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Another Traditional IRA to ROTH IRA Conversion question/clarification in Quicken Windows

When it comes to Investment type accounts, the lack of a "Split" action, when transferring to any account is an issue for me.

I recently converted X amount of dollars from a traditional IRA to a Roth. As part of the conversion, both Federal & State taxes were paid. So funds were sold in the traditional IRA and the cash transferred to the Roth, minus the taxes of both federal and state. So, in other words, the whole cash amount from the traditional IRA is not moving to the Roth. Only the remainder of cash, after taxes are paid will move to the roth, but I am unable to indicate the split of this transaction from either the outgoing or incoming account.

I did find out however, I can transfer the cash from the traditional IRA to a dummy non-investment account, then transfer to the Roth, using a split transaction at that point. This method works, but a bit more cumbersome than just a straight on the initial transfer.

Unless I'm overlooking something trying to convert from traditional to roth in quicken, It's hard to imagine others not having this same issue and to go on this long in Quicken. It's a normal process right?

I just recently retired, so I've not had much need for this type of transfer from an investment account within Quicken, but I have been a Quicken user from back in the days of Windows 3.1 where quicken came with the PC. Surely this is something that would have been addressed in that amount of time, or I'm doing something completely wrong. (certainly wouldn't be the first time)

Is there better way to do this? Any idea other ideas?

Best Answer

  • J_Mike
    J_Mike SuperUser ✭✭✭✭✭
    Accepted Answer
    tryintoo said:

    I did find out however, I can transfer the cash from the traditional IRA to a dummy non-investment account, then transfer to the Roth, using a split transaction at that point. This method works, but a bit more cumbersome than just a straight on the initial transfer.

    I would recommend this approach using the dummy account.

    Using this method, QWin recognizes and properly reports the tax information in the tax reports. Retirement accounts are excluded from the tax reports and thus QWin does not "see" tax related info entered within those type of accounts.

    A bit cumbersome - yes - but effective!

    QWin & QMac (Deluxe) Subscription
    Quicken user since 1991

Answers

  • eichmat
    eichmat Member ✭✭
    I don't like that Investment accounts don't support splits on their side the transaction either...

    I'd do it one of two ways:

    Option 1:
    1) Record the sale(s) in the Traditional IRA account as a straight Sell pick the "to this account's cash balance" for where to "Record Proceeds" (bottom-left of the Sell screen)
    2) Create "Withdraw" transaction with just the amount being transferred with [<name of your Roth IRA>] as the Category to transfer the funds to the Roth
    3) Create Miscellaneous Expense transactions in the Traditional IRA account for the Federal and State taxes withheld.

    Option 2:
    1) Record the sale(s) in the Traditional IRA account with "SellX" (pick the Roth IRA account for where to "Record Proceeds" (bottom-left of the Sell screen)
    2) Create Miscellaneous Expense transactions in the Roth IRA account for the Federal and State taxes withheld.

    Hope those help...
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    When converting assets in a traditional IRA to a Roth IRA, it is better to pay the tax implications with other funds so as to maximize the tax-free growth in the Roth IRA.  If you really need to pay taxes from with the traditional IRA account, I suggest you use a Withdraw transaction to enter the split: open the IRA account, select Enter Transactions and Withdraw in the Enter transaction: pull-down menu
  • J_Mike
    J_Mike SuperUser ✭✭✭✭✭
    Accepted Answer
    tryintoo said:

    I did find out however, I can transfer the cash from the traditional IRA to a dummy non-investment account, then transfer to the Roth, using a split transaction at that point. This method works, but a bit more cumbersome than just a straight on the initial transfer.

    I would recommend this approach using the dummy account.

    Using this method, QWin recognizes and properly reports the tax information in the tax reports. Retirement accounts are excluded from the tax reports and thus QWin does not "see" tax related info entered within those type of accounts.

    A bit cumbersome - yes - but effective!

    QWin & QMac (Deluxe) Subscription
    Quicken user since 1991

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
    J_Mike said:
    tryintoo said:

    I did find out however, I can transfer the cash from the traditional IRA to a dummy non-investment account, then transfer to the Roth, using a split transaction at that point. This method works, but a bit more cumbersome than just a straight on the initial transfer.

    I would recommend this approach using the dummy account.

    Using this method, QWin recognizes and properly reports the tax information in the tax reports. Retirement accounts are excluded from the tax reports and thus QWin does not "see" tax related info entered within those type of accounts.

    A bit cumbersome - yes - but effective!

    Does it really need to be a dummy account?  What about a net-$0 transaction in any cash account split as:
    • Gross from Trad IRA
    • Amounts to Fed and State Taxes
    • Amount to Roth IRA
    From and To are opposite signs, so make sure you get them signed correctly.  May help to start off as "Deposit" from the Trad IRA, then add the other split lines and adjust to $0. 
    My $0.02 worth 
  • tryintoo
    tryintoo Member ✭✭
    Thanks All. I think I will stick to the dummy account method, but with modifications to what I've been doing. I think I’ve learned a bit more today with everyone’s help. I already had a dummy cash account, but I used it as a catch all. I decided it best to create a new separate dummy cash account to be used only for Roth conversions and cash sales/withdraws from a traditional IRA money market account. Modifications being:

    1.) In the tax schedule information section for the new dummy account: Transfers In = 1099-R Total IRA taxable distributions. (Hoping to catch all taxable sale distributions in reporting)
    2.) I created two new TAX subcategories: Federal 1099-R & State 1099-R
    3.) Updated the Tax Line item for each to 1099-R IRA Federal Tax withheld and 1099-R IRA State Tax withheld.
    4.) Show the sales in the appropriate Investment account.
    5.) WithdrwX (transfer) the cash to the dummy account. (I assume the full amount should now show up correctly in reporting)
    6.) Make the transfer from dummy account to the Roth, but now the full amount can be split indicating the taxes paid to both federal and state using the correct tax line item as well for reporting purposes.

    Does this all seem workable and correct? If so, I’ll probably go back year to date and make some changes to my transactions in QWin😊
  • volvogirl
    volvogirl SuperUser ✭✭✭✭
    Just had a thought.....you could name the dummy account Funds in Transit and use it for lots of things.
  • tryintoo
    tryintoo Member ✭✭
    > @volvogirl said:
    > Just had a thought.....you could name the dummy account Funds in Transit and use it for lots of things.

    I have one I used as a catch all. I guess the main reason I created a new one, is to separate it for 1099-R purposes only. Trying to keep the reporting clean and accurate.
  • hinsonlw
    hinsonlw Member
    Having an issue with Option 1 in that the "Record Proceeds?" option is greyed out and defaults to " this Account" instead of allowing me to select the Roth account. Anyone encounter this?
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