Tracking Roth and Traditional contributions in one retirement account

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jwillis84
jwillis84 Member ✭✭
edited May 28 in Investing (Windows)

I don't mean to incite frustration.

But the level of detail and escalation for this topic is rather long and deep.

I am new at trying to use the "old" way and found it confusing from the Threads available.

Simply, in as few words as possible;

  1. Quicken lets you set up a new account of type 401k (x) tax deferred.
  2. When you setup a paycheck using
  3. [BILLS & INCOME] tab > [Add v] button > "Add Income Reminder"
  4. Looking down at the bottom of the dialog click on "Paycheck setup wizard"

Choose (x) Gross amount > [Next] button

Company name: "myemployer" > [Next] button

Fill out the sections for your paycheck, adding a

[Add Pre-Tax Deductions] > Other Pre-Tax Deduction

  1. Name: Broker - Traditional
  2. Category: replace the word "Salary" with the "[401k Account]" you set up, type but ignore the dialog that pops up > "[401k Account]/Traditional" and press enter, press [OK], ignore the [New Tag] dialog and press [Save]
  3. Amount: enter an amount if you like, press [OK]

[Add After-Tax Deductions] > Other After-Tax Deduction

  1. Name: Broker - Roth
  2. Category: replace the blank field with the "[401k Account]" you set up, type but ignore the dialog that pops up > "[401k Account]/Roth" and press enter, press [OK], ignore the [New Tag] dialog and press [Save]
  3. Amount: enter an amount if you like, press [OK]

When a paycheck is "Action > Entered" from Bills&Income, "tagged" contributions will be placed into the same 401k account; you can tell from their tags their contribution type.

My Retirement Account does not track contributions separately until withdrawl, it lumps them into a ratio which adds up to 100 percent.

A report to find out the current contribution totals can be run from;

Reports > Banking > Transaction

Select [Accounts] tab > [Clear all] button, and check the account "401k account"

Select [Tags] tab > [Clear all] button, and check the tags "Roth" and "Traditional"

Press the [Show Report] button

Select the [Date range: Year to date v] pick the [Custom to Date], press [OK]

a tabulate report will appear with only the tagged transactions for the account chosen.

This is a work around.

The important parts are the "/Roth" and "/Traditional" tag creation and appending to the Paycheck Cash Transfer Transaction type, not all Transaction types support tags.

This workaround does not support the Tax Planning or Forecasting features of Quicken, it allows you to manually track contribution types and reconcile with some retirement plan reports.

I find it better than nothing.

A more Robust solution would be appreciated.

Comments

  • QuickUserPSP
    QuickUserPSP Member, Windows Beta Beta
    edited May 28
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    @jwillis84 - I would not trust this workaround. This particular statement, if true, would have the regulators very interested in who the plan provider is.

    My Retirement Account does not track contributions separately until withdrawl, it lumps them into a ratio between the total of each contribution type which adds up to 100 percent.

    There is no way that a legitimate retirement plan provider would not keep track of contributions by money type, or source. Simply using a ratio does not work because the funds, fund options, or fund earnings, and withdrawals, are not always the same for each source (contribution type) of money. When a withdrawal is taken from a source, the ratio changes. Roth withdrawals are treated differently than 401(k) withdrawals tax wise, so it is important to keep an accurate money type or source balance for each contribution type.

    This issue has grown because Quicken has decided that they are able to adequately provide retirement (401(k), Roth) options or services. What's even worse is that they are adding it to their "paycheck wizard" which has been issue-ridden for many years.

  • Ps56k2
    Ps56k2 Alumni ✭✭✭✭
    edited May 28
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    My Retirement Account does not track contributions separately until withdrawl, it lumps them into a ratio between the total of each contribution type which adds up to 100 percent.
    On the day of
    withdrawal the current contribution ratio is used to calculate the available funds of each type from the total of the balance in the account.

    huh - how does your brokerage/bank/provider provide an accurate statement of the Contributions, Cost Basis, Withdrawals,
    and End of Year Balances for RMD purposes - along with your own tracking of IRS 8606 and other IRS IRA forms ?

  • jwillis84
    jwillis84 Member ✭✭
    edited May 28
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    I'll remove the text of the posting if that is satisfactory.

    Inciting panic and fury was not my goal.

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
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    No need to remove the text, as I see it. Others are just confused, not panicked nor infuriated.

    I am also confused but in a different way. I thought it was well established that some administrators did not maintain separate 401k and 401k Roth accounts. They co-mingled the contributions. The Roth and non-Roth contributions went into the same account. It does not affect me, so I never pursued the situation to understand how they maintained any distinction.

  • volvogirl
    volvogirl SuperUser ✭✭✭✭✭
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    I'm 99% sure that Traditional and ROTH have to be separate accounts. You may have made non deductible contributions to the Traditional account. At least you can for IRA accounts. Check with your employer or retirement plan what exactly you have and what they are doing.

    I'm staying on Quicken 2013 Premier for Windows.

  • q_lurker
    q_lurker SuperUser ✭✭✭✭✭
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    There are numerous posts like this one:

    “one 401k with both types”

  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
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    To me this looks like a royal mess. Not too long ago my wife's 401K announced that they were now supporting Roth contributions.

