Recording RMD Transactions

What is the correct way to enter this type of Quicken transaction. On one level, I realize that RMD is a transfer from an IRA account to to non IRA account. How should I record this event so it will appear on my Tax Summary as taxable income. Afterall, a normal transfer is not recorded as a tax event. Help please. (Win 10 Quicken Premier R 36.49)

Answers

  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited November 2021
    For a traditional IRA, the transfer transaction in the non-tax deferred destination account should have the 1099-R:Total IRA taxable distrib. tax line item assigned.  This is usually achieved by selecting 1099-R:Total IRA taxable distrib. in the Transfer out: pull-down menu of the Tax Schedule Information window for the traditional IRA account: open the traditional IRA account, press Ctrl + Shift + E, and select Tax Schedule
  • AMP
    AMP Member ✭✭
    Thanks Sherlock for your prompt reply.:
    When using "1099-R:Total IRA taxable distrib. in the Transfer out pull-down menu of the Tax Schedule Information window for the traditional IRA account" will indeed process the transfer. However, when I prepare a Tax Summary Report, the RMD transfer does not appear as taxable income.
    I must be missing something basic.
    Cheers,
    Andy
  • Ps56k2
    Ps56k2 SuperUser ✭✭✭✭✭
    AMP said: What is the correct way to enter this type of Quicken transaction.
    Here is some text that I have saved -

    Quicken IRA and RMD transaction

    Summarizing -
    you want QWin to record a transfer of the gross distribution from the IRA to the MM Acct (a taxable brokerage acct)
     and record the fed & state withholding.
    And you want QWin to track/report the taxable income and the taxes withheld in the tax reports.

    Set the tax attribute "Transfers Out:" for the IRA account to "1099-R:Total IRA taxable distrib."
    Go to the destination account - the MM Acct.
    Enter a Deposit transaction - scroll down to the Cash Transactions at the end of the transaction list to find Deposit.
    Select Split in the transaction window and record 3 split entries;
    The first split is the gross distribution with the category indicating a transfer from the IRA Acct.
    The second and third entries are the fed & state withholdings - with appropriate categories.
    The net of this transaction is the net deposit to the MM Acct.
    Schedule this transaction for your monthly distributions.

    You will want to enter these transactions into the register prior to downloading from your FI.

    The downloaded transactions from your FI may or may not match the register entries -
    try to manually match if auto match fails. [Matching in investment accounts seems a bit strange at times].
    If you can not get a match, I would delete the downloaded transactions.

    Couple of important points:

    1) The withholdings must be recorded in a taxable account in order for QWin to pick them up in the tax reports -
    they must be outside the 'tax-deferred' shield of the IRA.
    2) You can create categories for the fed & state w/h - use the corresponding 1099-R tax line assignments for these
    3) It is important to use the Deposit transaction when transferring to a taxable brokerage acct.
    QWin does not pick up the taxable event [the distribution] if one uses a 'Cash transferred out' transaction for some reason [bug?].
    4) If the destination account is a cash account (checking or savings) -
    just open a regular split transaction (in the destination acct)
    and record the transfer from the IRA and the withholdings.
    5) Check for proper tax reporting by running QWins Tax Schedule Report -
    look for the 1099-R sub-header.
    6) The procedure is exactly the same for distributions from any tax-deferred retirement account (IRA, 401k, other).
    The tax line assignments are the same - note they all refer to 'IRA' - but work the same for a 401k or other.


    QWin Deluxe Subscription - Win10
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    AMP said:
    Thanks Sherlock for your prompt reply.:
    When using "1099-R:Total IRA taxable distrib. in the Transfer out pull-down menu of the Tax Schedule Information window for the traditional IRA account" will indeed process the transfer. However, when I prepare a Tax Summary Report, the RMD transfer does not appear as taxable income.
    I must be missing something basic.
    Cheers,
    Andy
    If you have confirmed the 1099-R:Total IRA taxable distrib. tax-line item assignment on the entry in the non-tax deferred account, I suggest you review the filters set on the Tax Summary report: open the report and press Alt + C

    Note: The transfer's income should appear in the Transfer section of the Tax Summary report.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭✭
    edited November 2021
    @AMP - Are you having income tax withheld when you make your RMD withdrawals and are you making those withdrawals on a monthly basis?  If so, you might want to consider using the process I use to make sure both the full taxable amounts and the withheld taxes are being captured properly in the Tax Reports and Tax Planner:
    1)  What works best for me is to set up a recurring Income Reminder (not Transfer Reminder) for a deposit to your taxable account. 
    • The deposit amount is a positive number and is the net amount after withheld tax is accounted for.
    • Split the category.
    • 1st line of the split:  The category is a Transfer from the IRA...ex., [IRA Acct].  The amount is a positive number and is the gross amount before tax is withheld.
    • 2nd line of the split (if needed):  The category is _401FedWithheld (you might need to check the box to show hidden categories to be able to see and select this category).  The amount is a negative number.
    • 3rd line of the split (if needed):  The category is _401StateWithheld (check the box to show hidden categories if needed).  The amount is a negative number.
    • The total amount of the split categories needs to match the net deposit amount.
    • Make sure the correct tax line item is assigned to the _401FedWithheld category:  Category List > select the category (check the box to show hidden categories if needed) > on the right side in the "Action" column click on the button > click Edit > assign 1099-R:IRA federal tax withheld.
    • Make sure the correct tax line item is assigned to the _401StateWithheld category:  Category List > select the category (check the box to show hidden categories if needed) > on the right side in the "Action" column click on the button > click Edit > assign 1099-R:IRA state tax withheld.
    • Enter the Reminder into the taxable account register when appropriate.
    2)  If you are downloading transactions from your IRA account(s), when the distribution and tax withheld transactions are download be sure to delete them.  If you do not delete them then there will be double counting issues in the IRA account and in the Tax Reports and Tax Planner.
    There are a couple of other ways to manage this but IMO this is the simplest and easiest method to manage it.  Once the recurring Income Reminder is set up there is nothing else to do going forward except to make sure the reminders get entered in the taxable account and to delete the downloaded distribution & tax withheld transactions in the IRA account...and to once a year adjust the dollar amounts in the recurring Income Reminder.
    (QW Premier Subscription: R39.23 on Windows 10)
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