Is there a problem with split categories when entering transactions in investments?

Question

I cannot get Quicken to accept  split transactions correctly. I'm trying to enter Y/E 401k withdrawal and split out withholding and the money I get to keep. I use the "Enter Transaction" button and enter the data as usual, but the system keeps overriding the total I had entered with data from another transaction and I get an erroneous total. I've been doing this on Quicken for 10 years or more and have never had this problem.

rjcharle · Accepted Answer

Thanks to both volvogirl and NotACPA, but I disagree on two counts. First, why provide a "Split" option on the "Category" field if you can't use it? Second I discovered I can circumvent the problem by turning off the "Quick Fill" option in "Preferences." With that option off I can do exactly what I want.
 The problem seems to be that Quicken prefills the "Amount" field with a value from another account and then greys it out so it can't be changed.

q_lurker · Accepted Answer

As @volvogirl indicated, to get the proper data into the proper reports in Quicken, you need to make a distribution from the retirement account as the full gross distribution transferred to the receiving account, then in the receiving account you have a split transaction with one line as the full gross amount transferred from the retirement account and the second (or more) lines as the reduction to that amount paid to fed and state withholdings.

When Quicken is looking for tax related transactions (how much you have had withheld, a tax report), it will not (normally) look in retirement accounts.

See this FAQ for further info:  https://community.quicken.com/discussion/7072150/faq-best-way-to-handle-distributions-from-ira#latest

NotACPA · Accepted Answer

@rjcharle You can reject our responses all you want ... but that the way that it works ... and the ONLY way that it works.A split within a retirement account DOES work ...  but no part of that split can be to a tax category.I'd speculate that it's primarily for when you want to transfer funds to more than 1 other account.BUT, we, the other users of this forum,  can only provide HOW answers ...not WHY answers ... because we're other users and not Q developers or  Q managers.

Boatnmaniac · Accepted Answer

If a single transaction with a split category is used to transfer 
the net distributed amount from a retirement account to a checking 
account (or other taxable account) and to expense the taxes withheld, it will keep the retirement account 
and checking account balances correct.  And in a test file where I did 
this it was observed that the Itemized Categories report can be set up to capture 
this type
 of transaction properly but there were numerous other issues 
encountered, such as:* Tax Schedule report does not capture it properly
* Tax Summary report does not capture it properly
* Tax Planner does not capture it at all properly

* Income & Expense report does not capture it properly

Bottom line is that:* If
 you simply want to make sure that your retirement account and your 
checking account balances remain accurate and you don't use Quicken's tax reporting and planning tools, then using a single split category 
transaction for retirement account distributions probably works quite 
well.

* If, however, you want/need to use the tax reports 
and tools, then the single split category distribution transaction will disappoint.  The better way to record 
the distribution is to enter a transfer out transaction from the 
retirement account for the net distribution amount to the checking 
account, enter another transfer out transaction for the tax withheld 
amount into into a dummy manual Cash Account (I call mine "IRA Distributions") and then do another expense
 transaction for _401kFedWithheld (and for _401kStateWithheld if appropriate) from that Cash Account.  (The two separate
 transactions from the retirement account are usually necessary because 
brokerage companies usually report two separate transactions and it's 
best to match what the brokerage companies do.)  The two transfer out transactions will total up to match the gross distribution amount and by default will be picked up by Quicken as taxable events so they will be captured in the Tax reports and in Tax Planner.

Chris_QPW · Accepted Answer

It seems to me that @rjcharle and every one else on this thread are talking about two different things.

@rjcharle is talking about the split function not allowing him to get the category into the transaction, and everyone else is warning about the fact that the tax reports will not be right.  Two different problems.

I'm not seeing the problem you are describing though.  I started a withdraw transaction and put in a payee that was a memorized payee so it did fill in the amount and category, but it didn't make the payee field read-only.

Second on the point "why provide a split if you can't use it?"

The comments from the others aren't saying that Quicken will prevent you from using a split.  There shouldn't be anything that stops that.  Something is not working right in your data file.  It might be worth running Validate & Repair.

What the others are saying is that you don't want to use a split with a category that is tied to a tax line in a retirement account because if you do it will not be reported on the tax reports or the tax planner.  You want to instead to transfer the full amount out, to a taxable account and do the splitting off of the categories that are associated with the tax lines there.

J_Mike · Accepted Answer

As indicated above, I use the single split transfer transaction procedure retirement acct to checking) and it works perfectly for me. The Tax Schedule and Tax Summary reports pick up the gross disreibution as taxable income and report the withholdings. The Tax Planner picks up the gross distribution (under Other Income) and it reflects the withholdings.

No problems at all from a tax reporting viewpoint.

There is a wrinkle if the distribution is a transfer to a taxable brokerage act. In the brokerage acct register, one must use a "Deposit" transaction (under Cash Transactions) for the tax reports and planner to report correctly.

rjcharle · Accepted Answer

Case closed. Thanks to all.

J_Mike · Accepted Answer

@Boatnmaniac

Enter the split transaction in the destination account - Checking
Split #1  Transfer from IRA      $1.000
Spit #2   Tax Withheld               ($100)

Result is a net deposit to checking of $900
The resulting IRA Acct register entry shows only the withdrawal ($1,000) - a transfer to Checking.

Tax Line Assignments;
IRA Acct - Transfers Out .    1099-R:Total IRA taxable distrib.
Fed Tax withheld                  1099-R:IRA federal tax withheld

As indicated earlier, my tax reports and the planner do match up.