    So, I thought great I will change her future contributions over to Roth ones. Then I did some checking. Not only are you going to have the wrinkle of them mixing the Traditional IRA with the Roth IRA, but it also seems that the employer contribution works like a Traditional IRA not a Roth IRA. In other words, its "pre-tax" and as such you need to pay tax on those contributions/gains when you withdraw the money.

    Signature:
    This is my website: http://www.quicknperlwiz.com/
  • QuickUserPSP
    QuickUserPSP Member, Windows Beta Beta
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    The 401(k) and Roth contributions go into the same 401(k) account but kept in different money types or sources which could be thought of as sub-accounts. That is the main issue with trying to set up a 401(k) account on Quicken with different contribution accounts. The contributions should be posted to their own money types or sub-accounts on Quicken, but there is no sub-account capability on Quicken so it's not possible. 401(k) accounts your plan provider set ups on their system usually has several sub-accounts depending on the plan provisions. Typical money types or sub-accounts are -

    • 401(k) Deferrals
    • Employer Match
    • Rollover
    • Roth Deferrals
    • After-Tax

    There is no way to emulate this on Quicken because it can only handle the investment side of the 401(k) plan and not the participant recordkeeping side.

    In my opinion, when Quicken users ask for the ability to keep Roth contributions separate on Quicken they are asking for the impossible.

  • jwillis84
    jwillis84 Member ✭✭
    edited May 28
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    Offending text and points of debate removed from the message using edit.

    I'll leave it unless someone gets overly worried about the whole message.

    It is a (choice) whether you use this method to track contributions, or decide to do nothing.

  • Ps56k2
    Ps56k2 Alumni ✭✭✭✭
    edited May 28
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    Not sure what your thinking is…. but no one was getting concerned -
    Some of us just commented on how this new 401k co-mingling is going to create lots of issues, unrelated to Quicken -
    We are all users… just sharing -

  • QuickUserPSP
    QuickUserPSP Member, Windows Beta Beta
    edited May 28
    Options

    @jwillis84 please don't think that anyone is offended.
    I think the example you provided might be a bit confusing and we are all trying to sort it out.

  • volvogirl
    volvogirl SuperUser ✭✭✭✭✭
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    Right. We are all learning here. This might be a new thing. Heres an IRS page about ROTH 401K

    Retirement Topics - Designated Roth Account | Internal Revenue Service

    Having trouble pasting it. Hope this works.

    I'm staying on Quicken 2013 Premier for Windows.

  • fciani
    fciani Member ✭✭✭
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    Mixing Traditional 401k and Roth 401k funds in the same account is wrong on so many levels. However, if that is what the company does, you're stuck with it. While Quicken does not support the concept of sub accounts, there is an easy work around. I've run multiple SP businesses where I used this concept.

    I create:

    Bus SP1 checking

    Bus SP2 checking

    Bus SP3 checking

    It's all one real account at the bank, but in Quicken it's three. I then record transactions into each sub account appropriately. When it comes to reconcile, I have a Register report that includes all three accounts. I have to manually set the transactions to 'R', but this only takes a few seconds. I am able to track each SP separately while using a single real account.

    Assuming the amounts going into the Traditional 401k and Roth 401K are known, two accounts could be set up in Quicken (Traditional 401k and Roth 401k). If the contribution amount is ratioed between the two accounts, it then follows that any securities purchased with the contributions would be ratioed as well. These would need to be manually input into the appropriate account. A report containing both accounts should yield the totals contained in the statements from the employer's plan. This keeps the taxable portion in the Traditional 401k account and the non-taxable portion in the Roth 401k. It's not perfect, but it is closer to reality.

  • fciani
    fciani Member ✭✭✭
    Options

    Co-mingling Traditional 401k and Roth 401k funds into the same account is wrong on so many levels. However, if it is what your employer does, you’re stuck with it.

    Several people have commented that Quicken does not support the concept of sub-accounts. This is true, but there is an easy and quick work-around. Over the years, I have run multiple SP businesses. Some of which I used the same real bank account. In Quicken, I created the following:

    Bus SP1 Ckg

    Bus SP2 Ckg

    Bus SP3 Ckg

    I record transactions into the appropriate SP# account keeping everything separate but using the same real account. When it comes time to reconcile, I have a register report that contains all three SP# accounts. I manually set the transactions to ‘R’, but this just takes a few seconds.

    In this investment scenario, two accounts are necessary, a Traditional 401k and a Roth 401k. The OP knows how much of the contribution goes into each bucket, so this is easy to set-up in the paycheck. Knowing this ratio, it can be determined how many shares purchased with the contribution goes into the appropriate bucket. This is a manual process, but not difficult. In this way, the taxable 401k money/portfolio is separate from the Roth 401 portfolio in quicken and the Quicken features can be used. A report combing the two accounts should tie out to the monthly statements.

    This may not be perfect, but I think it gets closer to reality.

  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
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    Another option is to choose different securities for the Traditional and Roth portions of the account.

    Also when you start taking distributions, you can usually roll over the 401(k) into separate Traditional and Roth IRAs.

    QWin Premier subscription