Problem with this year's Required Minimum Distribution

Bob.

Worked fine for years, but this year the category came in differently and when I try to change it, it creates havoc in the investment account.

RMD's from the investment account have always and continue to come in categorized as [IRA Investment XXyyyy]. No issue.

But when deposited to checking, the category used to say Other Income: Required Minimum Distribution and get categorized properly for income, budget etc.

Now it says:NORMAL DISTR PARTIAL NORMAL DISTR PARTIALEDyyyyyyyy  /WEB

If I try to change the category it warns me it will change in the investment account and if I agree, the balance changes in the investment account and this transaction is nowhere to be found!

How can i fix this?

Thanks.

Sherlock

Bob. said:

Thanks for replying, @Sherlock.

Actually, I have ALWAYS scheduled a transaction at Fidelity 's Web Site to take the distribution. After that, everything takes place without me. First, the Fidelity IRA transaction arrives in Quicken and I accept it, then likely the next day the deposit in checking likewise accepted. All balances are proper, but the Income is not shown as income this time around,.

All categorizing is done by the banks or Quicken, but not me.

Your suggestion has me a bit confused. Are you saying to change from [Wells Fargo Checking} to {Other Income: RMD] in the Fidelity register, let it delete the Wells entry and create a new entry matching in Wells for the proper date and clear it?

If so, please confirm. If not, please clarify.

Again,  if you want to handle the RMD the same way as you have in the past, I suggest you edit the transaction in the IRA account register to be self referencing and enter a separate deposit transaction in the checking account register with a matching amount.

That means you want the RMD transaction in the investment account categorized as [IRA Investment XXyyyy].  If you examine the RMD transaction you are having an issue with, I suspect you'll find it is categorized as [Wells Fargo Checking].

After you have corrected the transaction in the IRA account, I suggest you enter the matching deposit transaction in the checking account with the Other Income: Required Minimum Distribution category.

As to why you may have experienced a different behavior this time around, I suggest you disable the Transfer detection preference: select Edit > Preferences...

Bob.

@Boatnmaniac - perhaps you have a way? Thanks.

Bob.

Tried changing it to a split transaction with 0 investment and total amount RMD. It removed it from the Fidelity account and increased cash as if never taken.

Must be a way. Worked for 5 years. Problem is in the entry in my checking account and cannot change it wiothout corrupting the accurate data in the investment account.

Bob.

Tried changing the description in the Fidelity register and it removes the transaction from the checking account when I do that.

Out of ideas

Bob.

Problem is neither the IRA transaction nor the Checking Account transaction are categorized (not description) as Other Income: RMD as they have been in year's past.

If I try to change Checking from IRA Investment to Other Income: RMD, it warns me it will delete the transaction in the IRA account.

If I try to change from [Wells Fargo Checking] in the IRA register, no warning but it deletes the Checking Entry.

So I know the problem, just not how to fix it. And it does not show as income in all the places I need it to.

Called Fidelity. They could not help[.

Maybe the above will help someone help me....

Sherlock

Based on your description, you previously used an internal transfer to remove RMD funds from the IRA account register and a matching deposit in the checking account register.  I suspect you're now using a transfer to move the RMD funds from the IRA account register to the checking account register.  If you want to handle the RMD the same way as you have in the past, I suggest you edit the transaction in the IRA account register to be self referencing and enter a separate deposit transaction in the checking account register with a matching amount.

Bob.

Thanks for replying, @Sherlock.

Actually, I have ALWAYS scheduled a transaction at Fidelity 's Web Site to take the distribution. After that, everything takes place without me. First, the Fidelity IRA transaction arrives in Quicken and I accept it, then likely the next day the deposit in checking likewise accepted. All balances are proper, but the Income is not shown as income this time around,.

All categorizing is done by the banks or Quicken, but not me.

Your suggestion has me a bit confused. Are you saying to change from [Wells Fargo Checking} to {Other Income: RMD] in the Fidelity register, let it delete the Wells entry and create a new entry matching in Wells for the proper date and clear it?

If so, please confirm. If not, please clarify.

Sherlock

Bob. said:

Thanks for replying, @Sherlock.

Actually, I have ALWAYS scheduled a transaction at Fidelity 's Web Site to take the distribution. After that, everything takes place without me. First, the Fidelity IRA transaction arrives in Quicken and I accept it, then likely the next day the deposit in checking likewise accepted. All balances are proper, but the Income is not shown as income this time around,.

All categorizing is done by the banks or Quicken, but not me.

Your suggestion has me a bit confused. Are you saying to change from [Wells Fargo Checking} to {Other Income: RMD] in the Fidelity register, let it delete the Wells entry and create a new entry matching in Wells for the proper date and clear it?

If so, please confirm. If not, please clarify.

