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An extra amount is coming out of an annuity account each month that I cannot trace

actuary314

I'm using the latest release of Quicken Premier Classic. Each month, via Bills and Income Reminders, I transfer a constant amount of funds from an annuity account to my checking account. For each of the past three months, an additional constant amount is coming out of the annuity account, but not going into my checking account. I checked all my bills and income reminders and can't find where this additional amount is coming from. Any ideas as to how to eliminate this additional amount would be greatly appreciated.

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Accepted answers

actuary314

Thanks so much for your help. I'll consider the question answered since I can delete the paycheck reminder and just memorize the downloaded transaction from the bank. I'll re-memorize the split as needed.

All comments

NotACPA

What does the statement from the annuity company show?

How did you determine that these add'l funds are coming out?

Does the annuity account exist in Q? If so, why can't you research it from there? If not, why?

Have you looked at those monthly transfers to see if they're split, and maybe that's where the add'l funds are?

actuary314

Thanks for your quick response. Here are my answers to your questions:

I get only annual statements, but past ones show only the correct amount and not the additional amount.
For each of the past three months, my Quicken annuity account shows two transactions instead of one. One of the transactions is for the correct amount. The second transaction is for the additional amount. It is this addition amount that I cannot trace. My checking account shows only the correct amount. The downloaded transactions from the annuity company show only the correct amount.
Please see #2.
There are no splits currently since Federal Income tax is not charged on principal withdrawn.

retird

Since you only get yearly statements you might start by contacting your annuity company. Find out what they are showing for monthly transactions for the past 3 months and where they are going. The extra amount you speak of may be going to another annuity person and it was taken from the wrong annuity (yours).

actuary314

Thanks for your quick response. I apologize for not being clearer. The issue is not with the annuity company. I am positive that they are paying the correct amount because the monthly downloads from them are correct. My problem is that I cannot trace the extra amount that is being recorded in my QUICKEN annuity account. I love Quicken and have been using it since around 1995. This is my error. I just can't figure out what I did to cause this extraneous amount to go into my QUICKEN annuity account.

q_lurker

For each of the past three months, an additional constant amount is coming out of the annuity account, but not going into my checking account.

How do you have this account configured in Quicken? (Investing account, banking/cash/spending account, other property/debt account?)

Are you downloading transactions for this account from a financial institution? Or manually entering them in Quicken (even if as an automated scheduled transaction)?

Are the transactions showing up and identifiable in the Quicken annuity account (and thus also able to be deleted as needed)?

If so, what is the category assigned to the transaction?

Is the amount of the transaction the same every month, approximately the same, or does it vary widely?

When do these extra transactions appear in the account? Same time each month? When your regular transaction gets entered? When you do One-step Updates? Erratically?

volvogirl

Yes please give more details. Can you post a screenshot of the register showing the extra amount coming out? The whole line with the headings included.

actuary314

q_lurker response

Thanks. My answers:

Other Asset.
I'm downloading the transaction from the annuity company AND scheduling it as an automated transaction (Paycheck). Both amounts are correct, $350.17 each month. I then delete the downloaded transaction. But an additional transaction, $466.89 goes into the annuity account, at the same time.
Yes.
[Bob's Checking Acct]
Almost always identical.
When the regular transaction gets entered. (When I do OSU.)

Boatnmaniac

Do you have a Transfer or Income Reminder set up for the regular monthly transfers? (The Reminder should show up in both the checking account and in the annuity account registers as transfers between the two accounts.)

If so, it is possible that the monthly withdrawal transactions from the annuity are not getting matched to the Reminder transactions in the Annuity register. That would create two withdrawal transactions in the Annuity account register when there really was only one. This is not an uncommon occurrence when it comes to investment accounts, especially if the Reminder transaction has a split category with one being for the gross distribution amount and the other being for an income tax deduction.

actuary314

volvogirl response

Thanks. My answers:

I'm reluctant to provide a screenshot because of confidentiality. However, I'm happy to give filtered answers for each non-blank field.

Transaction #1 (correct amount)

date: 9/11/24

payee: company x

memo: annuity

category: [Bob's Checking Acct]

decrease: $350.17

amount: -$350.17

balance: prior month balance less $350.17

Transaction #2 (extraneous - I delete it each month)

Identical to Transaction #1 except the $350.17 is $466.89.

actuary314

Boatmaniac response

I do have an income reminder with a split transaction set up. However, the gross distribution for quite a while = the net distribution because the income tax has been $0. Also, the transaction I need to delete, $466.89, exceeds the gross distribution, $350.17. But if this is the problem, how do I fix it?

Boatnmaniac

https://community.quicken.com/discussion/comment/20452936#Comment_20452936

First, I am curious about who the company is that is downloading Annuity transactions into Quicken. My understanding is that Quicken does not support Annuity accounts so we need to do a workaround with them by setting them up as manual offline tax deferred accounts (such as an IRA). Most of the companies that I am aware of that download Annuity data are not actually downloading from an Annuity account. Instead, they download data from a linked cash account. So, I would really like to understand who this company is and what data they are actually downloading into Quicken so I can learn more about it.

On to your issue:

The difference between $466.89 and $350.17 is $116.72 which is 25% of the $466.89 figure. That suspiciously appears to be a withholding tax bracket (from pre-2018). Could it be that they are still withholding fed tax from the distributions so there are two different transactions getting downloaded….one for the amount matching what is being downloaded into your checking account (the Net amount) and another for the pre-tax amount (the Gross amount)?

