What is best approach to setup a defined benefit pension plan?

Question

My wife is a retired teacher who is receiving a monthly pension payment. Thank you.

Bob_L · Accepted Answer

I would just set it up as an income reminder with automatic entry.  Do that from the top of reminders page at CTL -J.  If there are taxes withheld make it a split transaction.

q_lurker · Accepted Answer

There are various ways to value a defined benefit pension, so in part the best setup needs to know your wants and expectations.  Certainly the simplest is to simply schedule transactions - deposits into the bank.

If you want to value the pension for net worth or long term planning, something else more elaborate might be used.

Personally, I think I'd try to keep it simple.

Jim_Harman · Accepted Answer

To record the income and have Quicken capture the taxes correctly, you will want to set up Categories with the correct tax line items. You might do something like
Category              Tax line item
Pension Income     1099R: Total Pension Gross distrib
Pension Fed WH    1099R: Pension Federal Tax withheld
Pension State WH  1099R: Pension state tax withheld

Then you can set up a split deposit transaction or use the Paycheck Wizard to set up a paycheck with these categories. Choose Gross pay as the paycheck type.

Jim_Harman · Accepted Answer

It sounds like when she started receiving the pension payments, the pension account was converted to an annuity. It pays every month as long as she is alive and can never run out, right?

If so, then I would not consider the pension account as an asset and I would just record the payments from it as income. You can zero out the pension account balance with a transfer of the cash balance to the same account.

Bob_L · Accepted Answer

Does the pension check include a return of her contributions as non-taxable?  If so then only that portion of her payment should have been used to reduce that pension account you set up.  In theory you could go back and fix all of those past transactions but I personally don't think keeping track of those cumulative contributions accomplishes much.  I would just wipe out the balance in that pension account using a transfer back to that same account as @Jim_Harman suggested. Then going forward this year use a reminder income deposit split between taxable pension income and non-taxable pension/other income.

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