How to set up Retirement Income - 1099-R and also VA benefits

I started receiving my teacher retirement. I will set it up in Quicken Wizard unless that is the incorrect way to do it. I think it is considered an annuity. I will have it for the remainder of my life with a lump sum going to my husband if I am deceased before he is.

I was looking at the tax line info for 1099-R. What is the difference between 1099-R Total Pension Gross Distribution and 1099-R Total Pension Taxable Distribution? Which is the correct 1099-R to use?

My husband has military retirement that he currently draws. He only gets part of it because a portion of it is set aside for an annuity for me. How is this set up on Quicken? Which line items?

My husband gets a VA Disability which is non-taxable. How do I set it up? Which line items?

Should I use Quicken's Paycheck Wizard or enter them manually?

Thanks

Best Answer

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Answer ✓
    Frankly, it's somewhat difficult to set up an annuity on your balance sheet since you really don't have any solid understanding of what its value is.   Companies that issue annuities have the same problem, (in their case it's a "liability", not an "asset" as you would set it up in Quicken), but they have thousands and thousands of annuitants and use statistical, actuarial figures that they can use to come to a liability figure that's "close enough."
    So for most people simply recording the income as some form of retirement income as it's received is procedurally the easiest approach.  The paycheck wizard has been the source of considerable problems in Quicken lately so I'd probably simply set up a Reminder, maybe a Reminder with splits if you're have taxes withheld, and go with that.
    As to your 1099-R question, distributions can be entirely non-taxable, entirely taxable, or something in between, and that's the distinction between the two lines.  So the first line is the gross amount of the distribution and the second line is how much (if any) of the gross needs to be reported on your income tax return.  I'd guess that your distributions could be entirely taxable but someone at the administrator of the retirement should be able to help you for your particular circumstances.
    As to your husband's military retirement question, you'll have to figure out how this works yourself and, again, someone in the administration of the plan will have to point you in the correct direction.  My guess here would be that the distributed amount would be entirely taxable and that the annuity amount would not show up on a 1099-R until the annuity payments are actually triggered.
    As to the VA distributions I don't think they are even reported on a 1099-R and also aren't reported on the income tax return, but check that too.
    Just to make life easier I'd recommend setting up different income Categories for each "style" of retirement income, e.g., "Teachers Retirement", "Military Retirement" and "VA Disability Benefits."  Quicken can keep track of the tax effects of each.

Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Answer ✓
    Frankly, it's somewhat difficult to set up an annuity on your balance sheet since you really don't have any solid understanding of what its value is.   Companies that issue annuities have the same problem, (in their case it's a "liability", not an "asset" as you would set it up in Quicken), but they have thousands and thousands of annuitants and use statistical, actuarial figures that they can use to come to a liability figure that's "close enough."
    So for most people simply recording the income as some form of retirement income as it's received is procedurally the easiest approach.  The paycheck wizard has been the source of considerable problems in Quicken lately so I'd probably simply set up a Reminder, maybe a Reminder with splits if you're have taxes withheld, and go with that.
    As to your 1099-R question, distributions can be entirely non-taxable, entirely taxable, or something in between, and that's the distinction between the two lines.  So the first line is the gross amount of the distribution and the second line is how much (if any) of the gross needs to be reported on your income tax return.  I'd guess that your distributions could be entirely taxable but someone at the administrator of the retirement should be able to help you for your particular circumstances.
    As to your husband's military retirement question, you'll have to figure out how this works yourself and, again, someone in the administration of the plan will have to point you in the correct direction.  My guess here would be that the distributed amount would be entirely taxable and that the annuity amount would not show up on a 1099-R until the annuity payments are actually triggered.
    As to the VA distributions I don't think they are even reported on a 1099-R and also aren't reported on the income tax return, but check that too.
    Just to make life easier I'd recommend setting up different income Categories for each "style" of retirement income, e.g., "Teachers Retirement", "Military Retirement" and "VA Disability Benefits."  Quicken can keep track of the tax effects of each.
  • Sherlock
    Sherlock SuperUser ✭✭✭✭✭
    The 1099-R:Total pension gross distrib. tax line item is the amount entered in box 1 of the 1099-R form.  The portion of the gross distribution that is taxable is reported in box 2 of the 1099-R form and should be associated with the 1099-R:Total pension taxable distrib. tax line item.  It's tricky to track both amounts in Quicken.  If the entire gross and taxable amounts are the same, I suggest you just use the 1099-R:Total pension taxable distrib. tax line item.  If their not the same and you want to track both, I suggest receiving the gross amount in a holding account and using a transfer for the taxable portion.

    Regarding the non-taxable VA disability, I suggest you create an income category without an associated tax line item.  If you're attempting to track the contributions to the annuity, I suggest you use a split transaction.  If you're attempting to track the value of the annuity, I suggest you use a tax deferred account.

    I suggest not using the Paycheck wizard when setting up reminders for these types of income.  They're not really paychecks.
  • PYohe
    PYohe Member
    Thank you both.

    So I will not use Paycheck Wizard, but use Income Reminder for paychecks and all other income that needs split.
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