How to reclassify transactions from BoughtX to Bought

Chris_QPW

@Terry Locke  This is a "head scratcher", but as I explained above the workaround will work fine as far as tax reports, and the tax planner is concerned because you will be mimicking what Quicken does, with the exception of the transfer.

I don't think you can look at what is on the financial institution's website and use it as guide of what will happen in the download to Quicken.  And yes, your account is setup "special" that is the reason why when you changed to a different ORG with an account setup differently it behaves differently.  Note on the financial institution's website they are certainly going to record the deposits because that is information you need, but again it isn't "mandatory" that they send that information to Quicken.

I have always known that it is possible that the financial institution might not send cash transactions in a 401K account.  Here is the reference to it in the OFX spec:

"Some servers may not report the cash transactions, e.g. deposits are immediately used to purchase securities and only the buy transactions are reported. Similarly, securities are sold to fund a withdrawal and only the sell transactions are reported and not the actual withdrawal transaction."

What isn't clear from this text just how a program like Quicken should handle this situation (or how it even detects it).

To me there are two ways that this could be accomplished.
The first one would be simply that the cash transactions are just supplied by the transfer from the checking account.  That what I think we all expected.

The other one is what Quicken is doing for you with the BoughtX.  That is it records the buy in a way that doesn't affect the cash balance just like the spec says might happen.

And in fact I think I have actually encountered this in my wife's 401K and never knew it.  My wife's 401K account is handled by Merrill Lynch.  But it doesn't support Direct Connect only Web Connect (downloading/import a QFX file).

Being that the account got setup without the help Direct Connect we can consider it a "manually created" account and as such couldn't get any "special flags".

What happens in that account is that the paycheck reminder puts the funds into it, and the QFX file supplies the buys.  But it never sends the deposit transactions.

In this case the "funding" works out fine, but when I go to do a reconcile I have to always do select all the transfer transactions because they are in the uncleared state,  because they were never matched to a downloaded transaction.

So basically what I think I have here is the exact same kind 401K setup, but nothing has told Quicken that is true of this 401K account.

And for your case it show why changing the paycheck reminder is the right thing to do instead of changing the BoughtX to Bought.

If you change the BoughtX to Bought you will end up with the same situation I'm in where you will find that the transfers from the checking account aren't marked cleared, and you will have mark them yourself.

BTW note on my instructions on fixing the paycheck reminder and the cash balance.  I used a withdraw to remove the cash from that account because I was under the impression that there was a lot of paycheck transactions that would have to be changed and it would just be easier to do it with the one withdraw. But in truth the cleaner way would be to go back to all the paycheck reminders that are causing the problem and fix them.

q_lurker

Terry Locke said:

...

Also I have managed to make all the BoughtX to be Bought transactions simply having that 401K be set up as an investment account in Quicken. Then when importing the QFX file all the transactions are Bought and Sell with the cash for the transactions coming from the cash in that account, no more BoughtX and SellX. I know that's not what I want to do but what the hell?

OK, no promises -- For that regular investment account, Edit Account and change it to "Tax Deferred = Yes" 
Imports still come in as Buys and Sells?

Next -- again Edit Account and now click on the Convert to 401k ...  Maybe?
Imports still come in as Buys and Sells?

Even if you just get it to the Tax Deferred state, that is a step better than not.   

Chris_QPW

q_lurker said:

Terry Locke said:

...

Also I have managed to make all the BoughtX to be Bought transactions simply having that 401K be set up as an investment account in Quicken. Then when importing the QFX file all the transactions are Bought and Sell with the cash for the transactions coming from the cash in that account, no more BoughtX and SellX. I know that's not what I want to do but what the hell?

OK, no promises -- For that regular investment account, Edit Account and change it to "Tax Deferred = Yes" 
Imports still come in as Buys and Sells?

Next -- again Edit Account and now click on the Convert to 401k ...  Maybe?
Imports still come in as Buys and Sells?

Even if you just get it to the Tax Deferred state, that is a step better than not.   

Knowing what I know now I wouldn't do this.  Quicken is doing the right thing in that account.  It is only the paycheck reminder that is doing the wrong thing.

Jim_Harman

@Terry Locke when you say "Also I have managed to make all the BoughtX to be Bought transactions simply having that 401K be set up as an investment account in Quicken. " do you mean a regular brokerage account? 

As noted above, I have had similar problems with a 401k account but I transferred the assets in Quicken to a Traditional IRA account and the ***X problems appear to have gone away for newly downloaded transactions. I would think that a Quicken IRA account would be more appropriate for tax reporting and Lifetime Planner purposes than a brokerage account.

