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Which tax schedule for transfers in - 401k?

Hi - wondering if my 401k account should have a tax schedule associated with transfers in.

contributions are made pre tax via payroll deduction so not sure I should assign anything, but I appreciate any guidance.

Answers

  • Frankx
    Frankx SuperUser ✭✭✭✭✭
    edited December 2020
    Hi @harry askenazi

    You are correct, that there is no need to assign a tax schedule to your 401k contributions or to matching contributions of your employer, since those amounts are not recorded by a taxpayer on their personal tax returns (until such time that they start to make withdrawals from such accounts).

    Frankx 



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  • J_Mike
    J_Mike SuperUser ✭✭✭✭✭
    Transfers In for the account should be set to "W-2:Salary or wages, self".

    The pretax contributions will then be subtracted from gross income in the tax reports.
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  • Rocket J Squirrel
    Rocket J Squirrel SuperUser, Windows Beta ✭✭✭✭✭
    I don't have a 401(k) so I don't have direct experience with this. But it appears that Quicken handles this automatically in a special way. It creates a pseudo-account named "Tax Impact of 401(k) Accounts". And there are many hidden investment categories starting with "_401". The _401Contrib category is already assigned the TLI "W-2:Salary or wages, self", so assigning transfers in to the same TLI may double the results. But that should be easy enough to check.
    From Quicken Help:
    When Quicken adds a 401(k)/403(b) account, it also creates a special tax impact account. This account tracks all the transactions associated with your retirement account that can have an affect on your taxes (for example, if you withdraw funds from your retirement account prematurely). Quicken uses this information in some tax reports and planning tools. The tax impact account does not appear in your Account List, but you can drill down to tax impact account transactions in tax reports. You should not edit or delete such transactions, or the account itself, in any way.

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  • Frankx
    Frankx SuperUser ✭✭✭✭✭
    Employee pre-tax contributions to a 401(k) account are not part of reportable wages on a US Federal tax return.  The employee's W-2 Box for [taxable] "Wages, tips, other comp." is the result of the calculation - "Employee's Gross Compensation Paid" minus "Employee 401(k) Pre-Tax Contributions" [the latter of which is displayed only in Box 12a and is shown nowhere on the Form 1040, nor is it used in any computation on the return].

    Frankx


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