ROTH Conversio

markisgold

I’m asking how to record a ROTH conversion in Quicken Classic Premier Windows 62.16.

I tried searching for an answer but only found transfers of specific stocks. I transferred a $ amount from a simple IRA account to a ROTH IRA account.

I tried doing a simple Withdrawx with the cash transfer to the ROTH account but then it didn’t show up in tax reports.

Thanks for any help,

Mark

CaliQkn

@markisgold I simply created a "Roth Conversion" category and attached the tax line item - Form 1099-R: Total IRA taxable distribution

Keep in mind that the transaction will never show on tax reports because the IRAs are usually excluded from tax reporting. In order to get the transactions for Roth Conversion to show, you would need to somehow run them through a taxable account. I never bothered with this and just ran a tax report for all accounts, for only transactions with a tax line item.

Jim_Harman

Quicken says they are working on an improved way of entering Roth conversions and other distributions from tax deferred accounts, but until this is available, here is the method I have used to enter Roth conversions.

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:

1. 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.
2. Sell the shares for the conversion in the IRA
3. In a taxable account, record a Deposit with the Category set to the IRA account name in [square brackets] of the full amount of the conversion. If taxes were withheld, split the transaction and record the withholding(s) as negative amounts.
4. In the same account on the same day, record a transfer of the net amount to the Roth account.
5. Also on the same day, Buy the converted shares in the Roth account
6. Delete or do not accept any downloaded transactions associated with the conversion.

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.

CaliQkn

@Jim_Harman I was never successful in getting the IRA distributions to show up in tax reports if I used your method in step #1. That is why I created a category. What am I missing?

Jim_Harman

It works for me if the intermediate account is taxable and included in the tax report and the IRA and Roth account Tax Line Items are set correctly.

Also you must follow the directions above exactly. It may have been fixed recently, but historically the transfer from the IRA to the taxable account must be entered as a Deposit with the IRA in [square brackets] as the Category, not as an XOut from the IRA.

CaliQkn

@Jim_Harman ok thanks, I haven't tried it in a while, so maybe it should work now.