Quicken Reporting Capital Gains for Retirement Accounts (401k/IRA)

Blues_guy

401(k) account: In the 1st quarter of the year, I rebalanced my account by selling shares of some funds and buying others. The account is set up as “Tax deferred-yes”.

Taxable brokerage account: In the 1st quarter of the year, I sold two stocks, one for a gain and one for a loss. This account is set up as “Tax deferred-no”.

When I run a Quicken Standard Reports/Investing/Capital Gains report, only the capital gains from the taxable brokerage account are shown. So far, so good.

When I run a Quicken Standard Reports/Spending/Income and Expense by Category report, under “Income” it shows a category “_RlsdGain” and includes capital gains from both my taxable brokerage and 401(k).

This is incorrect. Capital gains from my brokerage account is definitely income and will be reported as such on my tax return. Rebalancing my 401(k) produced no income. This inflates my actual income for the quarter.

Is there a way to prevent Quicken from including 401(k) or IRA rebalancing transactions in Income and Expense reports?

All 1st Quarter Income:

1st Quarter _RlsdGain Drill-down:

NotACPA

It IS a Capital Gain. It's just not taxable because of the account type.

What else would you call it? Magic Money???

Bob_L

Just leave out the 401k or other tax deferred accounts by customizing the report.

Blues_guy

NotACPA

Whether or not rebalancing a 401(k) or IRA produces a capital gain is rather academic. The Oxford dictionary defines capital gain as:

1. a profit from the sale of property or an investment. "a tax is imposed when individuals part with an asset and make capital gains on it"

Clearly no profit was made. The value of the account didn't change. The cash balance didn't change. There is no capital gain to report because there was no capital gain.

Bottom line: No brokerage firm ever reports a capital gain due to the rebalancing of a retirement account, so neither should Quicken.

Bob_L

Thanks for the tip. I did as you suggested and excluded this retirement account from this particular report. The report no longer shows the _RlzdGain associated with this account. But, a withdrawal such an RMD (Required Minimum Distribution), a taxable event, will also not be excluded as income on this report. I will have to handle that another way, such as with the account into which the distribution is deposited.

NotACPA

If you bought a security and sold it (or part) for an amount other than the purchase price you've got a Capital Gain (or Loss). That's "Investing 99 (for Dummies)"

Your "tax" reference in the quote is irrelevant since it's a non-taxable account.

Blues_guy

Exactly!…calling it a capital gain is irrelevant.

QuickUserPSP

@Blues_guy I would concur with @Bob_L and just exclude the 401(k) account from the report.

The Withdrawal and RMD reporting is another issue entirely which would occur no matter how you handle capital gains issue. The Withdrawal or RMD issue is a longstanding one, which has been discussed multiple times over the years. There is a workaround but rather than muddy the waters here, when you get a chance, search on RMD or IRA Withdrawal.

NotACPA

https://community.quicken.com/discussion/comment/20431457#Comment_20431457

It's irrelevant for TAX purposes. It's VERY RELEVANT for accounting purposes as it represents where the funds in the account came from.

Or, again, do you just want them to be considered "Magic Money"???