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How do I record a transfer from one mutual fund to another mutual fund in my 401k?

On 5/30/2019, my 401k was invested in one target date mutual fund and on this same date it was transferred to another target date fund. In Quicken, I have entries for both funds in my 401k account. On that date, there's a bought entry for the new fund. Shouldn't I see a corresponding sold or transfer entry from the old fund?

Answers

  • Frankx
    Frankx SuperUser ✭✭✭✭✭
    HI @Clay McLaughlin,

    It does sound like something my be wrong but also a little surprising on the timing. 

    But a few questions first:

    a) You say the "transaction' took place on 5/30/2019 - are you just noticing this now?  Why the delay?
    b) Do you download all entries from the 401k plan into Quicken, or are there manual entries in the Quicken account?
    c) Is the overall account balance in Quicken correct? Have you compared the Quicken account balance with statements from the 401k provider and do the balances agree?
    d) do you have any placeholders in the Quicken account?  Placeholders are usually hidden, so you need to "unhide" them as follows:

    Select - “EDIT” > “Preferences” > "Investment Transactions" then check "Show Hidden Transactions" > click “OK”.


    Get back to us and we'll go from there.


    Frankx


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  • Hi Frankx, below are answers to your questions.

    a) No I didn't just notice this now. I just recently added this account to Quicken.

    b) I download transactions to Quicken via my 401k's website. The transactions downloaded are "bought" transactions using cash from the account's cash balance. I have to manually enter a corresponding entry transferring money into the account.

    c) The account balance is approximately 14k more than what's in the account. All the transactions downloaded were "bought" transactions, so I'm manually entering "transfer" entries.

    d) There are no placeholders.

    Thanks for helping with this.

    Clay
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    edited November 2020
    Unfortunately you can't really rely on downloads from any Financial Institution (FI) to get your accounting correctly stated.  That's one reason why you shouldn't have "Automatic entry" of downloads turned on or, if "Automatic entry" isn't turned on, simply clicking "Accept All" in the Downloaded Transactions area.  You need to be able to review transactions one at a time in order to catch "transactions" the FI has sent to you that aren't really correct, or missing.
    Getting more specific to your situation, was the movement from one fund to the other fund a real "Sell and Buy" situation, (if this had happened in a taxable account, would the "sell" result in a capital gain or loss that you'd report on your tax return?), or was it really a "transfer" situation (a non-taxable event where a fund manager - not you - closed an old fund by merging it into another fund?)
    Since capital gains and losses inside a tax-advantaged account don't show up on an income tax return this distinction between "what type of event was it?" isn't as critical at it might be for a taxable account.  A sell/buy transaction resets the holding period and basis of the "new" holding, where a transfer transaction carries over the old holding period and basis of the old holding to the new holding. 
    Clearly there was a "Buy" of the new fund to a certain extent since you indicated cash already in the account was used, so if your balance difference is entirely due to the old fund continuing to show up in Quicken when it's not shown on statements from the FI, it seems like establishing the nonexistent "sell" of the old fund would serve to get the balances correct, even if the transaction from old to new really was a "transfer."
    Having said that, understand that since nobody here can actually see your Account in Quicken all we can do is provide some guidance based on what you've posted so there are some things here that are a bit puzzling.
    1. You said " I have entries for both funds in my 401k account" but didn't describe how the entries affected the old fund.  FIs usually create transactions that serve to get security balances correctly stated, (even though those entries might not be "correct accounting"), so I'd have thought that the FI would have provided a "Sold" or "Removed" entry for the old fund.  What did this entry or these entries do to the old fund?
    2. By default Quicken compares the account portfolio after download to what you are showing in Quicken, so I'd expect that you would have placeholders if your balances are off.  Did you turn off this feature for this Account?

  • Frankx
    Frankx SuperUser ✭✭✭✭✭
    edited November 2020
    Hi again @Clay McLaughlin

    Thanks for the additional information - it is helpful.

    A few, top of the head thoughts about your "process" first-

    If you aren't already taking an approach of doing a periodic comparison of the "balance per 401k statement" with the "balance per Quicken", then you need to do that starting with the earliest transactions and moving eventually to today.  What "period" (i.e. monthly, bi-monthly, quarterly, annually) you use will depend on the records that are available to you (e.g. paper/electronic "month-end" statements, etc.).

    The Q "entries" that you "have to manually enter" should be coming pretty much automatically from payroll transactions that you've (presumably) already been: a) either "downloading" from your employer on a regular basis, or b) "manually entering" based on pay stubs.  If you are now creating new entries for these, you need to be very careful because there is much room for error.  Also, keep in mind that there is, very likely, a "matching" contribution from your employer that happens periodically, which you also need to enter.

