How to Journal shares from an IRA to a Roth

pamela77

We did a roth conversion and journaled shares from an IRA to a Roth. I am on Quicken 6.5.3 on catalina on a mac. Quicken doesn't seem to recognize that the shares have been moved. I tried to enter it manually using "transfer shares". Q automatically changed it to remove shares in the first account and add shares in the second account. In "remove" shares I am not able to find a place to adjust the price, and quicken has the price wrong. How do I do it?

I started a new file in november of 2020, so many of the investments don't show a cost basis. I tried to go in and add the cost basis BEFORE I did the manual transfer to the roth. Everything seemed ok until I hit save and then the security just disappeared from the IRA account completely.

In the Roth, the added shares show up at the price the day of the conversion (although not exactly the right price) and there is no way to add a cost basis. Normally in the portfolio view you can add a cost basis, but this is not allowed after I add the shares.

Please help me to do this correctly!
Thankyou!

jacobs

I do Roth conversions in Quicken as a mirror of what happens in the real world:

1. Sell share of a security(ies) in the IRA account, generating cash
2. Transfer the cash amount to the Roth account
3. Buy security(ies) in the Roth account

pamela77

Thank you, that's an interesting approach. In Schwab, it is showing the cost basis as the original cost basis that was there in the IRA, not a new one at the time of the transfer. If I sell in the Ira and buy in the Roth won't the cost basis be new?

For the securities that are still sitting mistakenly in the IRA, I'd like to add a cost basis, but when I do that using the "add" button under the cost basis, the security just disappears when I hit "save". It's as if it makes quicken realize that the security is not there.

jacobs

First, I'd note that the cost basis for any IRA account is not relevant for tax purposes. For a traditional IRA, all the money you take out is taxable; it doesn't matter how much was purchased and how much was appreciated. (Unless you made after-tax contributions to your traditional IRA, which most people do not. And even then, you need to track the dollar amount of after-tax contributions — the cost basis of the account — but not the cost basis of any individual securities.) For a Roth IRA, none of the money you take out is taxable; it doesn't matter how much was purchased and how much was appreciated. So tracking your cost basis doesn't serve a purpose.

When you do a Roth conversion, you are withdrawing the money from your IRA — which is why it's a taxable transaction — and then investing in the Roth IRA. It doesn't matter if you sell and buy the same security or sell one security and buy another. I don't think it's correct that the cost basis of a security owned in a traditional IRA would be retained if you purchase the same security in a Roth IRA. 

pamela77

Thank you Jacobs. I do understand that in practical terms the cost basis won't matter for tax purposes, and I get the difference between a roth and a regular IRA. I guess I just wanted the cost basis so I could see for myself how the security was doing in terms of gains and losses. In our schwab account online they "journaled" the securities so that the original cost basis still shows.

I spent a long time this morning trying to do it by hand - I removed the shares from the IRA and then I bought them in the IRA but I used the original date of their purchase, which often was a few years ago. I started a new quicken file at the end of november, so they are showing prior to that. It still isn't really right though, because now it shows them as present ever since then.

Then I realize that they I had removed shares from the IRA 6/6/22, so they were showing present in both accounts for a few months.

I guess the simplest thing is to delete all that work , and then do as you described, and just forget about that cost basis, but I'd like to be able to see it.