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Distributions from a beneficiary IRA

thomas_in_acf

I'm not sure how to handle a couple of things.

First, a bit of background. The distribution came in the form of a paper check, which I put in my checking account. And the money came from the IRA's cash balance, so no securities were sold.

Based on earlier posts here, I set my IRA tax schedule to "1099-R; Total IRA taxable dist." And I treated the transaction as a transfer between my IRA and my checking account because it was the only way I could think of to get it to show up in my tax summary.

My first question is whether that is the correct way to do it.

My second question concerns how to get the withholding to show up in the tax summary as well. The bank that holds the IRA is treating the distribution and the withholding as separate transactions. I have them entered in Quicken that way too, but only the distribution shows up in the tax summary.

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Accepted answers

Jim_Harman

Here is a "Cheat sheet" for entering IRA distributions

In the IRA, click on the gear at the top right and select Edit account details. Click on Tax Schedule and set Transfers out to 1099R: Total IRA taxable distrib., like this:

For the taxes to be recorded properly in Quicken, the receiving account can be a banking or an investing account, but it must be taxable, not another IRA for example. In the receiving account:

1) Enter a Deposit transaction for the net amount of the RMD...a positive number.

2) Split the category:

Line 1 of the split: Category = the IRA account name in [square brackets] and the gross distribution amount...a positive number.
Line 2 of the split: Category = the Fed taxes category that you use...a negative number.
Line 3 of the split: Category = the State taxes category that you use...a negative number.
Total of the split: Must equal the net amount of the deposit.

If you receive the distributions regularly, you can set this transaction up as an Income Reminder.

In the IRA account: Delete any downloaded brokerage transactions for

The net distribution
The Fed taxes withheld
The State taxes withheld

All comments

volvogirl

How did you enter the withholding? I enter mine as expenses in the checking account after the transfer of the FULL GROSS distribution. The withholding should have their own expense categories.

FAQ for good way to record a IRA withdrawal and taxes….

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

thomas_in_acf

Thanks for your response (and for attaching that earlier comment). Right now, I've been treating the withholding as its own separate transaction, which is how it downloaded. But I can see the logic of what you're saying. So, then, do I have this right? That I should ignore what the download says and manually enter the information in the checking account?

Jim_Harman

Here is a "Cheat sheet" for entering IRA distributions

In the IRA, click on the gear at the top right and select Edit account details. Click on Tax Schedule and set Transfers out to 1099R: Total IRA taxable distrib., like this:

For the taxes to be recorded properly in Quicken, the receiving account can be a banking or an investing account, but it must be taxable, not another IRA for example. In the receiving account:

1) Enter a Deposit transaction for the net amount of the RMD...a positive number.

2) Split the category:

Line 1 of the split: Category = the IRA account name in [square brackets] and the gross distribution amount...a positive number.
Line 2 of the split: Category = the Fed taxes category that you use...a negative number.
Line 3 of the split: Category = the State taxes category that you use...a negative number.
Total of the split: Must equal the net amount of the deposit.

If you receive the distributions regularly, you can set this transaction up as an Income Reminder.

In the IRA account: Delete any downloaded brokerage transactions for

The net distribution
The Fed taxes withheld
The State taxes withheld

thomas_in_acf

It worked! Thank you.