Withdrawal or Transfer Cash Out

TheBobster

I recently retired and am moving cash monthly from my investments into my checking account to fund my living expenses. Is this transaction a withdrawal or transferring cash out (XOut)? The Quicken investment register includes both labels in the action column. Which would be most accurate and helpful as I create reports and analyses? Hopefully I'll have many years of these transactions, and I'd like to get it right from the beginning.

[Deleted User]

TheBobster - you don't say what type of retirement account you have, but I would like to alert you to a bug in using "Xout" or "Xin" for 401(k) or IRA accounts. These transfers will show up in the 401(k) or IRA account as "ContribX" or "WithdrwX". The problem is if you ever do a "File Validate" on your Quicken file, the cash amounts associated with these transactions will disappear from all reports. This is a bug that Quicken recently officially submitted as an issue, but who knows when it will be fixed. What that means is maybe the "Withdrawal" and "Deposit" transactions are better to use for the time being until Quicken fixes this bug with the Xout and Xin transactions for 401(k) and IRA accounts.  If you choose to use "Xout" or "Xin", I would run an investment transaction report periodically, filtering on "ContribX" and/or "WithdrwX".  If you find the amounts for these transactions are indeed missing, the only way to fix the issue is to delete the transactions and reenter them again.  Keep in mind that these amount will disappear again if ever you do a File Validate again.

Tom Young

A Withdrawal action with the receiving Account as the Category "[Name of Receiving Account]" and a XOut action with the same receiving Account being specified are exactly the same from a pure accounting standpoint.  The XOut action is probably marginally faster since the drop down list that shows up in the Category area includes only Accounts, where if you use the Withdrawal action the drop down list has both Categories and Accounts. 

Personally I use the XOut action when I want to specify an Account and the Withdrawal action when I want to specify a Category.  Just by looking at what's in the Action column I can tell immediately if the money flowing out went to another Account or represents some kind of expense, so that's a slight advantage.

Jim_Harman

Another way to think about it is Withdraw is for when you spend money directly from the investing account, XOut is for when the money is transferred to another Quicken account (your situation).

Other information applies if these transfers are from an IRA or other tax deferred account.

[Deleted User]

TheBobster - you don't say what type of retirement account you have, but I would like to alert you to a bug in using "Xout" or "Xin" for 401(k) or IRA accounts. These transfers will show up in the 401(k) or IRA account as "ContribX" or "WithdrwX". The problem is if you ever do a "File Validate" on your Quicken file, the cash amounts associated with these transactions will disappear from all reports. This is a bug that Quicken recently officially submitted as an issue, but who knows when it will be fixed. What that means is maybe the "Withdrawal" and "Deposit" transactions are better to use for the time being until Quicken fixes this bug with the Xout and Xin transactions for 401(k) and IRA accounts.  If you choose to use "Xout" or "Xin", I would run an investment transaction report periodically, filtering on "ContribX" and/or "WithdrwX".  If you find the amounts for these transactions are indeed missing, the only way to fix the issue is to delete the transactions and reenter them again.  Keep in mind that these amount will disappear again if ever you do a File Validate again.

TheBobster

Thanks guys, very helpful. I decided to go with the XOut option. Almost all my withdrawals have been from my taxable investment account. I only have one withdrawal from an IRA so far and will keep an eye on it. I don't anticipate any more IRA withdrawals for a couple more years when the required minimum distributions kick in.

rbknox

I recently had to show a distribution of sorts from a 401(k) account. I came across what many have noticed - there is no specific Action for a 401(k) or IRA distribuiton. There has also been some debate as to whether to or how to show this distribution as Income. And, what is the best way to deal with taxes that are deducted?

Now, it is possible this was recently fixed, but It seems Quicken does have an intended way to deal with distributions, as follows. In your tax defererd account, use the XOut Action. In my case I was tranferring the funds from a 401(k) account to my Checking account. When you go to save the transaction, Quicken will ask you “Is this a retirement distribution from your 401(k) account?" Assuming it is, answer Yes. In my case, state taxes were deducted from the distribution, so in my Checking account I expanded the deposit transaction into a split and added a -ve amount for the taxes. Finally, this distribution should show up in your tax reporting as _401Withdrawl. That is, if you look at Taxable Income YTD in Tax Center, or, if you generate a Tax report, there will be a entry for _401Withdrawl.

BTW, I also did a file Validate after this transaction. As far as I could tell, there were no changes made to this accounting as a result of the Validate. For example, the transaction I described creates a MiscIncX entry in the [Tax Impact of 401(k) Accounts] (this is the hidden account that tracks your 401k contributions as MiscExpX). This was untouched by the Validate action.

I hope this is helpful to others.