How do I Update Annuity Investments, not just Cash.

t257daf

When I do One Step Update with a Merrill Lynch annuity it only recognizes Cash portion. Other investments are ignored and don't even appear in the Quicken Account Holdings.

Boatnmaniac

(Edit, 10/13/2023: Annuities are tax deferred insurance policies that from a tax perspective are treated much like pension annuities. As such, the investment accounts in the 2 options mentioned in this post below should set up as tax deferred IRA accounts. The tax schedule for transfers out of the account should be set to 1099-R:Total pension taxable dist. because that will most closely approximate the 1099-R form the financial institution will send out at tax time.)

Quicken does not support downloading of annuities. I'm thinking that is because annuities are a form of life insurance and not actual securities but I am not sure of that.

More specific to your situation: It sounds like you want to track the performance of the individual securities in your annuity. A very common issue with that is that the funds that comprise annuities are often not publicly traded funds so they have no tickers nor CUSIP IDs meaning the is nothing that can be downloaded about them. Even if they have the same name as a publicly traded fund they are often not exactly the same and have different share values and perhaps even different securities compositions.

What I do with one of the annuities that I used to track is as follows. It is, however, not what I would recommend for most people and I think you'll understand why. I am simply posting it here for you because that is what I think you are asking about.:

1. Set up the annuity as a manual investment account.
2. Enter the individual securities (usually mutual funds, ETFs and money market funds) that comprise the annuity. If they are publicly traded funds, match them to their tickers when you add them to Security List so the daily prices will be downloaded. If they are not publicly traded funds, you will not be able to match them to a publicly traded ticker and will instead need to manually enter share prices when you want them updated. NOTE: You will probably need to go to the website of the insurance company that issued the annuity to get that information.
3. Enter buy transactions for the each of the various securities that are in the annuity. You might need to get the shares and cost information (the price per share of each fund for purchase date) from the annuity issuer.
4. Once a quarter (or whatever time period you want) get the new cost information for each security from the annuity issuer and manually enter them into Quicken.
5. The Cash portion of the annuity is probably held in a money market fund. This is the only security in the annuity where the number of shares (@ $1/share) is likely to change over time because all dividends received by the annuity will buy more money market funds (@ $1/share).

As you can see, this can be a lot of work. So, in my 2nd annuity I did it much different and am so glad that I did.:

1. Set up a manual investment account.
2. Enter a new custom security for the annuity itself. I named mine USAA Annuity.
3. Enter a buy transaction for the number of shares of the annuity at $1 per share. Ex: If you bought your annuity for $100,000 then the number of shares bought would be 100,000 and the share price would be $1.
4. Once a month I get the current value of the annuity from the brokerage and manually enter a ReinvDiv transaction for the difference between the annuity value shown in Quicken and the new value provided by the brokerage. Ex.: If the value increase was $200 I would enter the ReinvDiv transaction as 200 sh @ $1 ea.

The 2nd option is so much simpler and less time consuming to keep updated. Heck, if you wanted to you could do #2 manually every day, something that would be quite difficult and time consuming to do with #1.

The biggest issue I had to deal with was getting it out of my head that I needed to track every single security in the annuity. To help me get around that mindset I started to think of the annuity itself as fund, much like a mutual fund or ETF. I don't track the individual securities held in MFs and ETFs, so why should I do that with an annuity? Once I came to grips with that then it was easy for me make this change.

I hope this helps. Let me know if you have any questions.

Boatnmaniac

(Edit, 10/13/2023: Annuities are tax deferred insurance policies that from a tax perspective are treated much like pension annuities. As such, the investment accounts in the 2 options mentioned in this post below should set up as tax deferred IRA accounts. The tax schedule for transfers out of the account should be set to 1099-R:Total pension taxable dist. because that will most closely approximate the 1099-R form the financial institution will send out at tax time.)

Quicken does not support downloading of annuities. I'm thinking that is because annuities are a form of life insurance and not actual securities but I am not sure of that.

More specific to your situation: It sounds like you want to track the performance of the individual securities in your annuity. A very common issue with that is that the funds that comprise annuities are often not publicly traded funds so they have no tickers nor CUSIP IDs meaning the is nothing that can be downloaded about them. Even if they have the same name as a publicly traded fund they are often not exactly the same and have different share values and perhaps even different securities compositions.

