401K distributions not showing as income

Marc

Every month I have a $5000 distribution from my 401K with taxes already taken out. What is the best way to enter this so it shows total income as $5,000 but $4,250 transfer to checking and $750 to federal taxes. I have the 401K account type set as 401K but when I do a transfer it does not show as income.

Marc

Thanks you for the suggestions

Marc

Thanks you for the suggestions

Marc

So what would be the best way to do this in keeping with standard accounting practices? I will get a tax form (1099R) and some taxes will be pulled from it but the whole amount is taxable. What I have been doing is in the 401K I have a Payment/Deposit with a split transaction $4250 to checking and $750 to Fed taxes. But when I do a report I do not see how much taxable income I have.

jacobs

@Marc This is the same issue as people withdrawing an IRA Required Minimum Distribution. At this time, I believe there's only a "trick" way to get it to work...

Start exactly as @RickO described above: make the transaction from the checking account, not the retirement account, because Quicken won't show any income in retirement accounts. You'll want to have four split in this transaction. The first two are as shown above: a transfer from the 401k account and a federal income tax expense.



Create a third split line using the category like Personal Income:Other Pension (which is mapped to tax schedule 1099-R for taxable retirement income), with a value of +5,000. That will create the taxable $5,000 income on the Tax Schedule report. But your splits now don't total up to the $4,250 total of the transaction, so now it's time for the trick: enter a fourth split line for –5,000 and apply the category=Adjustment.

Adjustment is a special Quicken category which is simply ignored in all income and expense reports. In this case, we're created $5,000 in income out of thin air in the third split line, and the opposite adjustment in the fourth split line makes the splits add up to the transaction total. 

So now your 401k shows the $5,000 being transferred out, your checking account shows the $5,000 being transferred in, the $750 tax deduction, and there's $5,000 in taxable income.

Yes, it's a bit of a hack. But until the developers recognize that anyone pulling money out of any IRA or 401k account need a more elegant way to do this, this hack works. (I'm pretty certain no one on the development team is old enough to be dealing with IRA and 401k withdrawals and RMDs yet!) Please take a second to click on this link to add your vote for just such a feature. (In the yellow box, click the little black arrow under the vote counter.) More votes will enable this to be pushed to the developers to be added to their development roadmap.