Transfer In/Out values in the Tax Schedule of retirement accounts

Question

I would like some education on the best practices to set the Transfer In/Out "Tax Schedule" fields within the Account Details of retirement accounts.  Anything you can share or point me to please.

Accounts are regular/Roth 401k (Roth 401k setup as Roth IRA, not 401k), and Trad/Roth IRAs.  We have recurring paycheck contributions to 401k & Roth 401k, typical annual contributions to IRAs (sometimes Roth IRA), and occasional non-taxable rollover from a 401k to IRA.  And then future consideration for taxable IRA distributions upon retirement.

My guess is that I cannot have the same values in the Transfer In/Out fields satisfy all pre and post retirement conditions since they are global settings, rather I have to change the values when we retire (which will impact older results, but should I care?)  Alternatively I can create a copy of the Quicken file in the future.

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One specific area I am confused is the difference between selecting 1099-R:Total IRA taxable distrib, vs 1099-R:Total IRA gross distrib, vs BLANK.  What result difference and where should I expect to see?

In my test file, setting the Transfer Out = gross distrib or leaving it blank behave the same in income and tax planner.  Or I am not doing it correctly.

Rocket J Squirrel · Accepted Answer

@BK

One specific area I am confused is the difference between selecting 1099-R:Total IRA taxable distrib, vs 1099-R:Total IRA gross distrib, vs BLANK. What result difference and where should I expect to see?

In my test file, setting the Transfer Out = gross distrib or leaving it blank behave the same in income and tax planner. Or I am not doing it correctly.

What you are seeing is normal behavior. The Tax Planner only looks at the Taxable distrib. Gross distrib is ignored. You can see in the Tax Planner which tax line items are used in the various calculations.

You can use Gross distrib to withdraw post-tax dollars, if you have any of those.

The Taxable distrib will be noticed by Tax Planner only when you enter a DEPOSIT transaction into a taxable account which is a transfer from your IRA or pension. So to accomplish a non-taxable rollover, use a WITHDRAW from your IRA which is a transfer into another tax-deferred or tax-free account.

Jim_Harman · Accepted Answer

I think you are correct on how Quicken treats the tax line items (AKA Tax Schedule) for transfers to and from tax deferred accounts.

If you set the Transfers out to 1099-R:Total IRA taxable distrib, then transfers to a taxable account are included in the Quicken data section of the Tax Planner and in the Tax reports. The 1099-R:Total IRA gross distrib line is used in the 1099-R for distributions where the FI does not know the tax status of the distributions, typically rollovers or withdrawing pre-tax dollars. With that line selected, transfers are not included in the Tax Planner, but are included in the corresponding Gross sections of the Tax Schedule and Tax Summary reports.

As you observed, the Tax line item settings are global and even affect transactions that have already been entered. If you change them, they will affect previous years' Tax reports and Tax Planner results. This may not be significant, but if you have a mixture of transfers from the IRA to a taxable banking account and some are not taxable, you can edit the tax line item assignment in the Deposit transaction by right clicking on the Category and changing the tax line item assignment. I believe that change only affects the current transaction.