When taking RMDs, why does Quicken thinks it's a contribution?

Mike Curran · February 25

Hello - There's probably a simple answer and it's something I need to do diffently, but when I enter a sale of an IRA security (btw, it's for an RMD) and have it transferred (direct deposited) into my checking, Quicken tells me I've made an IRA contribution and asks me if it's for this year or last. How can a sale be considered a contribution???

Thanks for any help with this. - Mike

Boatnmaniac · February 25

I just set up a new IRA account in a test file. I added a deposit transaction into a checking account with the category being a pull transfer from the IRA account. Here is the "contribution" popup I got.:

But I did find out that I only get this popup when the transaction entered into the checking account has a split category (one for the total taxable distribution amount and one for Fed tax withheld). If it's just a single transfer category I did not get this popup. I also did not get this popup when I entered a transaction into the IRA account as a single category transfer to checking.

Boatnmaniac · February 26

Some additional testing information and observations this morning:

I edited the date of one of the single-category transfer transactions that I'd entered into the checking account last night. Last night when I entered that transaction I did not get the popup. But when I edited the date and saved it I then got that popup.

This morning I entered a Cash Transferred out of Account transaction into the IRA which shows in the register as WithdrwX, as I'd expected it to. I did not get the Contribution popup but it did default to a 2025 "contribution" in the transaction in the IRA register.

The transactions where I did not get the popup do not show which year they were applied to in the IRA register (with the exception of the Cash Transferred out of Account). However, they did default to 2025 because they all show up in the Tax Reports and Tax Planner for 2025.

So, yeah, there is some inconsistency with this popup occurring depending on the type of transaction, where the transaction is entered and whether or not there is a split category. Looks like there might need to be some programming changes made to bring some consistency to this popup.

Quicken Jasmine · February 25

Hello @Mike Curran,

Thanks for reaching out! It sounds like Quicken may be misinterpreting your transaction as a contribution due to how it’s being categorized. When recording an RMD, here are a few steps to ensure it’s properly recognized as a withdrawal:

Check the Category – Make sure the transaction is categorized as a "Withdrawal" or "IRA Distribution" rather than a "Contribution."
Verify the Transfer Type – Ensure that the transfer from your IRA to your checking account is correctly set up as a withdrawal and not mistakenly classified as an IRA deposit.
Manually Adjust the Transaction – If prompted about a contribution, edit the transaction details and select the appropriate tax classification, such as “IRA Distribution.”

If the issue persists, you may want to check your account settings or provide additional details about how the transaction is being entered.

I hope this helps!

NotACPA · February 25

Do TOOLS, Account List and click EDIT adjacent to your IRA account. Click Tax Schedule at the bottom of that dialog. What shows on the "Transfers out" line?

I'm thinking that it's the transfer, not the sale, that's triggering what you're seeing.

Mike Curran · February 25

@NotACPA: Transfers from this account: "1099-R:Total IRA taxable distrib."

Sounds right to me.

@Jasmine: Transaction in IRA account is categorized as "Sell - Shares Sold". My Q version (Win 10) has no "IRA distribution" transaction type. In the "Record proceeds?" box for the sale transaction, there are 2 options: To this accounts cash balance (did not use this one), and To ________ where I entered the checking account.

For now I'm just telling Q that it's a contribution for last year. I don't use Q for IRA contribution stuff so it's just a puzzling annoyance, but I get it every time I record an RMD transaction.

NotACPA · February 25

OK, something screwy is happening. I just now did 2 straight cash transfers from an IRA to a checking acct, and a SOLDX from an IRA to a checking acct … and on not one of those did I get the "what year" prompt.

What BUILD of Q, and which product, are you running? Do HELP, About Quicken for this info. I think I already know the answer to this, but just in case, what date are you using for the transaction? I used today's date in my tests.

And, your tax line is the same as mine.

Boatnmaniac · February 25

I have gotten this prompt for some IRA distributions that occur from 1/1 - 4/1 for many years..

I've always viewed it as being more of a nuisance than a bug. I think this is because 4/1 is the last date to make prior year IRA contributions and the last date to take an RMD distribution when the prior year is the first year of required RMDs. And since Quicken cannot know what the user's intent is for transfers into and out of an IRA it must ask the question in order to properly account for it in the Tax Reports and Tax Planner. After 4/1 it is no longer a question of taxable intent so the prompt stops coming up.

I also agree with @NotACPA that this is likely caused when using a transfer category, not a non-transfer category, because of the tax line item that is used.

I generally set up Income Reminders for my IRA distributions (I'm not yet of the age where I'm required to take RMDs). Generally, I have 1 recurring deposit Income Reminder for my IRA distributions on the same day of each month. This Income Reminder is set up as a deposit to checking with the category being a pull transfer from the IRA since this type of transaction is needed in order for Quicken to properly capture it in the Tax Reports and Tax Planner, especially when income tax is withheld by the brokerage. For these recurring reminders I do not get these popups. But if I enter an ad hoc transfer transaction for an additional IRA distribution inside the 1/1 - 4/1 window I do get this popup.

