How to record an RMD with withholding into a brokerage account

Mike Krausnick

I'm doing a one-time RMD to cover all my IRAs into my Schwab-1 brokerage account. I read the cheat sheet post from Jim Harmon, but it looks like that won't work with a brokerage account, as "Deposit" is not a transaction type. The corresponding type is xIn and splits don't exist.

How do I accomplish getting an RMD into the brokerage account while accounting for withholding?

Jim_Harman

To enter a Deposit in a brokerage account, click on Enter Transactions and scroll all the way down to the Cash transactions section of the list of transaction types. You should find Deposit there.

Note that if you have set the account as a Single Mutual Fund account, you can't make a deposit because those accounts cannot hold cash.

Or if the investing account has a linked checking account, which will appear in the list of banking accounts as <account name>-Cash, you would record the deposit there.

NotACPA

Since you're going from one investment acct to another, you'll probably need to create 2 transactions.

The 1st moves the actual cash that ends up in the brokerage acct and the 2nd would be a "Miscellaneous Expense" for the taxes withheld. I'd use MiscExp, rather than a withdraw, because with MiscExp you can assign a category … I E your appropriate tax category.

If it won't let you assign that tax category (which is possible, because retirement accts can't have tax txn), you'll need to WithDraw the tax amount to a banking account and Expense it from there. Just one of the quirks of Q.

volvogirl

To record the RMD, after you do the sell and create cash in the stock account you need to enter the actual deposit starting from your bank account for it to show up right for taxes. You enter the deposit and split it, Gross as a transfer to the Stock account and split lines for the federal and state withholding.

Mike Krausnick

Thank you all for the prompt responses. I tried following Jim's instructions first, and I was able to enter the transaction with withholding. Quicken changed the transaction type to MiscInc and the amount showed up as negative in the split window in the brokerage account, but the balances in both accounts were correct afterwards.

Jim_Harman

I am surprised the Deposit transaction was changed to a MiscInc, but it should have the same results. In response to peoples' questions, I have updated the description of the procedure I use. Here is the latest version:

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It is a bit tricky to record IRA distributions in Quicken so that the tax implications are captured correctly. The gross distribution and any tax withholding must be recorded in the receiving account, not the IRA. It can be a banking or an investing account, but it must be a taxable account, not another IRA for example. If there is already an Xout transaction in the IRA account that transfers money to the taxable account, note the amount and delete it before entering the Deposit. Do not try to edit the receiving end of the transfer. Here is a "cheat sheet":

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."

In the taxable receiving account:

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

2)  Split the category:

• Line 1 of the split:  Category = the IRA account name in [square brackets] for the gross amount as a positive number. This will create a transfer from the IRA.
• Line 2 of the split:  Category = the Fed tax withholding category that you use, as a negative number.
• Line 3 of the split:  Category = the State tax withholding category that you use, as a negative number.
• Total of the split:  Must equal the net amount of the deposit.

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

Delete or do not accept any downloaded brokerage transactions for

• The net distribution
• The Fed taxes withheld
• The State taxes withheld