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How to manage and track annuities in Quicken?

alexd

I am trying to ask boatnmaniac a question but I am not sure how to contact. I wrote on his page but not sure that worked.

Any advice?

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Quicken Anja

Hello @alexd,

Just responding to your post so I can tag @Boatnmaniac for you.

Hope this helps get you in touch with him!

Boatnmaniac

Hi, @alexd. I saw the post you made to my Wall. For future reference, when you want to ask me or any specific Community member a question about something that was posted, perhaps the best way is to enter the question in the Leave a Comment field of the original post and make sure I or the other member's profile name is preceded by the @ symbol, like how @Quicken Anja and I have done in this thread. Doing this will send a notification to that person that someone has asked that person a question or replied to that person.

If the original thread is closed you can start a new discussion thread about it, copy/paste the original thread URL in the message and make sure to enter the member's profile name preceded by the @ symbol.

Another way to contact a Community member is to send that person a private message via the envelope icon at the top right of the webpage right next to the bell icon. This allows members to hold a private 2-way communications. This can be very helpful sometimes. However, if the question or issue is something that other Community members might benefit from it would probably be best to keep it in the open forum rather than in a private message.

Specific to your question: I have a personal matter to take care of right now. I will reply to you here in this thread a little later today.

Boatnmaniac

@alexd - Sorry about getting back to you so late. That personal matter yesterday took much longer to take care of than I'd anticipated and today I needed to get my wife in to a couple of medical appointments. My life was supposed to become simpler once I retired. How did I that so wrong? 🤔

To make it easier to hold this discussion, I've copied & pasted the message you posted to my Wall:

Annuities cannot be downloaded into Quicken. So, I set up an offline IRA Account for mine (and another file for my brother's).

Annuity distributions are usually treated by the IRS as deferred income, much like Pension and IRA distributions. An IRA account works really well regarding this.
Make sure the Tax Schedule for this account is set to 1099-R:Total IRA taxable distribution or 1099-R:Total pension taxable distribution. There is no Tax Schedule for annuity distributions in Quicken so these are the closest to it. This will ensure distributions get captured in the Tax Reports and Tax Planner.
I set up a custom security for the Annuity. (Mine is a USAA annuity so I named it "USAA Deferred Annuity".)
Then I funded the account by entering a buy transaction for this annuity security with a share price of $1.00 (just like with money market funds). For example: If the annuity is a $50,000 annuity, enter a buy of 50,000 shares at $1.00 ea.
Once a month I update the shares balance with a Reinvest - Income Reinvested transaction. For example, if the value of my annuity increased by $200 I would report that in the transaction as 200 shares reinvested @ $1.00 each. (I use dividend reinvestment but you could use interest reinvestment if you wish.)
When I take a distribution I treat it like I would any distribution from an IRA account: First, enter a Sell transaction for the pre-tax amount of the distribution with the proceeds deposited to the IRA account. Then, enter a deposit transaction to the deposit account with a split category. In the 1st line of the split, enter a transfer from the annuity for the full pre-tax distribution dollar amount as a positive number. In the 2nd line of the split (if appropriate) for Fed tax withheld as a negative number. If needed for state and local withheld tax, add additional negative dollar amount line items. The total of all the splits needs to equal the net deposit to the deposit account.

This has worked really well for me. Hopefully you find it will work well for you, too.

Hi,

I read this comment and it is very helpful. I see how you increase the value when it goes up, but how to you decrease it? I have been using IntInc when on the rise, and MiscExp when losing. Not working out good because MiscExp is for the Account, not the Security.

Any advice?

**********************************************************************************************************************************************************

What kind of annuity do you have? The annuity that I have is a Deferred Fixed Annuity with a fixed guaranteed interest rate so my Annuity does not decrease in value except for when a distribution is taken from it. The process you referenced above really is intended for use with Fixed Annuities and assigning a $1/share fixed cost to the Annuity works really well with this kind of Annuity.