    And lastly,  you said "The account balance is approximately 14k more than what's in the account." - I assume that you mean that "the balance in my Quicken account register" is "more than the actual account balance per my last statement from the Plan Administrator".  If that is the case, it could clearly be caused by a failure of the Plan Administrator to provide you with a downloaded transaction for the "sale" or "exchange" of shares in one fund for another fund.  However, if you've been diligent in downloading all time periods, it would be unlikely that such a transaction wouldn't have been among the downloads.

    Obviously, there are significant limitations on the information that is available to us in this Community and therefore that limits how effective our assistance can be.  Hopefully this gives you some direction.  But, as you move forward, if you have the ability to be more specific, please reach out with additional information and questions.

    Frankx


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  • Tom/Frankx,

    Thank you both for your assistance. I will try am]nd provide more information.

    1) There are two bought entries for purchases in the new account on 5/30/19 and the share amount reflected the number shares purchased in the new account. On the statement there is one transfer entry transferring from the old account to the new one. This transfer entry is a little over 14k.

    2) Initially, there were placeholders for the number s shares being off and I managed to correct those. Now I'm trying to correct the account balance.

    3) As Tom suggested I think I need to use the account report I was able to generate showing all transactions since the account was opened and either correct what is in Q or add transfer in entries to correspond with the but entries.
  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    1) You are using the word "account" here, but I assume that word should be replaced by "fund" throughout?  That is, all transactions occurred in the 401(k) "account" and the transactions involved different "funds?"   If the situation is that at the FI's end there was a transfer from one account to another account, but you are starting your Quicken 401(k) Account after the (real world) transfer, then from your perspective everything happened in your one Quicken Account.
    2) Now there's a puzzler.  IF you've got the number of shares correctly stated for any securities in the Account AND you've got the price of each security properly stated, then it seems like you SHOULD BE in balance.  From what you've posted previously it appears that you've got a "linked" cash Account in Quicken as you had to "transfer in" cash to make the initial purchases.  We're not talking about something as simple as the statement from the FI shows a balance reflecting both the value of securities in the account and the cash in the account, and you're trying to balance to your 401(k) Account in Quicken that only has securities in it?  I would think not, but I've got to ask since we can't see into your Quicken file.
    3) Before you start pawing through transactions, the first thing you need to do is determine WHERE you are out of balance, as that's not clear.  Take the first statement from the FI after that 5/30/2019 date and compare the "Holdings" in your Quicken Account as of the same date.  Presumably one security or the amount of cash will jump out at you to explain that $14K difference. 

    If you're able to use the "Attach Image" feature in here, (you have to have made some small number of posts before that feature becomes available to you), and feel comfortable posting some suitably redacted information from the FI statement and/or your Quicken Account, that might move things forward if you still can't figure out what's causing the balance difference.
  • Frankx
    Frankx SuperUser ✭✭✭✭✭
    Hi @Clay McLaughlin

    Regarding your last message...

    You said - "1) There are two bought entries for purchases in the new account on 5/30/19 and the share amount reflected the number shares purchased in the new account." and also said - " there were placeholders for the number s shares being off and I managed to correct those."  From these I am assuming that you believe that the "share balance" in the new Quicken account matches the correct number of shares in currently held in the account - presumably because it agrees with a current statement from the plan administrator/website. Is that correct?

    You also said - "On the statement there is one transfer entry transferring from the old account to the new one. This transfer entry is a little over 14k."  Can you tell me what "statement" you are referring to?  And, is there also an entry in your Quicken account for this transfer, or is it simply on a "statement" but not in Quicken?

    It seems more than a coincidence that you have this "transfer transaction" in Quicken for $14k AND your out-of-balance amount is $14k.  If you were to delete the transfer transaction in Quicken, would your Quicken balance agree with (or at lease be close to) the 401k account statement/online balance?

    Frankx


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  • Tom/Frankx,

    I was wrong there is a placeholder (image attached) for the exact number of shares that were transferred on 5/30/19. I selected Enter History on this placeholder and entered one transaction for 5/30/19 transferring 854.402 shares. Quicken added a corresponding transfer transaction (all dated 5/30/19) for each transaction prior to 5/30/19. The securities value (image attached) now equals what is shown online. I just need to add transfer in transactions to remove the cash balance. Can I select Delete All at the bottom of the placeholder to remove the placeholder? When I do, it throws a warning (image attached). I just wanted to make sure I could delete it. Happy Thanksgiving! And thank you both.
  • Frankx
    Frankx SuperUser ✭✭✭✭✭
    HI again @Clay McLaughlin,

    Okay, that all makes sense.  And "yes", if you've entered that manual entries for all purchases, you can delete the placeholder. The warning is just that, meant to make folks think twice before potentially putting the account out of balance with the downloaded balance.  But, as always, make a backup before you delete it, just in case.

    Have a wonderful Thanksgiving (and don't worry about having a second helping of dessert - we've all earned it this year!).

    Take care,

    Frankx



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