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changing REMOVE SHARES to TRANSFER SHARES isn't working, any ideas?

rmjryost95

I've transferred shares from IRA to ROTH accounts. I have several transactions that I've download which have a REMOVE SHARES in IRA and ADD SHARES in ROTH. When I attempt to change the REMOVE SHARES to TRANSFER SHARES nothing happens. Any ideas?

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rmjryost95

I take that back. Something DOES happen. Another ADD SHARES transaction appears in the TO account. Just seems odd that the transaction doesn't change to TRANSFER SHARES in that column. Guess I just need to delete the previous ADD SHARES transactions?

jacobs

You should actually be using SELL and BUY transactions. Moving money out of your traditional IRA to an Roth IRA is a taxable event. Enter a SELL transaction in your Traditional IRA account, creating cash. Then enter a transaction to transfer the cash to your Roth IRA account. Then enter a BUY transaction in your Roth IRA to purchase the shares in that account.

Transfer Shares is used when there is no taxable event, such as moving your shares of one or more securities from one brokerage to another, without generating a taxable gain or losing the existing cost basis.

Jon

As for why it didn't remove the previous Add Shares transaction, that's because the Remove Shares and Add Shares transactions were completely separate transactions with no connection to each other. You might know that you were moving shares from one account to another, but Quicken didn't know that. The only way Quicken knows you're moving shares from one account to another is if you use the Transfer Shares transaction type. But as jacobs points out, you might not want to do that in this particular case. (I don't have any experience with Roth conversions, which it what it sounds like you're doing, so I don't have a personal opinion one way or the other.)

rmjryost95

Thanks for the replies. My second post was accurate. Just needed to delete the previously downloaded transactions ADD SHARES. Multiple ADD SHARES were added to the account when I edited the REMOVE SHARES transactions and selected transfer shares and then selected the appropriate account. It's not a taxable event converting IRA to ROTH.
https://www.investopedia.com/how-to-set-up-a-backdoor-roth-ira-4584775

jacobs

For most people and in most instances, Roth IRA conversions are taxable events.

You cite a link to the backdoor loophole. Just make sure you're following everything precisely, or you can get hit with unexpected taxes or penalties. If you never had a traditional IRA, the backdoor approach works well. But if you have money in a traditional IRA and try the backdoor approach, it gets complicated, and there definitely are taxes involved because rollovers from traditional IRAs to Roth IRAs must be done pro rata. (You may know all this, but I'll state it anyway for anyone else reading this thread.)

For instance, let's say you have $93,000 in a traditional IRA. Now you want to add money to a Roth IRA and figure you'll try the back-door approach of adding post-tax money to your traditional IRA, then immediately converting it to the Roth IRA. So you deposit $7,000 in your traditional IRA, then transfer the same $7,000 to your Roth IRA. It hasn't appreciated any, so it's free of tax, right? No, because IRS requires your transfer to the Roth to be pro rated across all your IRA holdings. In this simplified example, you have $93,000 that's pre-tax money and $7,000 that's post-tax money. So with $93% of your IRA consisting of pre-tax money, 93% of your $7,000 transfer to the Roth IRA is taxable. IRS doesn't allow you to choose to convert only after-tax money. (Also note that IRA applies the pro-rata rule to your total IRA balance at year-end, not at the time of conversion.)

So again, if you have no money in any form of traditional IRA, or all the money in your IRA is post-ax money (e.g. you never claimed any of it as a tax-deductible IRA contribution) -- which is rare -- then the back-door conversion is slick and tax-free. But if you have pre-tax funds in existing traditional IRAs, any Roth conversion is partially or fully taxable.

Again, I'm not meaning to sound like I'm lecturing; I've just seen people think it's easy to escape taxes with IRA conversions and get burned. If you knew all the rules and you genuinely have a tax-free conversion, then good for you -- and it sounds like you're all set with Quicken.