Mike Curran · February 25

@NotACPA Quicken Classic Deluxe, Build 27.1.61.20. Date used is for actual sale date, 2/18/25.

@Boatnmaniac I have not noticed if this stops appearing after 4/1. If I remember I will notice it 😁

Thanks to both of you and to Jasmine. I'm not sure it's worth pursuing, but it just seems dumb that Q would think a sale from an IRA constitutes a contribution, and that hoop-jumping is necessary to avoid this mischaracterization. My 2 cents' worth.

NotACPA · February 25

This still mystifies me. A) because I'm not getting that message, and B) because it ISN"T a contribution … I agree with Mike there.

Perhaps, could you take a screen shot of the particular transaction, so we can take a look at it and see if anything pops up for us?

You can redact the amount if you wish.

Jim_Harman · February 25

I have also been getting the confusing "What year is this contribution for" prompt for IRA withdrawals taken in January, February, and March. These transactions are entered as split Deposits in a taxable brokerage account, where the split lines are the gross amount of the distribution entered as a Transfer from the IRA and the other lines are the tax withholdings, entered as negative numbers. In the IRA, it shows a a WithdrawX for the gross amount. For many years, this has been the way to get IRA distributions recorded correctly in the Tax reports and Tax Planner.

In the IRA, the Tax Schedule for transfers out is set to 1099: Total IRA Taxable distrib.

If I click on a Jan, Feb, or March WithdrawX transaction to expand it, the selected year shows at the left of the second line of the transaction. This is the same behavior as I get if I make a contribution in one of those months.

This would just be an annoyance, but if for example I select 2024 by mistake for a withdrawal taken in 2025, the withdrawal shows in the 2024 Tax Planner when it should show in 2025. As far as I know there is no way to edit the year; you must delete and re-enter the transaction.

Note that you are allowed to make IRA contributions for the prior year up to April 15, and the first year you are required to take RMDs, you are allowed to avoid a penalty by crediting a withdrawal before April 15 of the following year to the prior year's RMD, but you are still taxed in the year the withdrawal was taken. Perhaps this behavior is a flawed attempt to support this special rule.

Or maybe it is just that the Tax Planner simply does not properly distinguish between deposits and withdrawals.

Update: I just tried this again on my test system for a transfer today and I did not get the prompt, so now I am confused. I am running R61.17 on that system.

Boatnmaniac · February 25

It's calling it a contribution even though that is not common terminology and is awkward and not intuitive. I think simply changing it from "contribution" to "which year does this apply to?" would be easy to make and would eliminate most if not all confusion this might be causing some people.

I don't see this as a bug that requires a programming change. It appears that Quicken handles the transactions correctly provided the user has selected the correct year for the transaction.

EDIT: To clarify, I think perhaps that whoever designed this popup might view IRA transfer transactions as either positive contributions (i.e., actual deposits to the IRA) or as negative contributions (i.e., withdrawals from the IRA). Either that or it was incorrectly called "contributions" and has never been corrected.

Mike Curran · February 25

Okay, so IIUC, Quicken calls any movement in or out of an IRA a "contribution", and asks for clarification if it occurs in the 1/1 → 4/15 time frame. I just need to indicate the correct year the transaction applies to if I'm going to use the features you guys use (I currently don't use Tax Planner or any others like that). Thanks again.

PS I will do a screen shot or two next time I'm in Quicken.

Jim_Harman · February 25

@Mike Curran Please go to Help > About Quicken and let us know what version of Quicken you are running. That might explain why some of us see this issue and some do not.

mshiggins · February 25

Just speculating on what other differences could cause the issue:

When was account created?
Was account originally a tax deferred brokerage account that was converted to an IRA account?
Was account converted from MS Money?
What type of IRA in Quicken - traditional IRA?

NotACPA · February 25

As an FYI, my 2 IRAs were created before hell froze over. My wife's IRA was created in my current Qdata file about 8 years ago, when we got married.

All are "traditional" IRAs or Rollover IRA's, which are the same thing. None were converted, none were imported.

R61.20

q_lurker · February 25

I’m in the @NotACPA camp in that I am not getting that prompt with WithdrawX transactions from any of three different IRA accounts. Two were created in the dark ages - c. early ‘90s (possibly Q-DOS) and likely went through the IRA conversion process. The second was created in 2018 (pre-subscription) and would not have been a conversion.

No MS Money history, all now Traditional IRAs in Quicken.

While I am not getting the year prompt, the withdrawals do appear on the year’s Tax reports, but not in the tax planner.

Boatnmaniac · February 25

@q_lurker - If you are not getting your IRA distributions showing up as Other Income in Tax Planner, check your Tax Schedule setting. One thing I noticed when setting up an IRA account is the Tax Schedule needs to be changed.

