Annuity Withdrawal does not show up as Income

cmart0229

I have two tax deferred annuities which I update manually on the anniversary date to reflect the new balance. In 2021 I took a withdrawal from one of them and coded the action as WithdrwX as it was transferred to my checking. In the checking account I did a split to record the taxes withheld with the remainder as a deposit. I can't get the original lump sum withdrawal to show up as Income on any reports. It should definitely show up as Gross Income. How do I fix this? RMD's will be kicking in and I will have the same problem in 2022 if I can't figure it out. Quicken should be able to handle this.

Boatnmaniac

What kind of accounts are your annuities set up as?  In order to capture the distributions as 1099-R income they need to be set up as an IRA investment account.

One thing to note about retirement account withdrawals is that the only place in Quicken that they will show up as "income" is in the Tax Schedule report and Tax Planner.  In all other reports they will not show up as "income" because from a bookkeeping perspective they are not really income.  Instead, they are simply transfers from one account (the retirement account) to another account (checking, savings, brokerage, etc.).  So in, for example, Tax Summary, Itemized Categories and Income & Expense reports the retirement account withdrawals will show up Transfers, not as Income.

[Deleted User]

@cmart0229 - one warning - when you use a WithdrwX or ContribX, the amounts will be zeroed out on all reports once you do a validate.  I haven't heard that the issue has been fixed, so I am pretty sure that it still happens.

Boatnmaniac

Damian said:

@cmart0229 - one warning - when you use a WithdrwX or ContribX, the amounts will be zeroed out on all reports once you do a validate.  I haven't heard that the issue has been fixed, so I am pretty sure that it still happens.

I am not aware of this issue.  I also just tested it and found no issues like this in 6 different reports I pulled up.  Please provide more information on this so I can look into it some more.

[Deleted User]

@Boatnmanic - it was and is my impression that it has been a long standing issue.  To test it, do a transfer from an IRA account to another IRA account, in both directions.  Create an investment report showing the transfers on both sides. Then do a validate (or super validate).  Then run the report again.

[Deleted User]

@cmart0229 - here is a way that can do what you want without issue.

• In your IRA account do a withdrawal instead of withdrwlX.  You will need to use the "Enter Transaction" button at the top left of the register. Choose "Withdrawal" in the dropdown list.
• The payee can be anything, your name, or something like "IRA Withdrawal".
• The category can be anything but something like "IRA Withdrawal" would work.  
• It would be an expense category.  This is the transaction that shows up as a withdrawal on your reports.
• This new category would need a tax item line attached to it.  Go to the Tax Reporting tab in your new category and add the appropriate 1099-R you need.  You will have to scroll down to the end of the list to find it.  This is what makes it show up on your tax reports.
• Fill in the rest of the information as you want.
• In your checking account, do a Deposit.  Choose "Deposit" and fill in the information as appropriate.
• Again, the payee can be anything, your name, or something like "Deposit from IRA"
• The category can be something like "Deposit from IRA", or anything you like
• It would be an income category.  This is the transaction that shows up as "Income" on your reports.
• There is no need to add tax information to this category.  It is already recorded in the IRA account.

I know that a transfer is easier, but with the issues with "WithdrwlX", "ContribX", and tax reporting, doing it the way I outlined is the only way for things to be reported correctly, and without the error I described in my other post earlier.

One last thing, the split transaction for withholding should always be done in the IRA account because that is the account it's being taken out of.  A split doesn't need to be done if you create another separate withdrawal transaction for the withholding from the IRA account.  The only thing you should see in your checking account is the net proceeds deposited.  A withholding category would need to be created and the appropriate tax line item attached.

For your RMDs, you can use the categories created above, but then add a description or memo with the appropriate RMD information.

Boatnmaniac

cmart0229 said:

@Boatnmaniac FYI. It does show up in Tax Planner for 2021. Thx

Thanks for confirming. 

But you are not getting the gross taxable distributions to show up in reports?  Take a look at my immediately preceding post.  I suggest you try entering the transactions in your checking account (not in your Annuity accounts) as I described in that post.  It should get the data properly captured in the reports, too.

