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Moving shares between accounts shows an incorrect transfer value (Roth Conversion)

PetrS

When transferring shares between accounts, Quicken reports the value of the transfer as the cost basis of the shares transferred. This is completely wrong! The value of the transfer should be based on the closing price of the shares on the transfer day. This may not seem like a big deal until one starts doing Roth in-kind conversions. The IRS does not care how much I paid for the shares when I bought them, they care about their value at the time of the conversion.

Quicken people, can you please fix this?

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Jim_Harman

This is a conversion between a Traditional IRA and a Roth, right?

How did you record the transfer in Quicken?

What report is incorrect?

A Shares transferred between accounts preserves the cost basis for transfers between taxable accounts, but does not track the tax implications correctly for Roth conversions. There are ways to enter a Roth conversion in Quicken so that the tax implications are recorded correctly.

q_lurker

Depending on where you are looking, you might see the Remove/Add effects reported different ways. When I have done a Roth conversion, I have Sold in the IRA, WithdrawX cash to the Roth, and Bought in the Roth.

The same applies when some users think they are getting an ‘in-kind’ transfer from an IRA to an investment account. They are not.

PetrS

@Jim_Harman, I used the "Shares transferred between accounts". The value of the transaction in the register is incorrect (it does not affect the balances but still). And when I look at transfers between accounts, it shows as a transfer valued at the cost basis rather than a transfer valued at the actual value at the time of transfer. That is the issued I am trying to get fixed.

@q_lurker, Fidelity allows in-kind transfers from traditional to Roth, no sales are involved. However, in order to get my reporting right, I had to add a fake sale and a fake buy transactions in Quicken which messed up the date bought and the cost basis (which I am OK with since it's an IRA). I just wish Quicken reported the value of the transfer as of the transfer day, not as of the bought day.

Jim_Harman

You might want to review and comment on this Idea post, which was first requested over 5 years ago and has been "Planned" since 2023.

https://community.quicken.com/discussion/7864626/improve-handling-of-ira-distributions-including-qcds-and-roth-conversions

PetrS

https://community.quicken.com/discussion/comment/20471544#Comment_20471544

That's a huge topic and looks like a huge amount of work too. My request is much, much simpler. But agree that getting all the things requested in that post right would probably take care of my issue too :-)

q_lurker

Perhaps you should look at an Investment Performance report following the use of Shares Transferred. You should find in that report the values are based on closing prices.

PetrS

https://community.quicken.com/discussion/comment/20471548#Comment_20471548

Nice. Thank you. So, it seems that Quicken has the correct transfer value available. All they need to do is expose it as an investment transaction, so that I can add all the in-kind transfers and cash transfers together and know exactly how much Roth conversions I've done. Or, can you think of a workaround where I could modify the Investment Performance report to only see the cash + in-kind transfers (and not the beginning and end market values)?

Jim_Harman

When tracking Roth conversions, I have focused on getting the Tax reports and Tax Planner correct. My conversions have all involved moving cash, but if the shares were moved in kind, I think you might as well record it as a Sold in the IRA and Bought on the same day for the same price in the Roth account. This resets the cost basis, but cost basis is not important in a tax deferred account.

When measuring performance of a period that includes the transfer with the Investment Performance Report or the Avg. Annual Return (%) columns in the Portfolio views, you should include both accounts.

To have the tax implications of a Roth conversion recorded correctly in Quicken, you must record it as moving through a taxable account. What I do is:

In the Account Details for the IRA, make sure the Tax Schedule for Transfers Out is set to 1099-R:Total IRA Taxable Distrib. In the Roth account, make sure the Tax Schedule for Transfers In is blank.
Sell the shares for the conversion in the IRA
In a taxable account, record a transfer from the IRA of the amount of the conversion
In the same account on the same day, record a transfer of the conversion amount to the Roth account.
Also on the same day, buy the converted shares in the Roth account
Delete or do not accept any downloaded transactions associated with the conversion.

I edited the title of this discussion to clarify the issue.

q_lurker

@Jim_Harman I have successfully recorded transfers direct from a traditional IRA to a Roth IRA without use of the intermediary taxable account. That was without having taxes withheld. Transactions showed up in Tax Planner and in Tax Schedule report. Tax Schedule assignments for the accounts as you indicated in your point #1.

@PetrS "So, it seems that Quicken has the correct transfer value available." My understanding would be that the have the data available (shares and closing price) to compute the closing value (fair market value?) on that date. The value shown in the report is not a value stored as part of the transaction. If you would happen to change the closing value for that security on that date, the value in the Investment Performance Report would change accordingly.

so that I can add all the in-kind transfers and cash transfers together and know exactly how much Roth conversions I've done.

Ahhh. So that is your need. That also suggests the conversion(s) might have occurred over a period time and involved multiple securities. So my answer becomes I don't see a direct way to customize that report to limit it to the Roth conversion. If you could cut it to one day and a few securities you might get close, but the Beginning and Ending Market Values would still be there. A step you might be able to do is export a more comprehensive report to Excel and there sort and total based on Action - the Added transactions.

Jim_Harman

@q_lurker what transaction(s) did you enter to make the Roth conversion show up in the Tax reports?

In R60.20 I just tried an XOut from the IRA to the Roth and it does not appear in the Tax Schedule report. It also does not work if I enter a Deposit in the Roth account as a transfer from the IRA.

I think the transactions do not appear because neither account is included by default in the Tax reports. If I include the Roth account in the Tax Schedule report, the Deposit is included but not the XOut. But then dividends and other income in the Roth account are included in the report, which we do not want.

q_lurker

@Jim_Harman I was using Sold in the IRA / WithdrawX to the Roth / Buy in the IRA. R60.20 though I think I was getting the same back in R56.xx. For my quick check this morning I did not do any customization of the report. I’ll check further when I get back to my PC.

q_lurker

@Jim_Harman Follow-up - I am seeing the conversion reported in both Tax Schedule and Tax Summary reports. Again, the action shows as a WithdrawX in the sending IRA account and a ContribX in the receiving Roth IRA account. For reasons I don't recall, the sending IRA account is typed as a SIMPLE IRA. I am not sure if that is directly relevant, but then the associated tax line assignments for the account are:

Both reports cite the sending SIMPLE IRA account as the source (Category) of the value listed, even though that account is not identified as included in the report. As previously indicated, I did not customize the reports to include either the SIMPLE IRA or the Roth IRA. They are unchecked in the Accounts customization selection.

A quick check changing the Transfer Out selection from SIMPLE total taxable distrib. to commonly cited Total IRA taxable distrib. did not change the behavior; choosing Transfer Out as 1099-R:Total IRA taxable distrib. for the sending account also shows on the two reports.

@PetrS Do note that by using the Sold / WithdrawX / Buy approach, all the conversions through the year get summarized and reported in the two reports Jim and I are referencing. That is not the case, as far as I know, if the more direct Remove / Add transfer of shares is used. Just sayin'.