Transfer from Traditional IRA to Roth IRA

Charlie Davies

I have recently setup a new Roth IRA in Quicken. I also have been managing a traditional IRA in Quicken. Funds were transferred from the traditional IRA to initially fund the Roth. For reporting purposes, how do I implement both the transfer between these IRA brokerage accounts as well as showing the resulting transfer as income and a taxable event? Does anyone have a step-by-step to facilitate this?

Mark1104

1) you are going to do a 'cash transferred out of account' transaction from within the TRAD IRA.  Within that transaction, you'll indicate that the Roth is the 'transfer to' account.

2) Be sure that the Roth account tax schedule is correctly set.  Go to Account Detail for the Roth account and at the bottom of the screen there is a 'tax schedule' button.  for the 'transfer in' dropdown, go down to almost the bottom of the list and choose "1099-R Total IRA Tax distrib." 

see if that works for you. 

Tom Young

There's no overt need to somehow show the transfer from one IRA to the other IRA on some sort of report.  From a pure accounting standpoint, forgetting the income tax accounting for the moment, it's no different than moving money out of checking to savings, and most people probably don't routinely "report" those kinds of transfers.  So one approach is to simply withdraw the money from the old traditional IRA and deposit it in the new Roth IRA..

If when you set up the traditional IRA you specified on the "Tax Schedule" for that Account that disbursements out of the Account would be reported on a 1099-R, then the program "knows" that this is a taxable event and that transfer will show up as taxable income on the Tax Schedule report.

If you want to see the transfer out and transfer in on some sort of Spending report then you certainly can do that.  The essential elements of making this work is to specify that each Account is included as a Category selected under the Category tab when you customize the Spending report, and allowing transfers to be shown under the Advanced tab. 

That way the transfer out will show up as a form of "income", denoted "From [Name of Traditional IRA]" and as a form of "expense", denoted "To [Name of Roth IRA]", .  But getting this to work such that not every single transfer you make in your file shows up on that report can be quite a bit of work, involving de-selecting certain Accounts under the Accounts tab.  If this is pretty much a one-time event I'd probably opt not to try and show this.

mdbrown172

I have found the only way to get the transfer to show up in the tax planner is to make a net zero split entry in my checking account. Use tax category for the amount 1099-r taxable distribution, and checking acount negative amount. It will import to turbo tax, but you need to add the amount under gross distributions before turbotax sees it as taxable income.