Boatnmaniac

@"Terry Locke" said:

@Boatnmaniac Wrote "Unless @Terry Locke is also seeing downloaded employee and, if applicable, employer matching contributions in the register,"

I am seeing both an employee and employer cash 'deposit' in my online register at my Financial Institution's website.

What is showing in your online account is not what I inquired about.  My comment was about what your FI downloads to your account in Quicken. 

Generally speaking, what is shown online and what is downloaded should be the same. However, when I dug up my old 401K statements from the 2 plans that did not allow cash to be held (1 plan was first administered by Hewitt Assoc and later by Fidelity NetBenefits and the other plan was administered by Morgan Stanley) I noticed they, too, showed the contribution transactions from both me and my employer but those contributions were not reflected in any statement cash balance nor were they downloaded into Quicken as cash contribution transactions.  In addition, all buys were downloaded into Quicken as BoughtX and all sells were downloaded into Quicken as SoldX.  So there are 3 examples of where what the FI showed on their statements (and on the website?) and what was downloaded into Quicken were different from each other.

@"Terry Locke" said:

@Boatnmaniac Wrote: "I'm not sure what your concern is about changing these contributions to expenses (actually, pre-tax deductions) instead of keeping them as transfers. As far as the IRS and Quicken is concerned, pre-tax deductions (expenses) from Gross Pay is exactly what they are and they will be accurately reflected as such in your reports and Tax Planner provided they are categorized correctly as noted above. Could you explain your concern in more detail, please?"

This is the first 401K I have had that treats the Buy transactions as a BoughtX. Other Financial Institutions that I have dealt with for 401Ks are people like Schwab and all of them worked 'correctly' in that the paycheck contribution goes into the 401K account as cash and the securities are bought using the cash in the account. I have been using Quicken since the early 1990s and have never seen this BoughtX problem in all that time until 2 weeks ago. So I still need to do a little head scratching and research into what appears to be a valid 'workaround' to some kind of a bug or 'undocumented feature' in Quicken to see how it impacts my accounts, reports etc.

Every FI does things a little differently and how they do them is dictated in part by the contract they have with the 401K plan owner (the employer).  As I'd mentioned earlier, I had 2 401Ks in which the plans prohibited holding of cash and 1 where it was allowed.  The processes for downloading into Quicken from them were different because of that.  So to say one method is 'correct' while another method is 'incorrect' is incorrect.  It's just different.

You say you started seeing this happen 2 weeks ago.  Is that when you set up your 401K account in Quicken and started downloading into it?  Or was the account set up and downloaded into before then?  (Just trying to understand if this concern you raise started with a new account in Quicken being created or not.)

@Terry Locke said:

Also I have managed to make all the BoughtX to be Bought transactions simply having that 401K be set up as an investment account in Quicken. Then when importing the QFX file all the transactions are Bought and Sell with the cash for the transactions coming from the cash in that account, no more BoughtX and SellX. I know that's not what I want to do but what the hell?

OK, now this makes me want to scratch my head.  I would have thought that making this account change would not have changed BoughtX to Bought.  That's weird.  I also wonder how that might have affected your Tax reports and Tax Planner.  Are they still showing up there as pre-tax deductions from Gross Income?

Boatnmaniac

Chris_QPW said:

I have always known that it is possible that the financial institution might not send cash transactions in a 401K account.  Here is the reference to it in the OFX spec:

"Some servers may not report the cash transactions, e.g. deposits are immediately used to purchase securities and only the buy transactions are reported. Similarly, securities are sold to fund a withdrawal and only the sell transactions are reported and not the actual withdrawal transaction."

Ah, now I know the reason why we keep you in Community!   Thanks for the tidbit of knowledge.

Terry Locke

@Boatnmaniac Wrote: "What is showing in your online account is not what I inquired about. My comment was about what your FI downloads to your account in Quicken. " It does not download any type of a cash transfer into the account in the QFX file. But then again neither does my Schwab 401k and that 401k has Bought transactions that uses the cash from the 401K account for funding the Buy transactions not BoughtX

@Boatnmaniac Wrote: "You say you started seeing this happen 2 weeks ago. Is that when you set up your 401K account in Quicken and started downloading into it?" Yes.

