloads

KnnNike

My newly-connected T. Rowe Price account is downloading "Earnings Gain/Loss" transactions, in addition to normal buy, sell, dividend, etc. transactions...some have a positive dollar amount, some negative, and they don't cancel each other out. What are these transactions, and how should I handle them?

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GeoffG

That sounds to be a Capital Gain/Loss. Depending on the type (IRA/Brokerage) and how you have your account setup, they will either remain as cash until you do something with the funds or be reinvested to the same investment.

KnnNike

It's a normal 401(k) account. In my case, I had about 10 years of "buy" transactions for a single mutual fund that I recently sold. Basically, in addition to the "sold" transaction, T. Rowe downloaded one "Earnings Gain/Loss" transaction with a large positive amount (thousands of dollars) and one "Earnings Gain/Loss" transaction with a large negative amount (but slightly smaller than the positive amount).

What I don't understand...if the sell transaction gets recorded properly, isn't keeping these Earnings Gain/Loss transactions double counting? I would want to get rid of them in that case, right?

GeoffG

No, these transactions go into the running balance and while not critical on a retirement fund, gains and losses are critical for brokerage accounts in reporting to the IRS. If you have your account "reconciled" in Quicken to show the exact share balance, it will be evident that this activity and market value is part of the ending balance.

KnnNike

But where does this net balance go? In my case, the difference between the two transactions is about $100. But I noticed that Quicken has categorized these transactions as "MiscInc" and it does not affect the cash balance. I realize this is less of a question about Quicken and more of a question about how 401k/mutual funds work...but I am still not understanding what this "extra" amount of money represents, since the total value of my mutual fund shares was captured in the "sell" transaction

GeoffG

If you are saying you sold ALL shares of this fund and it is now zero, then yes you can adjust for the entry. I would not delete it, but zero it out so you have a trail. If you did not sell all shares, then does your share balance and cash balance agree to TRP?

Tom Young

What is the name of that "single mutual fund"? Ordinarily I'd say simply selling a mutual fund would result in a gain or a loss, and that's the end of it. But perhaps there's something unique going on behind the scenes - foreign currency gains? - that's affecting things here.

Have you tried asking TRP what this is all about?

KnnNike

I sold all of the shares, and then bought shares in other mutual funds. Between those buy/sell transactions, the full balance is accounted for. But then these earnings gain/loss transactions appeared, and the positive/negative amounts don't cancel out, to the tune of around $100.

KnnNike

Tom Young said:

What is the name of that "single mutual fund"? Ordinarily I'd say simply selling a mutual fund would result in a gain or a loss, and that's the end of it. But perhaps there's something unique going on behind the scenes - foreign currency gains? - that's affecting things here.

Have you tried asking TRP what this is all about?

It's nothing exotic...TRRKX, it's a target date retirement fund. On the T Rowe Price website, this net positive amount from the earnings gain/loss transactions is shown as a single entry called "Market Fluctuation". But on their end as well, it doesn't go anywhere...it doesn't add $100 to the fund balance, or show up as a cash balance of $100...it just disappears into the ether.

I haven't asked TRP yet...it's my wife's account, and they always give me the runaround whenever I try to talk to them on her behalf (she is not inclined to do much of this on her own...she would just say to let it go, haha)

GeoffG

KnnNike said:

Tom Young said:

I haven't asked TRP yet...it's my wife's account, and they always give me the runaround whenever I try to talk to them on her behalf (she is not inclined to do much of this on her own...she would just say to let it go, haha)

Yep, been there. Since the share amount is 0, make an offset adjustment to zero the market value.

KnnNike

That's basically what I ended up doing. From a conceptual standpoint, do you know what this activity would represent? I am still at a loss to understand the rationale in reporting a net $100 in earnings gain/loss outside of the buy/sell structure, and then just have it disappear to nowhere.

GeoffG

Without seeing, it's hard to say, it may be residual earnings after your sale due to a dividend. If you want to know for certain, you would need to speak to TRP.

Jim_Harman

In my experience the "Eanings Gain/loss" transactions downloaded when you sell holdings in a T Rowe Price 401(k) account are useless and should be deleted.

The downloaded proceeds from the sale include any gain or loss. If you accept those "Gain/Loss" transactions, the gains or losses will be counted twice and your cash balance will be incorrect.

This along with dividends being marked as interest is a longstanding bug in the feed from TRP.