[Deleted User]

@Cmart0229 - If you have had distributions or RMDs from your IRA, please take a look at the transactions for them from your bank and investment accounts.  I think you will see the distribution and WH amt(s) coming out of your IRA and your distribution amount transferred to your checking account.  In my opinion, I think it would be better if your transactions from your financial institutions matched Quicken, rather than altering the transactions in Quicken to produce tax reports.  Bottom line your financial institutions are responsible to provide you with the proper tax reporting when the time comes.  Not Quicken.  You can use Quicken as a tool to give you some idea on taxes, but it is not accurate.  When tax time comes around, you can use tax reports (Sched A, Sched B, Sched D) from Quicken to help you prepare your taxes, but there will probably be some manual intervention.  But bottom line, using Quicken is an art, there are many ways to get to the same result.  Each person finds out what works best for them.  That is why some times there is no one easy answer in this community forum.   

Boatnmaniac

What kind of accounts are your annuities set up as?  In order to capture the distributions as 1099-R income they need to be set up as an IRA investment account.

One thing to note about retirement account withdrawals is that the only place in Quicken that they will show up as "income" is in the Tax Schedule report and Tax Planner.  In all other reports they will not show up as "income" because from a bookkeeping perspective they are not really income.  Instead, they are simply transfers from one account (the retirement account) to another account (checking, savings, brokerage, etc.).  So in, for example, Tax Summary, Itemized Categories and Income & Expense reports the retirement account withdrawals will show up Transfers, not as Income.

[Deleted User]

@cmart0229 - one warning - when you use a WithdrwX or ContribX, the amounts will be zeroed out on all reports once you do a validate.  I haven't heard that the issue has been fixed, so I am pretty sure that it still happens.

Boatnmaniac

Damian said:

@cmart0229 - one warning - when you use a WithdrwX or ContribX, the amounts will be zeroed out on all reports once you do a validate.  I haven't heard that the issue has been fixed, so I am pretty sure that it still happens.

I am not aware of this issue.  I also just tested it and found no issues like this in 6 different reports I pulled up.  Please provide more information on this so I can look into it some more.

[Deleted User]

@Boatnmanic - it was and is my impression that it has been a long standing issue.  To test it, do a transfer from an IRA account to another IRA account, in both directions.  Create an investment report showing the transfers on both sides. Then do a validate (or super validate).  Then run the report again.

cmart0229

I set them up as Traditional IRA investment accounts. Tax deferred is Yes. Single mutual account is No. Tax schedule I picked 1099-R Total IRA taxable distrib. Not sure if that's exactly the right one. I just ran a Tax Schedule Report for last year and no dice. But I did notice that I am missing pension income on that report so I guess I have some more digging to do. It's not a huge deal to track manually but would like to eliminate that if I could. Thx

cmart0229

Thanks for the warning on the use of WithrwX and ContribX.

cmart0229

@Boatnmaniac FYI. It does show up in Tax Planner for 2021. Thx

[Deleted User]

@cmart0229 - here is a way that can do what you want without issue.

• In your IRA account do a withdrawal instead of withdrwlX.  You will need to use the "Enter Transaction" button at the top left of the register. Choose "Withdrawal" in the dropdown list.
• The payee can be anything, your name, or something like "IRA Withdrawal".
• The category can be anything but something like "IRA Withdrawal" would work.  
• It would be an expense category.  This is the transaction that shows up as a withdrawal on your reports.
• This new category would need a tax item line attached to it.  Go to the Tax Reporting tab in your new category and add the appropriate 1099-R you need.  You will have to scroll down to the end of the list to find it.  This is what makes it show up on your tax reports.
• Fill in the rest of the information as you want.
• In your checking account, do a Deposit.  Choose "Deposit" and fill in the information as appropriate.
• Again, the payee can be anything, your name, or something like "Deposit from IRA"
• The category can be something like "Deposit from IRA", or anything you like
• It would be an income category.  This is the transaction that shows up as "Income" on your reports.
• There is no need to add tax information to this category.  It is already recorded in the IRA account.

I know that a transfer is easier, but with the issues with "WithdrwlX", "ContribX", and tax reporting, doing it the way I outlined is the only way for things to be reported correctly, and without the error I described in my other post earlier.