@Boatnmaniac Wrote: "OK, now this makes me want to scratch my head. I would have thought that making this account change would not have changed BoughtX to Bought. That's weird. I also wonder how that might have affected your Tax reports and Tax Planner. Are they still showing up there as pre-tax deductions from Gross Income?" I don't know I have not looked into it that far since this is so far off base. I was just trying to get it to work the way Quicken gets you to set up a 401K and just like my other 401Ks are set up.

Boatnmaniac

Terry Locke said:

@Boatnmaniac Wrote: "What is showing in your online account is not what I inquired about. My comment was about what your FI downloads to your account in Quicken. " It does not download any type of a cash transfer into the account in the QFX file. But then again neither does my Schwab 401k and that 401k has Bought transactions that uses the cash from the 401K account for funding the Buy transactions not BoughtX

Thanks for confirming.  Investment companies are notorious for downloading information to Quicken (and I'm guessing just about any personal financial management software) in ways that are different from each other.  The one inconsistency that gets perhaps the most complaints here in Community has to do with differences in how cash is held and reported at the FI vs how it is reported to Quicken.  That can really be frustrating if you don't know about this and how that can cause significant variations between the online cash balance, holdings and market value in the online account and what is shown in Quicken.  But once it is understood it becomes manageable (maybe not desired), just like your situation with these BoughtX transactions is manageable even though it's not desired.

Terry Locke said:

@Boatnmaniac Wrote: "You say you started seeing this happen 2 weeks ago. Is that when you set up your 401K account in Quicken and started downloading into it?" Yes.

OK, that is good because this, then, is not a change that has occurred within an existing 401K account.  If this was a change that occurred in an existing 401K account that would be a good indication of something significantly having gone wrong which might require tech support from the FI and/or Quicken Support.

Terry Locke said:

@Boatnmaniac Wrote: "OK, now this makes me want to scratch my head. I would have thought that making this account change would not have changed BoughtX to Bought. That's weird. I also wonder how that might have affected your Tax reports and Tax Planner. Are they still showing up there as pre-tax deductions from Gross Income?" I don't know I have not looked into it that far since this is so far off base. I was just trying to get it to work the way Quicken gets you to set up a 401K and just like my other 401Ks are set up.

Let us know if you find out that having changed from a 401K account to a standard investment account results in issues with proper accounting in the Tax reports and Tax Planner.  I'm thinking it will result in no longer treating your contributions as pre-tax income reductions and that perhaps your employer match contributions might start being reported as income.   Hopefully I'm mistaken about that and it will not be the case.

If you do start seeing this problem, then I agree with @Jim_Harman that it might be better to have this account classified as an IRA since IRAs and 401Ks have such similar tax implications.

Terry Locke

@Boatnmaniac: After working with Tier 2 Quicken Support for 3 hours on Tuesday, they have confirmed my problem is a bug in their software. The bug is that if you set up a new 401K account and start it off by importing a QFX file then all transactions become …X like BoughtX, SoldX, MscExpX. They have logged it as a bug and have sent it that to their developers. They did mention they are having a similar problem with Fidelity 401Ks. Note that this is the very first time I have ever had to set up a 401K this way as all my other 401K accounts are direct connect (like my Schwab 401K account). We went so far as to set up a new 401K for Schwab and started it off with a QFX file that I downloaded from my Schwab online account and all the transactions that were Bought and Sold are now BoughtX and SoldX.

In the meantime, working with Quicken support, I have tried numerous ways to make this work and every one of them ends up with undesired results, or as Quicken puts it, unexpected results. Some of the workarounds ended up with placeholder transactions and uncategorized expenses that only appeared after you close the Quicken file and reopen it.

I have another session with Quicken Support scheduled for Thursday to see if they have a workaround and I’ll post my progress here.

Boatnmaniac

@Terry Locke - Well, I'll be.  If this is a bug then it's been around for a very long time.  And since the situation has been around for at least as long as I've been using Quicken and has an alternate logical explanation and workaround to make it appear that it's not a bug I've always assumed it was just another one of those normal quirky exceptions that exist with downloads from investment company FIs.  Thanks for contacting Quicken Support about this.  I certainly am looking forward to seeing your next update here.

Terry Locke

TLDR: The summary for this thread is that there is/are Bug(s) in the way Quicken handles 401K accounts that under certain circumstances, will result in errors such as misclassification of transactions (BoughtX instead of Bought), dropped transactions from the 401K account register and OL96A error messages (No new transactions available) when there are new transactions to import. The worst part is that these errors are dependent on the sequence of which you enter your transactions. I found these issues when setting up a new 401K account. After working with Quicken support they agree that there are bugs but there is no indication as to when they will fix the problems. However, I have managed to develop a workaround for my particular issue which is getting all Buy transactions to be Bought and not BoughtX when setting up my 401K.

