Investing Account Type - Tax Deferred Brokerage Account vs. IRA/401K ...

I have three IRA accounts. One is classified as a brokerage account with the tax deferred button checked, and the other two are classified as IRA with the tax deferred button checked. As far as I can tell all three accounts are treated the same in Quicken and properly segmented on the account tab as well as in tax reports. Is there any advantage to converting the tax deferred brokerage account to the IRA type. I'm asking because with any wholesale change of a long standing account there is some risk, and I would like to know if there is any reason to make the conversion that I might be overlooking.

Comments

  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    About the only place I can think of where this MIGHT make a difference is in the Lifetime Planner, but I doubt it even matters there...

    I just found one difference.  With it as a brokerage account both of the tax schedule lines for transferring in and out are left unset.  For an IRA they set to Transfer out like this.


    This is of course just the defaults, so you could change this in your "brokerage account" too.

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  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited January 9
    The IRA type will add support for the ContribX action and attempt to track annual contributions.  If these are traditional IRA accounts, you may want to select 1099-R:Total IRA taxable distrib. in the Transfer out: pull-down menu on the Tax Schedule Information window: open the account, press Ctrl + Shift + E, and select Tax Schedule
  • FrZpd7843
    FrZpd7843 Member ✭✭
    Thanks to both of you, this answers my question.
  • FrZpd7843
    FrZpd7843 Member ✭✭
    As far as I can tell, even if the account associates a tax line for a transfer out, I still have to create a pair of cancelling transactions in order to categorize the withdrawal as an RMD in order to produce a proper accounting in any of the quicken tax reports, so don't really see what setting the transfer out to match IRA gross or for that matter taxable distribution actually means in any of the quicken tools or reports. Since the contents of my IRAs are a decades long string of contributions and rollovers, I have had to keep my own ledger of what portion of my contributions are pre or post tax. If you know how the default tax association of transfers out with IRA gross distribution tax line is used by quicken, I would find that useful.
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    edited January 9
    FrZpd7843 said:
    As far as I can tell, even if the account associates a tax line for a transfer out, I still have to create a pair of cancelling transactions in order to categorize the withdrawal as an RMD in order to produce a proper accounting in any of the quicken tax reports, so don't really see what setting the transfer out to match IRA gross or for that matter taxable distribution actually means in any of the quicken tools or reports. Since the contents of my IRAs are a decades long string of contributions and rollovers, I have had to keep my own ledger of what portion of my contributions are pre or post tax. If you know how the default tax association of transfers out with IRA gross distribution tax line is used by quicken, I would find that useful.
    We perform our RMD as a transfer out an traditional IRA account to a non-tax deferred account with 1099-R:Total IRA taxable distrib. as the tax-line item.  No pair of cancelling transactions necessary to produce a proper accounting in any of the quicken tax reports.  Note: Our traditional IRA contributions are all pre-tax.

