How are you tracking 401K Investment Fees?

f_stopblues

My 401k "sells" off shares to cover the investment fees of the 401k. I am split between two different options on how to record this in Quicken:

1. Record the selling of shares as a simple "Shares Removed." This ensures that the number of shares is still correct, and it does not impact the "Realized Gain/Loss" since this asset fee shouldn't qualify as a Realized Gain/Loss unless I am misunderstanding something
2. Record the selling of shares as a "Sell" and then a corresponding "MiscExp" transaction and classify as an Asset Fee. The issue with this is that the "Sell" transaction would qualify as a sale, and essentially be categorized as a "Realized Gain/Loss"

What is your preference for handling these situations?

NotACPA

I believe that your 2nd option is the correct one ... as the transaction IS, in actuality, a sale.

q_lurker

Also as a sale, there is a true realized gain/loss even though it is not a taxable gain/loss (since it is inside a 401k account).  Thus your financial institution may be choosing to not report it to you as a realized gain/loss nor as a sale of a specific lot of shares.    Second option is still the correct choice, in my opinion.

NotACPA

I believe that your 2nd option is the correct one ... as the transaction IS, in actuality, a sale.

q_lurker

Also as a sale, there is a true realized gain/loss even though it is not a taxable gain/loss (since it is inside a 401k account).  Thus your financial institution may be choosing to not report it to you as a realized gain/loss nor as a sale of a specific lot of shares.    Second option is still the correct choice, in my opinion.

SammyDB

I edit the fee/sale transaction and enter the dollar amount as a commission so the net transaction in the register is $0.00.
Would I be better off entering a separate "MiscExp" transaction as the OP suggests?

Jim_Harman

IMO and as others have said above, the Sell and MiscExp is more accurate. It preserves the correct cost basis (even though that does not matter in a 401k account)  and if you identify the security in the MiscExp it correctly accounts for the effect of the fees on the performance.

SammyDB

Ah, that makes sense. Thanks Jim!