@Boatnmaniac @Chris_QPW @Jim_Harman @q_lurker @NotACPA @UKR

After a couple more weeks of working with Quicken to isolate the issues and trying to find a workaround, I can now list out the issues I have found and how I managed to finally develop a procedure that works when setting up a new 401K account when the financial institution uses Web Connect as the means of updating Quicken. In web connect you have to go to the FI’s site and download a QFX file and then import that file into Quicken. The way I isolated the issue was to build test Quicken files and run various scenarios.

First item is that Quicken support recommends that when setting up your 401K you also set up your paycheck. You need to determine if you want to track just the Net Paycheck (the amount that is deposited into your checking account after all deductions) or the Gross Amount. When you choose the Gross Amount you are provided with a set of standard tax categories including a 401K contribution category. Entering the Gross amount will allow you to track all your paycheck related expenses plus your 401K contributions and this is handy at tax time. Quicken states that if you select the Gross amount, you need to use their standard categories especially for the 401K contributions. They also stated that it is not a good idea to change the 401K contribution category or set up 401K expense category as this will impact your reports.

With that information I set about building Quicken test files and then going through the steps of setting up a checking account, a 401K and a Gross Amount paycheck with deductions and 401K contributions. I recorded the detailed step by step procedure for each scenario in a word document that included screen shots to show the errors. I did screen sharing with Quicken tier 2 support to show them the issues by having them watch as I reproduced the errors. I ended up with 57 different test scenarios and fully documented 15 of them and reviewed 5 of the most ‘buggy’ scenarios with Quicken Support. I provided Quicken with my 45 pages of detailed notes, my QFX files, some of the OFX files for a few of the scenarios and some ‘sanitized’ Quicken files for them to try and figure out what is going on.

In the scenarios I showed them that under certain circumstances you will get the following behaviors and errors:

1. If you first import transactions into your new 401K before you have a paycheck transaction, the Buy transactions will be BoughtX and the Sell Transactions will be SoldX. They tried to tell me that is because that is how some FIs handle their accounts and those transactions will always be BoughtX or SoldX. I then showed them that if the next transaction is a paycheck, then all further Buy and Sell transactions imported in a QFX file become Bought and Sold. So they quickly changed their minds about their statement. Also there is nothing in a QFX or OFX file that tells them how the FI would like to handle an account. This is repeatable if this is the first QFX file to be imported after setting up your 401K.

2. Under certain conditions, if your paycheck transaction is on the same day as your Buy or Sell transactions in your 401K then Quicken may or may not drop all 401K Buy and Sell transactions for that date. Yes, those transactions are in the QFX file and the OFX Log but they do not appear in the 401K account register. So your account does not balance. This is repeatable if this is the first QFX file to be imported after setting up your 401K.

3. Much like #2, and under certain conditions, if you have several paycheck transactions (let’s say two consecutive paychecks) and then import a QFX file that has 401K Buy or Sell transactions on those paycheck dates, then Quicken may or may not drop all those Buy and Sell transactions plus all transactions between those dates in your Quicken 401K account register. I showed them one scenario where Quicken dropped 607 of my transactions. Again those transactions are in the QFX file and also show up in the OFX Log file. This is repeatable if this is the first QFX file to be imported after setting up your 401K.

4. Under certain conditions and not really repeatable, I would get a OL96A “No New Transactions Available” error and yet the new transactions were in the ‘Accept Transactions’ area of the 401K register.

5. On the first QFX import after setting up your 401K account in Quicken, your “One Step Update Summary” window will show you that you have a number of new transactions in your 401K account. Sometimes and maybe, ever after that when you import your QFX file you will not get that information in the summary. This is completely random.

Numbers 1, 2 and 3 were the most impacting issues that were preventing me from getting my new 401K set up in Quicken. As I stated, Quicken agrees that numbers 2 and 3 are bugs and that number 1 may just be a quirk with how Quicken works with 401Ks. I call it a quirk because if you are only using the Net Paycheck method then there will never be 401K contributions coming from your paycheck and therefore the only way to get the 401K to not have an offset balance would be to use BoughtX.

Apparently there is a limit to the length of a post so my next post shows what I did to set up my 401K so that I have Bought and Sold rather than BoughtX and Sold X

Terry Locke

Continued from my last posted comment highlighting the errors in Quicken.

