How to handle RMD distributions (edit)

dave10a

Why can't Quicken deal with RMD distribution in a simple and straightforward way? I have the latest version and after many years of dealing with Quicken, I still have to manually enter my Vanguard RMD and tax estimate transactions. I think I would be better off using Excell macros to manage my investments and RMDs. It is hard to understand why Quicken is not addressing this issue after all the complaints I see.

Ps56k2

@dave10a - if I was working with the RMD - I would approach it this way - like a payroll check... with Split, if needed.
On Vanguard, setup the auto withdrawal... maybe monthly, or if you want, then just a manual withdrawal.
On Quicken - if doing a monthly RMD - then setup a Manual Reminder, to be Split, if you want, to handle the transaction for the Withdrawal.  Next you need another Manual Reminder for the "deposit" into some checking or savings acct.

There are several threads on different ways to approach this..... the key is getting the right "category" for the withdrawal, which in turn has the correct tax line item associated with that Category.  I would make these as separate withdrawal & deposit transactions vs any kind of "transfer" which might confuse things for the Category.

Others may jump in with different approaches.... whatever works -

dave10a

I take RMD distributions as I need them and not automatically and at the end of the year to make sure I have the full distribution to avoid penalties. Also I have Vanguard withhold the taxes which complicates Quicken downloads. To me Quicken needs to hire programers that can make things simple for us folks that are not accountants or Quicken software gurus. I am familiar with software like C++, assembly language and Basic, as well as being retired. I rather enjoy my retirement rather than learning Excell macros to down load the files from my bank and Vanguard into a spred sheet to calculate my taxes each month. I purchased Quicken to prevent becoming an Excell nerd. However, I might develop the Macros if I get frustrated with Quicken--- and make them freely available to those who have the same frustration with Quicken.

Bob_L

I know with Vanguards RMD service for monthly payouts that you give them a federal tax percentage to withhold.  Is that the same with irregular withdrawals, I,e, do you give Vanguard the percentage to withhold?  If so then you will know the withdrawal gross amount and the withheld amount when you place the order.  

Suppose you request 1000 and your withholding rate provided was 25%. Then go to your quicken bank account and enter a split deposit, MyRMD, where the first line is a transfer from your IRA for 1000.  Then add a second line categorized to an expense category for federal withholding taxes of -250 for a net of 750. Then when the download from vanguard arrives it will show a sale of whatever you directed equaling the 1000 gross amount.  There will also be a transaction showing the estimated tax amount which you can just delete since you have already accounted for it via the deposit to your bank account.  Be sure that you have set "transfers out" for the IRA tax schedule to be taxable IRA distributions.

if you want to further automate things, right click that split deposit in your bank account and choose memorize payee, taking the option to memorize the split percentages.  Then use that memorized payee the next time you take a withdrawal.  It will ask you for the transaction amount which unfortunately needs to be the net amount.  So if you want to do another transaction for say 2000, then you would use the memorized MyRMD  payee and enter 1500 as the net amount(2000-.25*2000), and it will automatically gross it up to the total withdrawal of 2000.

dave10a

Thanks for the suggestion. Although quicken makes things convoluted. I like the KISS (keep it simple stupid) approach to things. BTY Quicken does not handle Social Security very well. I have to pay SS taxes as well. It appears the government likes to tax SS if you make over a certain amount. What I have elected to do in Quicken is use the annualized manual approach -- it is much simpler than this mess in Quicken. I am too old for this quick convoluted mess.

Unknown

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dave10a

I simply can not depend on Quicken to handle RMD and Social Security distributions properly for tax planing. It is simply very bad software for that kind of tax planning.

Jim_Harman

@dave10a

What exactly are your issues with Social Security and RMDs? There are a few tricks to enter these correctly, but they should feed the Tax Planner and reports correctly.

For Social Security, set up an Income Category Social Security Dave or whatever with a Tax Line Item of Form 1040:Social Seurity Income, Self. If you have a spouse who is also receiving Social Security income, set up a second income for them. Create a Reminder for the income and another for your spouse, with a split where the first line is your gross SS income and additional lines for Medicare and other deductions entered as negative numbers. The total for the splits should add up to the amount of your SS deposit. If your deposit is on the 2nd Wednesday of each month, you can set the date for the Reminder to Monthly / every 1 month / on the 2nd / Wednesday.

For RMDs, follow the instructions here

https://community.quicken.com/discussion/7072150/faq-best-way-to-handle-distributions-from-ira-also-rmd