How should transfers of securities from a 401K Rollover IRA to a Roth IRA be recorded?

Question

Fidelity downloads give me "Shares Removed" and "Shares Added" transactions.  In the "Shares Added" I am provided a "Total Cost" entry in the Edit Box where I can enter the new cost basis, which is the value of the security at the time of the transfer.  This is the taxable amount.  But, in the "Shares Removed" Edit box I do not get that option.  I did notice that in one of the "Shares Removed" edit boxes that upon accepting, I was provided an option to transfer shares, although not always and I am not sure what triggers this.  I tried this on one security, but it transfers every buy transaction at the original cost basis, and not the taxable basis.  Way too many transactions if you consider I was buying the securities from each paycheck when I was working for a living.  The only way I can figure to do this is to sell the shares in the IRA account at the current price, transfer the funds to the Roth IRA account, and buy the shares back in the Roth account.  Is there a better way within the Quicken system?

AC · Answer

Thank you all for your valuable input.  It is greatly appreciated.  I will go with Mr. Squirrel's suggestion, but this dialog explains a lot about the 'features' in the software.

q_lurker · Answer

This is for a Shares Removed action initiated by the download from Fidelity, correct?  I suspect you got the option to "Specify Lots" for that specific security being transferred.  That would be the case if you transferred some but not all of your holdings in one security.  If all your shares in a specific security were being removed, you would not (should not) get that prompt.

I think you are saying your tried a "Shares Transferred between accounts" action for one security.  That would generate an Add Shares in the receiving account for every lot of the security being transferred.  As Jim points out, it is likely that you can treat the shares arriving in the Roth account as a single lot that have a single associated cost.  I agree that his sequence is likely the way to go, which was also your final question.

Rocket J Squirrel · Answer

No, this is the best way to handle this.

This is unnecessary. I recently did this in real life and I did not need to involve a taxable account.The key is to move the cash using a DEPOSIT in the receiving (Roth) account, with the "category" of the deposit the source (trad IRA) account, thus establishing a transfer. When I did this, Tax Planner picked up the amount properly as a taxable IRA distribution. If you try to enter the transfer as a withdrawal from the source account, Quicken indeed will fail to notice the tax consequences. Of course, your traditional IRA (or is it a 401k?) must have the proper tax line item set for transfers out, namely "1099-R:Total IRA taxable distrib."