QWin prompt: Is this a retirement distribution from your 401k?

I'm taking an 59.5 inservice withdrawal from a 401k and rolling it directly to a traditional IRA. The 401k trustee liquidated multiple funds and is transferring the cash directly to the recipient IRA as a lump sum.

When I create the XFER to the IRA in Quicken, I'm prompted with the question above. How do I answer it? Yes, it's a distribution, but not in the sense that it's a taxable event.

Best Answers


  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    With respect to QWin methodologies, I would suggest you transfer the securities and sell them in the new account rather than transferring the cash.  I believe that will bypass the question. 

    A parallel method is to but MM funds with the cash (real or fake fund), transfer that asset then sell the MM in the new account 

    Most commonly I recommend those techniques to bypass the question as to whether the addition of cash into the IRA is a calendar year contribution.  I am suspecting the same base behind your cited prompt.  
  • JoeBlow
    JoeBlow Member ✭✭
    Transferring securities is not an option. That is controlled by the 401k trustee. They already sold it. I guess i could transfer a dummy MMF but I'm not trying to avoid the prompt. I just want to know what it means.

    My real question is, what is the effect of a yes or no answer to the prompt? Does one record hidden tax implication transactions, and the other doesn't? Does something else happen?

  • JoeBlow
    JoeBlow Member ✭✭
    > ... to bypass the question as to whether the addition of cash into the IRA is a calendar year contribution.

    The prompt is not asking whether it's a calendar year contribution TO the IRA. Rather, it's asking whether it's a distribution FROM the 401k.
  • JoeBlow
    JoeBlow Member ✭✭
    Thanks for the tax impact information. I now have the knowledge I need to record the transactions accurately.
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