Tracking a 401 loan

This is not a question but what I did to work around the fact that Quicken does not have
any support for tracking a 401k loan.
Hope this helps someone else.

NOTE: I could not do this with a loan account so tracking interest is a manual endeavor.
You could however, make a shadow, hidden account for forecasting/interest
calculations/early payoff etc.

1) Create a cash account
2) Set your starting balance to the loan amount (you can track the loan fees as
separate transactions in the account if you want).
3) Once created, edit account and set Display Options -> Account Intent -> to Retirement
This allows it to track with retirement accounts
4) Finally set your paycheck auto-payment amount to go to the loan (cash) account
You can split the payment into an interest and principal (transfer) payment.

You may have to play around with how your 401 deposits come from your paycheck
if the loan payment and 401 deposits aren't separate in your 401 account.

This should simulate the 401 loan until such a time as Quicken makes it a priority to
close this gap in their tool.

Answers

  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    I sort of remembered seeing a question in Quicken asking about a 401K loan so I thought I would test this out.
    I created a manual entry 401K account and sure enough one of the questions is if you have loan(s), so I selected that to see what it does.

    Basically what it does is create an Asset account, and a loan account to go with it.  If you go through creating an Asset account one of the questions for it is if you have a loan account that you want linked to this asset.  This is what the 401K account add wizard is doing.

    Note that there doesn't seem to be any way to do this after the 401K account is created from the 401K account, but you could also create the asset/liability account yourself.  Also there isn't any chance that Quicken is going to download transaction automatically for this kind of loan account because Quicken is only supporting downloading through Express Web Connect, and all investment accounts are Direct Connect.

    But frankly downloading a loan account is "useless", as long as you make sure that the right amount of principal/interest is in the transaction in the checking account, the loan account has to be "balanced".  And just checking the balance of the loan account against what the financial institution says, proves that side of it.
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    (I'm always using the latest Quicken Windows Premier subscription version)
    This is my website: http://www.quicknperlwiz.com/
  • amphybius
    amphybius Member ✭✭
    Thanks for the help. Yes, just checking loan amount versus online should suffice for me.
    I'll recreate my 401 account to try this out.

    Cheers!
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited April 25
    To create a new loan in an existing 401 K account: open the 401k account, select Holdings, select the gear icon in the Accounts Attributes region, and select Create new loan.
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    @Sherlock Thanks, I would never found that because I never go into the Holding section of the account.
    Signature:
    (I'm always using the latest Quicken Windows Premier subscription version)
    This is my website: http://www.quicknperlwiz.com/
  • amphybius
    amphybius Member ✭✭
    Ok thanks @Sherlock and @Chris_QPW
    I was able to create a 401 loan account in this fashion. The only minor gripe is that I cannot change the
    account intent to Retirement. It shows up under Property and Debt instead with no way to correct it.
    This is annoying enough that I think I will go with the solution from my original post.
    Unless there is some way that I am not aware of to change it to be tracked under Retirement...
  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    I noticed that too when I did it.  No you can’t change the intent.  So I guess you trade the ability to have a linked asset and liability for this, which one the user wants more.
    Signature:
    (I'm always using the latest Quicken Windows Premier subscription version)
    This is my website: http://www.quicknperlwiz.com/
  • amphybius
    amphybius Member ✭✭
    Completely agree. The help was much appreciated you two.
    I hope others are able to benefit from this discussion.

    Cheers!
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    Chris_QPW said:
    @Sherlock Thanks, I would never found that because I never go into the Holding section of the account.
    We use the Holding view when we reconcile investment accounts.
  • csmiley3
    csmiley3 Member
    I am still struggling with how the 401k loan payments flow back to the 401K. As I pay back the loan, the payment amount gets reinvested into the 401K. So for every payment, the loan balance goes down, and the 401K increases by the payment amount(as the payment amount gets reinvested)
    If the loan payments come out of my paycheck, and they pay down the loan account, how do I get that payment amount back into my 401K to repurchase shares.
    The easiest way i have figured is to xfer the loan payment from my Paycheck setup to the 401K loan. And then "Add" shares back to the 401K as the loan pmt amount is reinvested.
    Any other ways/thoughts on how to do this? Thank You.
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