Again,  if you want to handle the RMD the same way as you have in the past, I suggest you edit the transaction in the IRA account register to be self referencing and enter a separate deposit transaction in the checking account register with a matching amount.

That means you want the RMD transaction in the investment account categorized as [IRA Investment XXyyyy].  If you examine the RMD transaction you are having an issue with, I suspect you'll find it is categorized as [Wells Fargo Checking].

After you have corrected the transaction in the IRA account, I suggest you enter the matching deposit transaction in the checking account with the Other Income: Required Minimum Distribution category.

As to why you may have experienced a different behavior this time around, I suggest you disable the Transfer detection preference: select Edit > Preferences...

Bob.

Thanks @Sherlock !
OK.
Not sure what you mean by "self referencing". You are correct in several ways though. Right now it shows in REPORTS as a transfer and the category IS Wells Fargo Checking. I can try all this.
I DID try similar and found an oddity where it was showing both as income and expense, but you are different enough in your steps that I shall try this. Agfter backing up, of course!!
I also DO have Transfer Detection selected. Is this new? I do not recall seeing it before. Do I lose anything by unselecting it?

Bob.

Absolutely perfect @Sherlock. Thanks so much!

I am curious on the transfer detection though and how that snuck up on me.

fanfare

There is a problem with Quicken reports (see the recent posts on another thread on this topic).
If you withdraw from tax-deferred into a brokerage account it doesn't report correctly.
If you withdraw into a Cash account it reports correctly, 
Then, step 2, move the cash into the desired account.

Th other thread tells a different way to do it, but after I tried it once I 
tried again a second time and it did not work for my desired account!. So I 'm now back to my original 2-step approach.

Sherlock

Bob. said:

Thanks @Sherlock !
OK.
Not sure what you mean by "self referencing". You are correct in several ways though. Right now it shows in REPORTS as a transfer and the category IS Wells Fargo Checking. I can try all this.
I DID try similar and found an oddity where it was showing both as income and expense, but you are different enough in your steps that I shall try this. Agfter backing up, of course!!
I also DO have Transfer Detection selected. Is this new? I do not recall seeing it before. Do I lose anything by unselecting it?

The Transfer detection preference is not new.  As to what you may lose by disabling the feature will depend on whether you rely on the functionality it attempts to provide.  It's possible you did not have the feature enabled until recently or since you previously imported the RMD. 

Note:  When the Quicken program updates, preference settings may change unexpectedly.  We always review the preference settings after we update the Quicken program.

By self referencing, I was referring to a transaction with a category set to the name of the register containing the transaction in square brackets otherwise known as a self referencing transfer.  Quicken uses these types of transactions for a variety of purposes.  For example, an account register's opening balance transaction is typically a self referencing transfer transaction.

Bob.

Thanks. I never set that preference so some update must have. I di dnot even know of it. So now off to check the other preferences

Boatnmaniac

Hi @Bob.   If I had to guess, to me it looks like this time you may have had a transfer out transaction from Fidelity (as evidenced by "NORMAL DISTR PARTIAL NORMAL DISTR PARTIALEDyyyyyyyy  /WEB" which is a standard memo message that Fidelity puts into their downloaded IRA distribution transactions) but you also had a downloaded transaction in your checking account and they didn't link together properly.  Somehow the matching process did not work as it has in the past (it is not 100% reliable) and so when you made changes in one account it messed up in the other.

I never rely on Quicken to figure out how to manage my IRA distributions.  And I always manually enter (either individually each time or via an Income Reminder) the distribution transaction in my checking account register, not in the IRA register.

Do you or do you not have income tax withheld by Fidelity?  If you let me know I will lay out for you a process that works very reliably in capturing it all in both account registers and is very accurate in capturing everything properly in the Tax Reports and Tax Planner.

Bob.

Thanks @Boatnmaniac Indeed, taxes were withheld and treated properly. I do think this was from the transfer matching which could not have been active previous years. Must have snuck in activating that by default in a Quicken update.
I had been trying to change categories in the wrong way and Sherlock had the key to making that work. So if it happens again, I'll be able to correct it more easily. But likely should not repeat.
Odd the Transfer Matching. For me seems more risky than valuable as a feature. Perhaps scenarios I am not considering where it makes more sense.

Boatnmaniac

Bob. said:

Thanks @Boatnmaniac Indeed, taxes were withheld and treated properly. I do think this was from the transfer matching which could not have been active previous years. Must have snuck in activating that by default in a Quicken update.
I had been trying to change categories in the wrong way and Sherlock had the key to making that work. So if it happens again, I'll be able to correct it more easily. But likely should not repeat.
Odd the Transfer Matching. For me seems more risky than valuable as a feature. Perhaps scenarios I am not considering where it makes more sense.

Hopefully the steps you have taken will now resolve and prevent recurrence of the issue.

