Inputting Required Minimum Distribution tax payments

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JHLAUER
JHLAUER Member ✭✭
edited August 2023 in Investing (Windows)
What transaction category does one use when inputting the tax for Federal or State on a RMD within the investing section. Is it Cash Withdrawal or Misc expense or another? Why doesn't Quicken have a category specific for tax payments in the investing section? Downloads from Vanguard seem to chose the Misc Expense which in my opinion is not clearly defined.

Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
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    A general way of dealing with distributions from IRAs with taxes withheld is to actually initiate the transaction in the checking Account.

    You enter the NET amount deposited, then split the transaction. The first line of the split is for the GROSS amount distributed, with the offset to the IRA Account. That captures the income for taxes. The second line of the split - a deduction to come to the net - codes the taxes withheld to whatever Category you normally use.

  • bkbaird
    bkbaird Member ✭✭
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    I am trying to understand the lingo used in categorizing the transactions/splits listed in the FAQ. Not getting it. I need to solve booking IRA distributions. help!

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited July 2023
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    @bkbaird

    The basic steps are:

    1. Sell securities in the IRA if necessary to generate the cash for the distribution, including any taxes that are withheld
    2. Go to the taxable account that will receive the distribution
    3. Enter a Deposit in that account with split Categories.
      1. On the first line of the split, enter the name of the IRA account in [square brackets] and the total amount of the distribution, including any tax withholding
      2. On the following lines of the split enter the Categories and amounts of any taxes withheld as negative numbers.

    The resulting amount of the deposit should be the amount that was deposited into the taxable account.

    Please provide more detail on your questions if you still don't understand.

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  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
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    Example: You take a distribution from your IRA of $500 and custodian withholds $75 in taxes and sends the net deposit of $425 to your checking Account. Here's how that would look in the transaction you create in the checking Account:

    You set the tax attributes of the IRA Account such that transfers OUT of the Account are picked up in a 1099-R.

  • bkbaird
    bkbaird Member ✭✭
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    i got it sorted!

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