One last thing, the split transaction for withholding should always be done in the IRA account because that is the account it's being taken out of.  A split doesn't need to be done if you create another separate withdrawal transaction for the withholding from the IRA account.  The only thing you should see in your checking account is the net proceeds deposited.  A withholding category would need to be created and the appropriate tax line item attached.

For your RMDs, you can use the categories created above, but then add a description or memo with the appropriate RMD information.

Boatnmaniac

Damian said:

@Boatnmanic - it was and is my impression that it has been a long standing issue.  To test it, do a transfer from an IRA account to another IRA account, in both directions.  Create an investment report showing the transfers on both sides. Then do a validate (or super validate).  Then run the report again.

I've been regularly using WithdrwX and ContribX transactions both between IRA accounts and between IRA and taxable accounts for many years and I don't recall having encountered this issue myself.  Even if it were intermittent I would have thought I would have experienced it at one time or another.

Per your suggestion I did test this several times both with Validate and Super Validate, and could not reproduce the issue.  Every time the Investment Transactions report captured the transaction dollar amounts correctly, both before and after Validate/Super Validate. 

I also noticed the following thread from 2021 regarding this issue: https://community.quicken.com/discussion/comment/20171439#Comment_20171439.  A bug ticket was generated to fix the issue so maybe it has been resolved already?

Then, again, it seems to be an issue after running Validate/Super Validate and I usually avoid doing that like the Plague.  Yes, they can be helpful and are sometimes necessary but they can also introduce other significant issues so I just tend to avoid doing them unless I really have no other option.

Boatnmaniac

Damian said:

@cmart0229 - here is a way that can do what you want without issue.

• In your IRA account do a withdrawal instead of withdrwlX.  You will need to use the "Enter Transaction" button at the top left of the register. Choose "Withdrawal" in the dropdown list.
• The payee can be anything, your name, or something like "IRA Withdrawal".
• The category can be anything but something like "IRA Withdrawal" would work.  
• It would be an expense category.  This is the transaction that shows up as a withdrawal on your reports.
• This new category would need a tax item line attached to it.  Go to the Tax Reporting tab in your new category and add the appropriate 1099-R you need.  You will have to scroll down to the end of the list to find it.  This is what makes it show up on your tax reports.
• Fill in the rest of the information as you want.
• In your checking account, do a Deposit.  Choose "Deposit" and fill in the information as appropriate.
• Again, the payee can be anything, your name, or something like "Deposit from IRA"
• The category can be something like "Deposit from IRA", or anything you like
• It would be an income category.  This is the transaction that shows up as "Income" on your reports.
• There is no need to add tax information to this category.  It is already recorded in the IRA account.

I know that a transfer is easier, but with the issues with "WithdrwlX", "ContribX", and tax reporting, doing it the way I outlined is the only way for things to be reported correctly, and without the error I described in my other post earlier.

One last thing, the split transaction for withholding should always be done in the IRA account because that is the account it's being taken out of.  A split doesn't need to be done if you create another separate withdrawal transaction for the withholding from the IRA account.  The only thing you should see in your checking account is the net proceeds deposited.  A withholding category would need to be created and the appropriate tax line item attached.

For your RMDs, you can use the categories created above, but then add a description or memo with the appropriate RMD information.

This process is far too complex for my tastes and I don't agree that "the split transaction for withholding should always be done in the IRA account..."  I've found the simplest and most straight forward method for doing IRA distributions is to enter a deposit transaction into the checking account (or whatever the receiving account is):

1)  Transaction Amount:  The net after-tax dollar amount that is to be deposited to the account.

2)  Split the category. 

• Line 1 of the split:  A transfer in from the IRA account of the gross pre-tax dollar amount...a positive number.
• Line 2 of the split:  The tax withheld category dollar amount...a negative number.
• Total of the split:  Equals the transaction deposit amount.
  

This process has worked flawlessly for me and all reports and Tax Planner capture the transactions correctly.

Boatnmaniac

cmart0229 said:

@Boatnmaniac FYI. It does show up in Tax Planner for 2021. Thx

Thanks for confirming. 