I think the first thing I would do is to confirm what it is that the Annuity is actually distributing….a single $350.17 gross distribution or $466.89 gross distribution before $116.72 in tax is withheld? Since you get only annual statements it means you will probably need to contact either the Investment company or the Insurance company you purchased your Annuity from. Simply relying on what is downloaded into Quicken most likely will not be enough to clearly understand the transactions that are at play here.

Generally, when an investment company downloads distribution transactions into Quicken, there will be 2 or 3 different investment transactions involved:

The asset liquidation transaction: For tax deferred accounts, this would be the Gross distribution (before any tax is withheld).
The actual distribution transaction: This can be the same amount as the Gross distribution (if there is no tax withholding) or it can be the amount of the Net distribution (if tax is withheld).
The tax withholding transaction (if any).

After you are able to confirm these details with the investment/annuity company, post them back here and we should then be in a better position to be able to assist you on this matter. And it will help in understanding and addressing what other issues this might be causing for you in your tax reports, Tax Planner and perhaps with your Annuity account balance.

actuary314

Thank you for your extensive work on this. It is greatly appreciated.

I should have been more precise on the cash flow. You are correct that the $350.17 monthly distribution is not directly downloaded from the annuity company. I've set up a monthly direct deposit from the annuity company to my checking account, and that is what is being downloaded. As you may have guessed, I'm a retired actuary, so please trust me when I say that the $350.17 is the contractual gross amount (before FIT) of the distribution. The significance of the 25% is that I requested a 25% withhold for FIT. So, I originally set up a 75%/25% split of the $350.17 in the checking account. $262.63 was the deposit amount in the checking account, and $87.54 went into the FIT account. The full -$350.17 got recorded in the annuity account. This is a nonqualified annuity, so interest is distributed first, and is fully taxed. But when interest payments are exhausted, principal payments are not taxed. That is why the current split for well over 3 months is $350.17/$0. This was working fine for years. Then, beginning 3 months ago, an additional transaction for -$466.89 (= $350.17/75%) began appearing in the annuity account, in addition to the -$350.17 transaction.

I'm due to get another annual statement in about a month, but I'm pretty sure that the $466.89 will not appear on it. If there is anything I should be doing in the meantime, it would be wonderful if you could let me know. Thanks so much for your help.

actuary314

I recently received my annual statement. As I expected, the gross annual withdrawal (before the 25% FIT withhold) was $4,202.04, which amounts to the $350.17 gross monthly withdrawal. Since I earned interest during the contract year in excess of the 25% FIT rate, the full 25% of the $350.17 was withheld, this month, and my net deposit to my checking account was $262.63. There was a corresponding $350.17 withdrawal from the annuity account. HOWEVER, unlike the past 3 months, there was NOT an additional $466.89 withdrawal from the annuity account. I.e., unlike the past three months, the Quicken calculation was performed correctly this month. I suspect that this was because of the additional amount withheld for FIT. It remains to be seen whether the calculation continues to be correct once there is no additional amount withheld for FIT. However, even if the calculation is correct prospectively, it doesn't explain why it was incorrect for each of the preceding 3 months.

actuary314

I think I've deduced why the Quicken calculation was correct this month. As stated previously, I've set up an income reminder for the deposit to my checking account and withdrawal from the annuity account. But I've also been receiving downloads for these transactions from my bank. In the past, I entered the income reminder from Quicken and deleted the bank's download. This month, since there was an FIT withhold, I entered the download and deleted the income reminder. The problem is obviously with the income reminder, although there was no issue with it prior to the preceding 3 months. So, the workaround is simply to delete the income reminder and to use just the download prospectively. That said, I'd love to know why there was a problem with the income reminder. I suspect that Quicken is improperly handling nonqualified annuity distributions.

Boatnmaniac

…unlike the past three months, the Quicken calculation was performed correctly this month. I suspect that this was because of the additional amount withheld for FIT. It remains to be seen whether the calculation continues to be correct once there is no additional amount withheld for FIT. However, even if the calculation is correct prospectively, it doesn't explain why it was incorrect for each of the preceding 3 months.

Quicken does not calculate anything regarding specific transactions that are downloaded. My suspicion is that the issue of the last 3 months was that you either did not update the deposit Reminder with the change to the FIT withholding instructions you gave to the annuity company or the Reminder change(s) you made to the Reminder were not entered/completed correctly or for some reason the Paycheck Reminder simply did not correctly accept the short-term FIT witholding change.

Any of these things could have resulted in a duplication of distribution transactions from your annuity account in Quicken (not in your real annuity account). Of course, I can't be sure about this without actually being able to view the transactions in both the checking and annuity accounts and seeing how you entered the FIT withholding change into the Reminder.

Since the latest distribution information appears to have been entered into Quicken correctly and you have deleted the previous erroneous distribution transactions in the annuity account, I do not think there is anything more to be done about those particular months.

BTW, you mentioned that you use a Paycheck Reminder for your annuity distributions. One of the things about Paycheck Reminders is they don't always manage short-term Reminder changes very well. What you might want to consider doing is to delete that Paycheck Reminder and then set up a new Income Reminder for your checking account, instead, as follows:

THE PAYEE: The Annuity.
THE TRANSACTION DEPOSIT AMOUNT: The net deposit after taxes….a positive number.
SPLIT CATEGORY: Line 1 = the Gross (before withholding) distribution amount….a transfer from your Annuity account….a positive number.
SPLIT CATEGORY: Line 2 = the FIT that is withheld…the appropriate FIT withholding category….a negative amount.
THE TOTAL OF THE SPLIT CATEGORIES: Must equal the Transaction Deposit Amount.

IMO, Income Reminders are more user friendly and dependable when making changes to them than are Paycheck Reminders. Many people who have variable job incomes use Income Reminders instead of Paycheck Reminders for this reason.

actuary314