Transfer Detection has been a feature of Quicken for a long time but I seem to recall the default Preference was to not have it enabled.  I just now created a new test file and see that it is now enabled by default.  If it defaulted to prompt the user to Confirm the transfer I would be OK with that but it now defaults to Automatically Create the transfers and that can be very problematic when it creates transfers that should not have been created.

I always set my Preference for Transfer Detection in all my data files to Confirm a possible transfer, not to Automatically Create them.  Since the default Preference is now changed I checked all of my data files and found that some still had Transfer Detection set to Confirm but others had been changed to Automatically Create them. 

There has been an intermittent issue for quite a while now that sometimes occurs when doing a Quicken version update:  Some Preference settings will sometimes (not often) be (randomly?) changed during the version update process. I've seen it most commonly happen with my Automatic Backup and Simple Investing settings.  Now it appears that it also happens with this Transfer Detection setting.  Others have reported other Preferences sometimes being changed, as well.

This Preference changing issue has been reported to Quicken by me and others on numerous occasions but I have no idea of whether or not it is being addressed.  All I know is that the issue still exists.  I've gotten into the habit of doing the following every time I do a Quicken version update:

• Always make sure my Automatic Backup settings are set to backup after every Quicken session so I always have very recent backup files that can be restored.
• Always make sure to have at least 30 days of Automatic Backup files saved.
  
• Never update Quicken from within Quicken or let Quicken automatically update the version.  Instead, download the Mondo Patch and use that to update Quicken.  (There seems to be fewer issues encountered when using the Mondo Patch to update.  Not sure why that is.)
• When a version update has completed, the first thing I do is review all of my Preferences and correct any that might have been changed.
• Perform a quick review of all of the account registers and balances to see if anything stands out as being being amiss.
• Perform a quick review of my key saved reports and Tax Planner to see if they show any data anomalies.

Doing these things have greatly reduced the risk of later finding "surprises" and then needing to spend a lot of troubleshooting to fix those "surprises".

Bob.

Thanks! I have never checked preferences after an update. I surely will now. I was lucky to cathc thi as I was just poking around in reports and budgets and could not find the RMD as income. Could have easily beemn missed and caused a bigger problem.

I have alerted my contacts at Quicken.

NebularNovice

I have been surprised to have to use this type of workaround because I have set "Transfers out:" of the IRA account to "1099R: Total IRA taxable distribution". I thought that would actually create the entry to the taxable IRA distribution based on the transfer itself. However when I look at the tax summary, the transferred amount does not show in income.

Why is that not working?

Boatnmaniac

NebularNovice said:

I have been surprised to have to use this type of workaround because I have set "Transfers out:" of the IRA account to "1099R: Total IRA taxable distribution". I thought that would actually create the entry to the taxable IRA distribution based on the transfer itself. However when I look at the tax summary, the transferred amount does not show in income.

Why is that not working?

If you set up the IRA distributions as is described below they will show up:

• In the Tax Summary report as transfers from the IRA into checking (not as income because IRA distributions are income only as far as the IRS is concerned but outside of the IRS they are simply transfers of funds from one account to another) and as tax withheld expense. 
  
• In the Tax Schedule report as 1099-R income and as 1099-R tax withheld.
• In the Tax Planner under Other Income>Taxable IRA/Pension Distribution and under Withholding>Other Withholding.
  

Here is the process that makes it work this way...and there is no need for any transfers into an interim manual Cash or Checking account:

1) In Category List:  You do not need to do this step but it will more accurately capture the tax withheld data since the default tax withheld category is set up for W2 tax, not IRA distribution tax.

• Click on the New Category button to create a new category for tax withheld for the IRA distribution.
  
• On the Details tab name it whatever you want but I suggest Fed_IRA Distribution.
• Then select Subcategory of: and select Tax from the drop-down.
  
• On th Tax Reporting tab select 1099-R:IRA federal tax withheld from the drop-down tax line items.
• Click on Save.
  

2) In the Checking Account: Enter a deposit transaction for the net amount (after tax) of the distribution.  Split the category as follows.

• Line 1:  A transfer from the IRA account for the gross amount (before tax) of the distribution...this is a positive number.
• Line 2:  Select the new Tax withheld category and enter the amount of the tax withheld...this is a negative number.
• The total of the split categories needs to equal the amount of the transaction net deposit.

3) In the IRA Account: 

• If there are SELL transactions downloaded to fund the distribution and the fed tax withheld, make sure the cash from those transactions are deposited to the cash balance of the Account....not transferred out of the account or expensed to anything.
• If there is a Transfer Cash Out transaction downloaded:  Delete it.
• If there is a transaction downloaded for paying the Fed tax withheld:  Delete it.

Let me know if you have any questions.

fanfare

Your method does not work if you want to withdraw your IRA distribution into a brokerage account.