What I do with one of the annuities that I used to track is as follows. It is, however, not what I would recommend for most people and I think you'll understand why. I am simply posting it here for you because that is what I think you are asking about.:

1. Set up the annuity as a manual investment account.
2. Enter the individual securities (usually mutual funds, ETFs and money market funds) that comprise the annuity. If they are publicly traded funds, match them to their tickers when you add them to Security List so the daily prices will be downloaded. If they are not publicly traded funds, you will not be able to match them to a publicly traded ticker and will instead need to manually enter share prices when you want them updated. NOTE: You will probably need to go to the website of the insurance company that issued the annuity to get that information.
3. Enter buy transactions for the each of the various securities that are in the annuity. You might need to get the shares and cost information (the price per share of each fund for purchase date) from the annuity issuer.
4. Once a quarter (or whatever time period you want) get the new cost information for each security from the annuity issuer and manually enter them into Quicken.
5. The Cash portion of the annuity is probably held in a money market fund. This is the only security in the annuity where the number of shares (@ $1/share) is likely to change over time because all dividends received by the annuity will buy more money market funds (@ $1/share).

As you can see, this can be a lot of work. So, in my 2nd annuity I did it much different and am so glad that I did.:

1. Set up a manual investment account.
2. Enter a new custom security for the annuity itself. I named mine USAA Annuity.
3. Enter a buy transaction for the number of shares of the annuity at $1 per share. Ex: If you bought your annuity for $100,000 then the number of shares bought would be 100,000 and the share price would be $1.
4. Once a month I get the current value of the annuity from the brokerage and manually enter a ReinvDiv transaction for the difference between the annuity value shown in Quicken and the new value provided by the brokerage. Ex.: If the value increase was $200 I would enter the ReinvDiv transaction as 200 sh @ $1 ea.

The 2nd option is so much simpler and less time consuming to keep updated. Heck, if you wanted to you could do #2 manually every day, something that would be quite difficult and time consuming to do with #1.

The biggest issue I had to deal with was getting it out of my head that I needed to track every single security in the annuity. To help me get around that mindset I started to think of the annuity itself as fund, much like a mutual fund or ETF. I don't track the individual securities held in MFs and ETFs, so why should I do that with an annuity? Once I came to grips with that then it was easy for me make this change.

I hope this helps. Let me know if you have any questions.

t257daf

Boatnmaniac,

You explained the Investment process clearly and your second solution is an easy fix to my concern. It will provide a quick approximation of the changing value of the annuity. Thanks for the lucid explanation.

markus1957

No question, just unclear how this works over the life of the annuity.

You appear to be discussing an annuity in an accumulation phase before payouts begin. How are you tracking the difference between your initial capital investment (cost basis) versus dividends received? A reinvested dividend will add to the cost basis in Quicken, but those earnings are tax-deferred. Once payouts begin, some portion of the payout will be return of capital (cost basis) and some will be taxable earnings in the form of dividends or interest. I'm not following how you will track the difference. It might not matter since the brokerage will provide a 1099 for the taxable portion of the distribution.

I use a similar method for a fixed income annuity except that I treat it more like a bond to keep the number of shares lower so in your example, 1000 shares at $100/share. The payout schedule is fixed for a period of years, so the payment is the same split each year of return of capital and interest until the capital is exhausted. If I live longer, then all payments would be interest on a holding worth zero dollars.

t257daf

My payouts have begun. I just wanted to get the market value of the mutual funds to show up in my overall balances in Quicken. My One Step Updates were only showing and updating the "cash" portions of my Merrill Annuity. When I go to my Merrill Account the Update would only be a small part of the value of the actual account shown at Merrill. You seem to have a very deep understanding of financial instruments. I am a retired engineer and use Quicken to mostly simplify downloading transactions and for reconciliations of my accounts and to provide a convenient way to collect year-end tax data. I think what you have provided me will make my Quicken annuity account values be in the ballpark with my Merrill account statements.

Boatnmaniac

Sorry, I should have also mentioned in my post above that the investment account should be set up as a tax deferred IRA account. I've edited my original post to add this comment as well as to provide some additional information regarding the tax schedule that should be assigned to that account for transfers out of the account.

By setting up the investment account like this, then the cost basis really does not really matter, just like it does not matter in any other tax deferred or tax exempt account. Every time you get a distribution it will be reported reasonably accurately in the Tax Reports and Tax Planner as 1099-R distributions.

In my #2 Annuity example above, my annuity was funded from an IRA account so it was not a taxable event (tax deferred account to tax deferred account transfer). I do get annual distributions which I enter into the annuity account as Sell transactions…..X number of shares sold for $1 each with the cash proceeds transferred back into the original IRA brokerage account. After a few more years the balance of my annuity will pay out in one lump sum which will also be managed via a similar Sell transaction. In my case there will be no tax impact at all but if I were to transfer the distributions to my checking account or a taxable brokerage account it would be captured properly in the Tax Reports and Tax Planner.

Unfortunately, there is not one pat answer regarding how to best manage annuity distributions beyond this because there are so many different kinds of annuities.