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Quicken Classic for Windows
Investing (Windows)
Accounting for IRA Distributions -- still not working
pauljasmine
I'm adding this question to a previous thread that was closed. I can see how you did the split transaction in the destination bank account to subtract taxes. I think what you're saying is you have to record as a deposit, with no direct transfer linking between the IRA account and the bank account. If I record the gross distribution as a transfer from account to account, then I'm left with a remaining uncatagorized amount equal to the gross distribution, which is not messes everything up. So I think you're saying I have to record the transfer as disconnected account withdrawal and deposit, not a transfer?
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Rocket J Squirrel
I'm not quite following why you wouldn't use a transfer. A deposit into the receiving account is how I would do it, with the first line of the split being the transfer and the following lines being the taxes withheld.
J_Mike
Having dissiculty following your line of thought - but here is an example of how to record an IRA distribution that is deposited to your checking account.
Example; Gross distribution of $1,000 with $200 Fed w/h and $50 State w/h.
The net deposit to checking is $750.
In the checking account register, open a split transaction.
Split #1 - The gross amount of $1,000 recorded as a
Transfer
from the IRA account.
Split #2 - The Fed w/h of -$200 - a negative number.
Split #3 - The State w/h of -$50 - a negative number.
The net of this transaction is $1,000 - $200 - -$50 = $750.
This should match what your bank reports as a deposit to checking.
The IRA account will then show a transaction of $1,000 being transferred to checking - the gross distribution.
If you download to the IRA account, you will likely get three transactions from the FI - the net amount of $750 plus the transactions for the Fed and State w/h. Delete these three downloaded transactions from the register as they are redundant.
Leave only the gross distribution transfer to checking ($1,000).
Post back if you have further questions.
Tom Young
"But if the gross distribution is recorded as a transfer, it cannot be categorized as income so that I can include it as income on a report."
That's not correct. You can show the transfer as a form of "income" on reports, like a Spending report. Simply add the IRA as a "Category" using the reports customization feature. The dollars out of the IRA will show up in the Income section of the report.
All comments
Rocket J Squirrel
I'm not quite following why you wouldn't use a transfer. A deposit into the receiving account is how I would do it, with the first line of the split being the transfer and the following lines being the taxes withheld.
J_Mike
Having dissiculty following your line of thought - but here is an example of how to record an IRA distribution that is deposited to your checking account.
Example; Gross distribution of $1,000 with $200 Fed w/h and $50 State w/h.
The net deposit to checking is $750.
In the checking account register, open a split transaction.
Split #1 - The gross amount of $1,000 recorded as a
Transfer
from the IRA account.
Split #2 - The Fed w/h of -$200 - a negative number.
Split #3 - The State w/h of -$50 - a negative number.
The net of this transaction is $1,000 - $200 - -$50 = $750.
This should match what your bank reports as a deposit to checking.
The IRA account will then show a transaction of $1,000 being transferred to checking - the gross distribution.
If you download to the IRA account, you will likely get three transactions from the FI - the net amount of $750 plus the transactions for the Fed and State w/h. Delete these three downloaded transactions from the register as they are redundant.
Leave only the gross distribution transfer to checking ($1,000).
Post back if you have further questions.
pauljasmine
I understand your example. But if the gross distribution is recorded as a transfer, it cannot be categorized as income so that I can include it as income on a report. I’d just have to run one of the reports that shows transfers.
Rocket J Squirrel
The Tax Summary Report will show this as a transfer, but it
is
included in your overall income at the bottom of the report. The Tax Schedule Report will show this correctly as 1099-R data.
Make sure you have your IRA tax schedule transfers out set to "1099-R:Total IRA taxable distrib." and this will work.
Rocket J Squirrel
I just noticed there are actual tax line items for taxes withheld from IRA distributions.
I hadn't noticed these because I take the easy way out and have no taxes withheld from my distributions. Instead, I file quarterly estimated taxes. Much easier for me. Withholding is optional, not required.
Tom Young
"But if the gross distribution is recorded as a transfer, it cannot be categorized as income so that I can include it as income on a report."
That's not correct. You can show the transfer as a form of "income" on reports, like a Spending report. Simply add the IRA as a "Category" using the reports customization feature. The dollars out of the IRA will show up in the Income section of the report.
pauljasmine
Great, thanks for the response!
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