But you are not getting the gross taxable distributions to show up in reports?  Take a look at my immediately preceding post.  I suggest you try entering the transactions in your checking account (not in your Annuity accounts) as I described in that post.  It should get the data properly captured in the reports, too.

[Deleted User]

@Boatnmaniac - I worked in the 401(k) business.  I know how WH should work.  The net distribution and the WH should come out of the IRA, never the checking account.  After thinking about it though, Quicken is not really meant to be an accounting software, so really it is up to each user to decide what works for them.  I was looking at it from an accountant's standpoint, and realize now, with Quicken, you really can't.

[Deleted User]

@Cmart0229 - If you have had distributions or RMDs from your IRA, please take a look at the transactions for them from your bank and investment accounts.  I think you will see the distribution and WH amt(s) coming out of your IRA and your distribution amount transferred to your checking account.  In my opinion, I think it would be better if your transactions from your financial institutions matched Quicken, rather than altering the transactions in Quicken to produce tax reports.  Bottom line your financial institutions are responsible to provide you with the proper tax reporting when the time comes.  Not Quicken.  You can use Quicken as a tool to give you some idea on taxes, but it is not accurate.  When tax time comes around, you can use tax reports (Sched A, Sched B, Sched D) from Quicken to help you prepare your taxes, but there will probably be some manual intervention.  But bottom line, using Quicken is an art, there are many ways to get to the same result.  Each person finds out what works best for them.  That is why some times there is no one easy answer in this community forum.   

cmart0229

@Damian Thanks much for this. Yes, I find that using Quicken is sometimes more work than using an Excel spreadsheet. I've tried to categorize to as much level as detail as I can to make the preparation and reporting to my accountant less and less time consuming each year. Each iteration I learn something new . You're right. It's a tool not a solution.

cmart0229

@Boatnmaniac and @ Damian Thank you both for your time and detailed responses. I now think I have enough information on how best to proceed for this year and going forward. The tip regarding splits in the IRA account was not something I had thought about. Also, I have never run a Validate or Super Validate and don't intend to. I am always leery of what Quicken does behind the scenes without an Undo function. Restoring is always an option but a pain.

cmart0229

@Damian and @ Boatmaniac: Thank you both for your time and detailed responses. I now think I have enough information on how best to proceed for this year and going forward. The tip regarding splits in the IRA account was not something I had thought about. Also, I have never run a Validate or Super Validate and don't intend to. I am always leery of what Quicken does behind the scenes without an Undo function. Restoring is always an option but a pain.

Boatnmaniac

@cmart0229 - You are welcome.  As you can see from this thread there can be multiple methods used with Quicken and often, as is with this case, which one is "the best" is really a matter of personal preference.  @Damian certainly provided one path you can take.  The method I provided, IMO, is simpler to set up and implement but it might look a little different in your Annuity accounts in Quicken than it will in your online accounts.  Both should capture the data in reports and Tax Planner pretty accurately and that is perhaps the most important factor. 

FYI, I should have mentioned earlier that the method I described above very closely mirrors how many people manage deposits to their checking accounts for paychecks, pension plan payments and Social Security benefit payments: Deposit transactions for the net deposit amounts and then have split categories for itemizing the gross incomes and deductions amounts.  They all show in Quicken that the deductions are made in the checking account deposits even though in reality each of those itemized split categories are actually done by whomever made the deposit payment.  And because the deposit transactions include transfer accounts and/or Payees assigned to them, we can always pretty easily identify the originators in the reports and Tax Planner.

As a final comment, after you have decided upon the path you want to follow and have implemented it, let us know if you are finding that the data is not being captured properly in the reports and/or Tax Planner.  Someone will weigh in to offer suggestions on how to resolve those issues.

Boatnmaniac

Damian said:

@Boatnmaniac - I worked in the 401(k) business.  I know how WH should work.  The net distribution and the WH should come out of the IRA, never the checking account.  After thinking about it though, Quicken is not really meant to be an accounting software, so really it is up to each user to decide what works for them.  I was looking at it from an accountant's standpoint, and realize now, with Quicken, you really can't.

Exactly.  We are in agreement.

[Deleted User]

@cmart0229 - you are very welcome.