Boatnmaniac

fanfare said:

Your method does not work if you want to withdraw your IRA distribution into a brokerage account.

I just tested it, again, and it does work with taxable brokerage accounts.  Make sure that you are entering the IRA distribution as a DEPOSIT transaction in the taxable brokerage account.  That will permit the category split (1st line being a transfer in from the IRA account for the gross amount; 2nd line being for the tax withheld) to be used.  Then it will populate the tax reports and Tax Planner properly.

NebularNovice

Thanks for the detailed description of my workaround, Boatnmaniac.

However I still don't understand why that is necessary when I have made the setting I describe.

That is, with that setting, why doesn't a simple transfer show up as "1099R: Total IRA taxable distribution" Isn't that the point of that setting?

Boatnmaniac

NebularNovice said:

Thanks for the detailed description of my workaround, Boatnmaniac.

However I still don't understand why that is necessary when I have made the setting I describe.

That is, with that setting, why doesn't a simple transfer show up as "1099R: Total IRA taxable distribution" Isn't that the point of that setting?

It probably should do that but it doesn't.  The developers never put in a good process for handling IRA distributions and Roth IRA Conversions among some other things.  When we find situations which Quicken doesn't do a good job of handling we can request Quicken to make a product improvement and then we implement workarounds to carry us through until the improvement is implemented. 

That all being said, setting the Transfer Outs in the IRA Account Details does work well with deposits to a checking or savings account when there is no tax withheld by the broker.  But when there is tax withheld a workaround is needed to properly capture the gross taxable amount of the distribution and this is perhaps the simplest and cleanest workaround.  (There is another good workaround utilizing a "dummy" manual Cash or Checking account as was mentioned by someone else above.  I used to use that but prefer the workaround in my previous post because it is easier, a little less complex and it does a cleaner job in capturing the data in the Tax Reports and Tax Planner.)

For these two issues there is a Product Improvement suggestion already made:  https://community.quicken.com/discussion/7864626/improve-handling-of-ira-distributions-including-qcds-and-roth-conversions/p1.  If you have not already done so I would encourage you to read it and vote for it.  To vote for an idea click on the button with a triangle in it as shown in the circle in the following picture.  Quicken does review these suggestions and the more people who vote for them the more likely it is that they will at some time put it into their product development plan.

NebularNovice

Thanks for the explanation. I read the long discussion on the product improvement discussion and entered my vote -- but I'm not holding my breath. I'll keep using the workaround

Boatnmaniac

NebularNovice said:

Thanks for the explanation. I read the long discussion on the product improvement discussion and entered my vote -- but I'm not holding my breath. I'll keep using the workaround

Yes, unfortunately there is no way of know when or even if the Development Team will add it to their plans.  We'll just need to keep an eye on it and wait to see what happens.  At least we do have the workaround options.

fanfare

"Deposit" is not an available action in a brokerage account register.

Rocket J Squirrel

fanfare said:

"Deposit" is not an available action in a brokerage account register.

Yes it is.

fanfare

Rocket J Squirrel said:

fanfare said:

"Deposit" is not an available action in a brokerage account register.

Yes it is.

OK, Not sure what was failing for me.

"That will permit the category split (1st line being a transfer in from the IRA account for the gross amount; 2nd line being for the tax withheld) to be used."

If you enter a Deposit, it changes to a MiscInc.
You cannot Split that.

Again the solution does not work for a brokerage account.
Now what ?

Rocket J Squirrel

fanfare said:

If you enter a Deposit, it changes to a MiscInc.
You cannot Split that.

Again the solution does not work for a brokerage account.

What version of Quicken are you using? My deposits in brokerage accounts maintain their identity as splittable deposits.

Boatnmaniac

@fanfare - I have not been able to replicate that MiscInc issue.  Would you please explain the New Transaction process you are following step-by-step?  If you can, take some snapshots of those steps and post them here?  Pictures can sometimes be worth a thousand words. Save the picture files to your hard drive and then you can click and drag them here.

NebularNovice

> @Boatnmaniac said:
> ...
> That all being said, setting the Transfer Outs in the IRA Account Details does work well with
> deposits to a checking or savings account when there is no tax withheld by the broker.  But when
> there is tax withheld a workaround is needed to properly capture the gross taxable amount of the
> distribution and this is perhaps the simplest and cleanest workaround.

After considerable experimentation, I have to disagree with Transfer outs working well. I entered a Sale (showed up as SoldX or course) from an IRA account with proceeds going to a checking account.  The IRA account setting specifies Transfers out associated with "1099R: Total IRA taxable distribution". No withholding involved in this test transaction.

As I expected from prior experience, the amount did not appear in the Tax Summary report. Thus it does not work well. I was somewhat surprised to find that the amount DID appear in the Tax Planner. Is that where you think it works well?