But there are also Variable Annuities where the value can go up or down. These Variable Annuities typically are comprised of several different securities (usually private mutual funds, bond funds, money market funds and/or ETFs) so this $1/share process does not work well with them.

I am assuming that you have a Variable Annuity so the following applies to that. If you have some other type of annuity let me know what it is.

Years ago my mother had a Variable Annuity which I managed as follows:

Set up an offline IRA investment account which I named Thrivent Variable Annuity IRA.
From the online Thrivent account I identified each of the securities that were included in that Variable Annuity, along with the number of held shares, the current cost/share as well as the extended value of those shares. (You could also get this information from a statement obtained from the brokerage that sold you the annuity or the insurance company that issued the annuity.)
Set up manual offline securities in Quicken for each of those securities in the Variable Annuity.
Edit each security to assign each of them a Type and an Asset Class. (This step is not necessary but if you are tracking your investments allocations it will allow you to include the annuity in the portfolio allocations analysis.)
If you transferred cash to the annuity from another account, enter that transfer transaction. Or simply enter a Deposit transaction. Then enter Buy transactions for each of the held shares and the market price for each of the securities.
Alternately, you can skip the cash transfer or deposit transactions and instead enter Add Shares transactions for each of the securities you created.
About once a month I would manually enter the current market price which I would get from the online Thrivent account. (You can vary the frequency of this based upon your personal desires and needs. For me, I found that doing this more than about 1X per month was a bit too much.)
During these monthly market price updates, I would also enter any shares quantity changes via Buy, ReinvDiv or Sell transactions that might be applicable due to distributions made and/or dividends that were reinvested by the insurance company.

Does this make sense to you? Any questions? Or, if you do not have a Variable Annuity let me know which of the many kinds of annuities you have and we can take a stab at setting up a process for managing that.

(BTW, I changed the title of this thread to more accurately reflect what this discussion is about. If you would like the title to be worded differently, let me know and it will be changed to reflect that.)

alexd

No problem with the delay, life is always throwing us curveballs!

To get back to the previous question I had about sending a private message. When I click on the envelope icon, all I have is an “Inbox”, there is no way for me to send a message.

My question concerns my Variable Annuity (and I do have Fixed Annuities too) and I do understand your steps for setting up this type, by entering individual securities. (Very good explanation.)

But this annuity is a little different. It uses 2 indexes, over 2 different time periods, with 2 different participation rates. (I will upload a snapshot). It seems complicated, but I have a spreadsheet and after I plug in the current index value in each row, I get a total monthly value. No problem here.

When I started the Variable Annuity investment account I did create a security called “Agility”. This is the only security in it because of the convoluted way to come up with the value. I started out with X number of shares at $1 per share.

So when the value goes up, I use IntInc to reflect the increase. But when it goes down, I am uncertain of how to best enter this. One way is to start changing the $1 per share value for either up or down and stop using IntInc. What do you think?

I hope I have explained it well enough.

Annuity Quicken.pdf

Boatnmaniac

This annuity is different from the ones I am familiar with (there are many, many different kinds of annuities). What I don't understand is the "Participation Rate" and how does that or can that correlate to a cost/per share?

My suggested solutions for fixed annuities depends on being able to identify the quantity of shares held and the cost per share for each security in the annuity. So far I'm drawing a blank on this one. If I can come up with an idea I'll be sure to pipe in here.

Otherwise, hopefully someone else familiar with this kind of annuity will have a suggestion.

alexd

Let's say for the sake of argument and simplicity, I consider this just one "security". Make believe it is not an annuity.

I know the value of this "security" each month. Which method do you feel best represents this scenario?

Changing the "$ per share to equal" the current value, or just "adding/subtracting income" to the security to equal the current value? I am not sure which method is best for "down the road". Your thoughts are appreciated.

If you think either method works just as well, I'll flip a coin I guess. LOL

Thank you.