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

rjcharle

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

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

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

@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

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

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

Boatnmaniac said:

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
  
• Income & Expense report does not capture it properly

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

Case closed. Thanks to all.

J_Mike

@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.

Rocket J Squirrel

You placed your question in the "Quicken on the Web" category, which is not where it wants to be. You need to tell us whether you're using Mac or Windows, US or Canada, and what version of Quicken, for starters.

If Quicken is populating one transaction with data from a different transaction, you may have data corruption. We'll need to know exactly what you're running to offer any assistance.

rjcharle

Sorry for this category error. I'm just learning my way around the site. As for your questions, I am running Windows 10 US Version R30.10 Build 27.1.30.10.
Here is a more detailed description of my problem:
With my IRA register displayed I press "Enter Transaction" in the upper left.
I specify the transaction type as "Withdraw" in the Cash group
I then designate myself as the payee and tab to the Split option under Category.
At this point, the Amount field is prefilled with the amount from the last transaction where I was the Payee and greyed out so it cannot be changed.

One more complicating factor is that, while recreating these steps, I was able to circumvent this problem and enter my transaction successfully. However, I have been unable to retrace the steps that allowed me to do this. The problem seems to be related in some way to the order in which I enter data in the Split dialog.

volvogirl

I thought you have to enter the full amount as the withdraw as a transfer to your checking or wherever.  Then in your checking account make another transaction for the withholding.  

NotACPA

No payment of taxes can be recorded in Q in a retirement type account.

You need to withdraw the FULL amount to your checking account, and then split the transaction to record a negative number as the taxes withheld and adjust the total of the transaction to record, in the register, only that which you actually received.

rjcharle

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

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

@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

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

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

Boatnmaniac said:

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
  
• Income & Expense report does not capture it properly

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

Case closed. Thanks to all.

Boatnmaniac

J_Mike said:

Boatnmaniac said:

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

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.

First, I corrected my statement regarding Tax Planner not capturing the split transaction data at all.  I'd needed to change the Tax Schedule setting for the account in my test file and now it does show up but the info is not accurate.

Second, you've peaked my interest.  My earlier post on this was based upon what I'd learned from others (including from several SUs) and from personal experience over the years.  If you've found a way to use a single split category transaction to accurately capture all the appropriate tax data while also keeping the affected accounts in balance and not causing issues with the data in the specific transactions then I'm all ears!

Following is my understanding of what you describe but as shown the data is not be captured properly.  What do you do differently or what am I doing incorrectly?

CREATION OF THE TRANSACTION IN THE IRA ACCOUNT REGISTER (for a $1000 gross distribution, $900 net distribution and $100 withheld for taxes):

TAX SCHEDULE AND SUMMARY REPORTS:

TAX PLANNER - OTHER INCOME:

TAX PLANNER - TAX WITHHELD:

J_Mike

@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.

Boatnmaniac

J_Mike said:

@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.

What a coincidence.  I was wondering what you were doing that was different than what I'd done (and what many others have likely done) that would give you different results than what I was getting and had decided that perhaps you were entering the data from the back-end instead of from the front-end. 

So I started testing that and came up with the exact same good results that you have reported.  And then I came back here and saw your post!  (BTW, I was not questioning that you were getting good results.  I was just trying to understand what you were doing that was different that gave you the good results.)

What threw me off for a little while was that the connected transaction that showed up in the IRA Account did not show the split for the withheld tax but then I realized it wouldn't and shouldn't since the transaction originated in the Checking Account.

My initial thoughts are that this process probably isn't the best one for those who download IRA Account transactions from the FI (assuming the FI downloads 2 transactions...one for the Net Distribution to the checking account and one for the withheld tax amount) but I'll test that out.  For others this could help to simplify their level of effort.

Thanks for the quick replies!