This 1st picture shows the default. With this default the Tax Reports will capture the distributions properly but Tax Planner will not.:
This 2nd picture shows the Tax Schedule changes I make. Now the distributions are properly captured in both the Tax Reports and in Tax Planner.:

Boatnmaniac · February 25

I just set up a new IRA account in a test file. I added a deposit transaction into a checking account with the category being a pull transfer from the IRA account. Here is the "contribution" popup I got.:

But I did find out that I only get this popup when the transaction entered into the checking account has a split category (one for the total taxable distribution amount and one for Fed tax withheld). If it's just a single transfer category I did not get this popup. I also did not get this popup when I entered a transaction into the IRA account as a single category transfer to checking.

Boatnmaniac · February 26

Some additional testing information and observations this morning:

I edited the date of one of the single-category transfer transactions that I'd entered into the checking account last night. Last night when I entered that transaction I did not get the popup. But when I edited the date and saved it I then got that popup.

This morning I entered a Cash Transferred out of Account transaction into the IRA which shows in the register as WithdrwX, as I'd expected it to. I did not get the Contribution popup but it did default to a 2025 "contribution" in the transaction in the IRA register.

The transactions where I did not get the popup do not show which year they were applied to in the IRA register (with the exception of the Cash Transferred out of Account). However, they did default to 2025 because they all show up in the Tax Reports and Tax Planner for 2025.

So, yeah, there is some inconsistency with this popup occurring depending on the type of transaction, where the transaction is entered and whether or not there is a split category. Looks like there might need to be some programming changes made to bring some consistency to this popup.

Stephen R · February 26

https://community.quicken.com/discussion/comment/20478456#Comment_20478456

I have a 401K SOLO account, should the Tax Schedule Information dialog box for IN /OUT transfers be linked the same tax form as shown?

Steve

Boatnmaniac · February 26

https://community.quicken.com/discussion/comment/20478502#Comment_20478502

I'm not 100% sure but Quicken does not have Tax Schedules specifically for 401K contributions and distributions. So, I think using the IRA Tax Schedules I suggested above are probably the best options for you to use with your 401K account. The general rules between IRAs and 401Ks are similar…contributions to both are before-tax and distributions from both are 100% taxable. There are specifics (such as contribution limits) that are different between them but that doesn't really come into play when it comes to the Tax Reports and Tax Planner.

So, unless someone else posts something better, yes, I think you should set up the 401K Tax Schedules to be just like for the IRA.

q_lurker · February 26

@Boatnmaniac Thanks for the correction on the gross vs taxable selection. I would have sworn I had that correct some time ago, but it was wrong now.

In my testing for the pop-up, I was also using a single category - the transfer account. Further testing confirms your observation that the pop-up appears for split transactions on the receiving end. It does not seem to matter if the other split line is as an expense or income entry. I had hypothesized to myself that a negative line (like the tax withholding) was somehow being treated as a partial kick-back contribution to the IRA account. Not so.

wiiiindy · February 28

Seems to me this is all a big waste of time without screen shots of exactly what is being entered into Quicken. I don't think Boatnmaniac's pictures are gemaine to Mike Curran's problem but won't know for sure without pictures or more detailed description of how/what he entered.

Boatnmaniac · March 1

https://community.quicken.com/discussion/comment/20478918#Comment_20478918

"…a big waste of time…"….for whom? The OP asked a question about why they were getting the popup (reference one of those pictures I posted that you think are not germaine to their question). That started a discussion about why some were getting this popup while others were not. And that resulted in finding out that how one enters the distribution transaction has a bearing on whether or not the popup will occur. In the end the OP accepted the answer so it would seem to me that this thread is very germaine (pictures and all) and not "a big waste of time" for them.

Rather than criticizing the thread and the posts and pictures in it that everyone else in this thread seems to follow and comprehend, perhaps you might want to post a specific question(s) if you don't understand something in this thread? That would give the rest of us (or others) an opportunity to reply and perhaps answer your question(s).

Jim_Harman · March 1

To be absolutely clear about this issue, here are screenshots that demonstrate one sequence that leads to the confusing dialog. The Tax Schedule for the IRA looks like this:

In a checking account, enter a split deposit dated between 1/1 and 4/14, where the first line of the split is a transfer from the IRA and the second is the taxes withheld, entered as a negative number. Click on OK for the split and the Payment or Deposit confirmation is displayed. Select Deposit and click OK. So far so good.

Note that this method has been recommended for years as the correct way to enter IRA distributions so that they will be captured in the Tax reports and the Tax Planner. If there is some other way we should be entering these transactions, Quicken should document it clearly.

Now click on the green button to enter the transaction and the following is displayed.

This is at best confusing, because we are not making a contribution into the IRA account, it is a distribution from the account. Also the dialog defaults to the prior year. Except for the first year you are required to take a distribution, it must be taken in the current year.

If you accept the default, the taxable income appears in the prior year in the Tax Planner.

Interestingly, if this same split transaction is entered as a Deposit in a taxable brokerage account, the Confirm your Contribution Tax Year message does not appear.

I will file this issue via Report a Problem.

When taking RMDs, why does Quicken thinks it's a contribution?

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