Annuities

Ayrscot

Where should I list my Annuities in Quicken?

Tom Young

Why do you ask?  You could account for them in simple Asset Accounts or, probably more traditionally, in Investment Accounts.

NotACPA

I have an annuity, from a former employer, recorded in an Asset account.  This annuity is making monthly payments to me, so I just reduce the value of this account each month with a transfer to my checking account.

IF I outlive the cash value of the annuity, that last payment from the account will take it to $0, and any remaining monies will come from an Annuity Income category that I'll create.

garysmith87

I use a variation of NotACPA's version.

Since my annuities are held as IRA's/401K's, I have them setup as Retirement Accounts (instead of Asset Accounts).  Since the annuities are held as non-publicly traded mutual funds within the annuity, I have created securities for the individual holdings.  I have to update the security prices manually for each fund, as none are traded on a security exchange and thus can't have the security prices downloaded.

I account for quarterly or annual annuity benefit fees by selling the appropriate security shares to create a cash balance and then using a Miscellaneous Expense to account for the cash, which I categorize as Annuity Benefit Fee.  This results in a zero cash balance within the account.  

This gives me an accurate current balance, but however does not give me the current annuitized Income Benefit Base.  The Income Benefit Base is the amount your annual income amount is actually based on when you start taking benefit withdrawals.  The current balance is the amount your beneficiary would get if you die.  

I also have a couple retirement annuities that have NO mutual fund holdings.  In those accounts, I have set up fake securities and valued them at a fixed value of $1.  There's only one "security" in the account and the share price never gets updated.  Once again, I sell shares of the security to account for any benefit fees and use the Miscellaneous Expense transaction type to account for the cash spent for those annuity benefit fees.

And once again, I still can't show the actual Income Benefit Base.

In both scenarios, I have a simple spreadsheet I created to track some of these metrics, such as Current Value, Income Benefit Base, Annual Income Amount, Monthly Income Amount, Withdrawal Date, Withdrawal Rate and age of withdrawal (in my case, the future year I'll be taking withdrawals).  I periodically update these values manually.  

If the balance in these accounts ever reaches $0, then, as above, just make a category for Annuity Income and categorize the payments as that.  

If I had to do over again, I might have just used the Simple Investing method for these type of accounts and I would periodically update the actual balance amount...or even use the Income Benefit Base instead...without having to actually track the minutae of each individual share and their price.  Because in the long run, why do I really need that information?  The only thing that's of real importance is what's my actual Current Balance OR the current Income Benefit Base.  

Maybe one rainy day I'll create a file copy and play around with Simple Investing and see how the results actually look.  It may be easier than tracking the price per share daily and the quarterly benefit fee transactions and account security re-balancing transactions.  

NotACPA

Unlike @garysmith87, I have no idea what the annuity actually holds.  I only know the cash value.

And, I've set the tax attributes of that Annuity account so that "Transfers Out" are reflected as "1099-R, Total Pension Taxable Distribution", which agrees with the 1099 that I receive for tax season.

garysmith87

Once again, agree with NotACPA...

Except, since my annuities are IRA investments, the "Transfers Out" are reflected as "1099-R:Total IRA Taxable distr". 

That Transfer Out also aligns with Quicken's Tax Planner module, which will account for those annuity withdrawals and get passed through to the Planner. 

Wind_Woman

I have a pension-payment type annuity (which generates 1099-R taxable income). Funds are just sent as cash (after taxes & employee benefits) to my checking account. Aka there is no balance account which has to change, like a 401k or IRA.

I was frustrated with trying to get that information into the Quicken Tax Planner correctly until I found the Quicken 'Paycheck' type Reminder. This help automate the breakdown of health benefits, federal and state tax deduction. It works really nicely!

See more about this at https://help.quicken.com/display/WIN/Set+up+your+paycheck

My reminder is in the Checking account which receives the funds. I enter the reminder in the register before downloading transactions from the bank. The bank record seems to find my record well and it populates Tax Planner nicely. Both the entry & reminder are easy to adjust.

PS- Note that the Paycheck Reminder uses some Quicken-created categories which are hidden. I unhide them but didn't fuss with them. Hope that helps.