    If you want to track gross distribution from the IRA accounts, I suggest you use: 1099:Total IRA gross distrib.
  • FrZpd7843
    FrZpd7843 Member ✭✭
    I have tried this and I need the extra pair of transactions to make the tax reporting work. I have seen several other posts that indicate they do the same. While the tax line for my IRA account is set to 1099 Total IRA taxable distribution, unless I make an entry with a deposit that I can categorize with an actual category that is associated with the same tax line (and then a dummy withdrawal to cancel out the extra deposit) the tax report is missing the 1099 R information. The transfer itself does not seem to do the trick. If I am missing something please clarify ...
  • FrZpd7843
    FrZpd7843 Member ✭✭
    OK, what I have now figured out is that if you transfer the RMD from the IRA account (with the transfer out associated with the IRA taxable line item) to a bank account (not a brokerage account), then the tax report works right away, but if you transfer the RMD from the IRA directly to a regular non tax deferred brokerage account, then it does not (why I do not know ...). If I transfer directly to a brokerage account, then I need to introduce two transactions (a dummy misc income with a category associated with the IRA taxable line item, and a dummy misc expense to offset the dummy deposit). So, I guess one can choose between having the two dummy transactions in the brokerage account (since that is where the RMD is actually going) OR moving the RMD to a dummy bank account (for the purpose of proper tax report categorization), and then to the correct brokerage account. Either way, this is a work around, not sure which is best ...
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    FrZpd7843 said:
    OK, what I have now figured out is that if you transfer the RMD from the IRA account (with the transfer out associated with the IRA taxable line item) to a bank account (not a brokerage account), then the tax report works right away, but if you transfer the RMD from the IRA directly to a regular non tax deferred brokerage account, then it does not (why I do not know ...). If I transfer directly to a brokerage account, then I need to introduce two transactions (a dummy misc income with a category associated with the IRA taxable line item, and a dummy misc expense to offset the dummy deposit). So, I guess one can choose between having the two dummy transactions in the brokerage account (since that is where the RMD is actually going) OR moving the RMD to a dummy bank account (for the purpose of proper tax report categorization), and then to the correct brokerage account. Either way, this is a work around, not sure which is best ...
    I suggest you use a Deposit transaction in the destination brokerage account to receive the transfer from the IRA. 
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited January 9
    According to this FAQ
    https://community.quicken.com/discussion/7072150/faq-best-way-to-handle-distributions-from-ira-also-rmd

    you can make a distribution directly from an IRA to a taxable brokerage account and have the taxes recorded correctly. The key is to enter a Deposit in the taxable account (not an XIn) with split Categories. The IRA account should be one Category and the gross distribution amount should be a positive number. Any taxes withheld should be entered with appropriate Categories and negative numbers. 

    I tried this and it appears to work.
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  • FrZpd7843
    FrZpd7843 Member ✭✭
    I just tried this and it didn't work. I suspect that your IRA was in a bank account not a brokerage account. My issue is in going from an IRA brokerage to a taxable brokerage account. Tax reports seem to work when going from IRA brokerage to bank account or from IRA bank account to brokerage, but not from IRA brokerage to taxable brokerage.
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    No, I went from brokerage IRA to taxable brokerage. Will post screen shots tomorrow if it still does not work for you. Do not edit existing transactions to set this up, delete any existing transactions and enter the brokerage Deposit from scratch.
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  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    FrZpd7843 said:
    I just tried this and it didn't work. I suspect that your IRA was in a bank account not a brokerage account. My issue is in going from an IRA brokerage to a taxable brokerage account. Tax reports seem to work when going from IRA brokerage to bank account or from IRA bank account to brokerage, but not from IRA brokerage to taxable brokerage.
    My IRAs are brokerage accounts.  My destination account is a taxable brokerage.  Tax reports work. 

    Again, enter the transaction in the destination brokerage account using a Deposit.
  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭
    I concur.  IRA distributions to taxable brokerage accounts does get reported correctly in the tax reports and in Tax Planner when:
    • Tax Schedule for transfers out of the IRA is set to 1099-R:Total IRA taxable distrib.
    • The transaction is entered as a Deposit in the taxable brokerage with the category being a transfer from the IRA.
    (QW Premier Subscription: R37.66 on Windows 10)
  • FrZpd7843
    FrZpd7843 Member ✭✭
    Yes, the transfer works as described above (I must have typed something in error last time). Transfer shows up just fine in standard tax reports for DEPOSIT into taxable brokerage from IRA brokerage (with tax line for 1099 total IRA taxable amount.

    Over time, I would like to be able to produce reports that show ALL RMD withdrawals over many years, so I'm still planning on using the double entry method, so that I can produce a report that filters on a category I created "RMD withdrawals" which is associated with the 1099 IRA taxable withdrawal line item.

    That way the standard tax reports work, AND, I can produce a tally of all RMDs by year, hopefully for many years to come, that I can put into excel as a record of long term RMD withdrawals. This seems important as I am drawing from various IRA accounts across Vanguard and Fidelity.