@Boatnmaniac @Chris_QPW @Jim_Harman @q_lurker @NotACPA @UKR

What I finally did to set up my new 401K account after my experimenting with Quicken:

Keep in mind that I am trying to set up a new 401K account in my existing Quicken file where I already have a “Gross Amount Paycheck” and the new FI uses Web Connect for downloading QFX files in order to update the Quicken account. I want all transactions to be Bought and Sold etc. rather than BoughtX and SoldX etc. because I use the Gross Paycheck method of tracking my paychecks. If you are going to try this you need to first set up a test file from your exiting Quicken file and test that the procedures will work for you.
I started with the following:

• My exiting Quicken file that already contains several 401Ks.
• A Gross Amount Paycheck with the 401K contribution (and employer contributions) that are going to a 401K that is not the new 401K
• Four QFX files as follows:
o The first QFX has transactions starting on November 15, 2019 and going to June 15, 2020. There are 607 transactions in this QFX starting with the first transaction on November 15, 2019.
o The second QFX has transactions from November June 16, 2020 to June 30, 2020
o The third QFX has transactions from July 1, 2020 to July 15, 2020
o The fourth QFX has transactions from July 15, 2020 to July 31, 2020

In order to get all transactions in my new 401K to be Bought and Sold I did the following:

1. Add a new 401K account. As I added the account I did the following:
a. I set the start date for this 401K account to be October 31, 2019 with a $0.00 balance. This date is well before the first investment transaction in my first QFX file.
b. I entered in all the Ticker symbols of all the investments I have in my new 401K using the Ticker lookup and set them all to 0 holdings. I did this to ensure I didn’t accidentally mix up my securities.
c. Quicken did not ask me about setting up paycheck and I assume that was because I already had one set up.

2. Went to my checking account where my paycheck is deposited and scrolled back to November 15, 2019 paycheck and edited that transaction adjusting the date to November 14, 2019 (because the first investment transaction is on November 15, 2019 see above notes on missing investment transactions when the paycheck date is the same as the investment transactions dates) and changing the contribution destination to the new 401K and saved that transaction. At this point I have a new 401K account containing only the contribution transactions (one is my contribution and the other is my employer’s matching contribution) that is on November 14, 2019, one day before the first investment transaction in my First QFX file.

3. Went to my new 401K account and imported the first QFX file. All 607 transactions showed up in the “ready to accept” window in the Register and then I “Accepted All” transactions. This resulted in all the transactions being imported into the register with a start date of November 15, 2019 going to June 15, 2020. Also, Quicken added an “Establish Cash Balance” transaction on the current day (in my case that was August 3, 2020) in order to make the ending cash balance equal $0.00 At this point all investment transactions are Bought and Sold and there are no BoughtX and SoldX transactions. At this point the Ending Cash Balance should equal $0.00

4. Went back to my checking account and for each paycheck transaction from November 16, 2019 to June 15, 2020 (the most recent date for investment Buy transactions loaded into the 401K account) and changed the destination of all 401K contribution transactions to the new 401K. I made sure not to change the dates for the paychecks and not to change the contribution destination for any other paychecks on dates newer than the last investment transaction from the first QFX file.

5. Went back to the new 401K. At this point you should see a cash balance of $0.00 on the last investment transaction day. This means that all your contributions add up to all the investment Bought transactions. If it is not, then go check your contributions against your paycheck. The Ending Cash Balance should now be equal to the Establish Cash Balance transaction that was automatically added by Quicken. You absolutely need to make sure this true at this point.

6. Reconcile the new 401K account to $0.00 one the day after the very latest investment transaction as it appears in the 401K register. In my case that day was June 16, 2020. Make sure to ‘Check” any transactions that are not already “Cleared”. Under no circumstances should you reconcile the Establish Cash Balance transaction.

7. Delete the ‘Established Cash Balance” transaction and your Ending Cash Balance will now read $0.00

8. Go back to the checking account and starting at the next paycheck after the last date in step #4, (in this case it was my June 30, 2020 paycheck) and going to the must current paycheck, edit the paycheck transactions to have the contribution destination be the new 401K.

9. Go back to the new 401K and import the rest of the QFX files. In my case that was 3 more files. Your ending cash balance should be $0.00, meaning that the total of all your investment Buys equal the total of all your contributions.

10. Reconcile the new 401K account to $0.00 on the day of the latest invesetment transaction. In my case it was July 31, 2020.

11. I then changed my paycheck reminder so that my 401K contributions are going to your new 401K.

Hope this helps anyone that is getting frustrated with these BoughtX bugs in Quicken.