How do you set up an annuity in Quicken?

JimDB

I have a single premium deferred annuity that I would like to set up in Quicken. Should that be set up as a banking account or an investment account?

Quicken Jasmine

Hello @JimDB,

I have found a support article that discusses how to set up Annuities within Quicken. You can follow this link to access that FAQ.

I hope this helps!

Quicken Jasmine

Hello @JimDB,

I have found a support article that discusses how to set up Annuities within Quicken. You can follow this link to access that FAQ.

I hope this helps!

JimDB

I read the article, and I think it would make the most sense to set up an asset account similar to a bank account. The value of the annuity is not based on any security, just on the growth from interest, which I can enter manually. Thank you.

Boatnmaniac

@JimDB - Is your annuity an IRA? If so, then you might want to reconsider and set it up as an IRA investment account so Quicken properly captures and tracks the growth as tax deferred and it also captures the distributions as 1099-R income in the tax reports and Tax Planner.

What I did was to set up a manual security which I named USAA Annuity. Then I did a Buy transaction: X-number of shares of USAA Annuity @ $1.00 per share….the total quantity equaling the purchase cost of the annuity.

About once a month I update the value of the annuity by doing a ReinvDiv transaction. For instance, if the value increased by $100 the ReinvDiv transaction was for 100 shares at $1.00 per share.

When I've taken a distribution I did a Sell transaction for X-number of shares @ $1.00 per share.

So, basically, it is set up and managed much like a Money Market Fund where the cost is always $1.00 per share.

This has worked really well for me since my annuity is a tax deferred IRA.

JimDB

No, the annuity is not an IRA. It has a guaranty of 5% interest for 5 years, with withdrawal charges of 7% that decreases to 0% after 5 years. So, I don't plan to make an withdrawals until at least after the 5 years. Until then, all that I will be dong is record interest payments. Would an investment account still be the best way to add this to Quicken?

NotACPA

@JimDB

"Would an investment account still be the best way to add this to Quicken? "

NO, I'd still set it up as a banking type account. As you've described the account, it's not going to hold any actual "investments" (i.e., securities), just the annuity itself.

Boatnmaniac

https://community.quicken.com/discussion/comment/20459003#Comment_20459003

In that case I think it's a personal choice matter.

I would probably still set it up as a taxable investment account using a manual security for it because annuities generally are marketed and sold as low risk investments. And most financial planners/advisors also view annuities as a type of investment that can be used to balance out risk in a portfolio. As such, I want to include them in my investments portfolio and in investments performance reports and graphs, just like I want to include and track other fixed interest investments, such as brokered CDs, Bonds and some Treasuries. (Bank CDs are different and should be tracked in a Savings account.)

Setting up and managing it in a manual investment account takes a little more effort than to set it up and manage it in a checking or savings account but it's not a lot more effort.

So, you just do what you think will meet your needs/wants better.

skeleton567

JimDB, this may not be the best solution but I have used it for years. I have a life insurance annuity that I have recorded for decades. I use two Q accounts, one an asset account and the second an investment account. The Asset account simply contains the 'opening balance' of $100k and nothing else. The Investment account contains the stock holdings in the annuity in which I can record the share values, investment transactions and maintain the investment value there. Back in 1995 I took the cash values of four Life Insurance policies and put them the annuity. The growth on the securities held there have paid the premiums since, so no ongoing cost to me for the $100k insurance. When I get the annual statement, I use shares removed transactions to account for the money withdrawn for the premium.

Maybe an even simpler way would be to create a 'security' for the face value of the life insurance, 100k shares at @$1.00 and put this in the investment account. The first way allows you to easily include or exclude the insurance value from your net worth report by account inclusion or exclusion. The second way allows you to do this by excluding the specific 'security'.