Better Support Needed for Roth IRA Conversions in Tax Planner

Tommy

Hi Quicken team and community,

I've been trying to correctly reflect a Roth IRA conversion in both the Tax Schedule and Tax Planner reports in Quicken for Windows, but the current workarounds feel overly complex for such a common, IRS-reportable event.

While I’ve managed to get the taxable income to appear in the Tax Schedule report by routing the conversion through a taxable staging account and assigning the correct tax line (1099-R:Total IRA taxable distrib), the Tax Planner still fails to recognize the income—even when all tax line assignments are correct.

The only workaround that has any effect in the Tax Planner is to create a zero-sum phantom transaction in a taxable account, which is far from intuitive and introduces unnecessary risk and confusion.

Roth conversions are standard financial events, especially for retirement planning, and they need to be directly and reliably supported in the Tax Planner without these convoluted steps. Please consider adding:

• A built-in transaction type or category specifically for Roth conversions.
• Improved Tax Planner logic to recognize taxable distributions from retirement accounts when used for conversions.
• Clear documentation or in-product guidance for users handling these scenarios.

Appreciate everyone’s input—and really hoping Quicken can simplify this in future releases.

Thanks, Tommy

Jim_Harman

Please review and comment on the longstanding Idea post below. It has been marked as Planned for almost two years; hopefully we will see an implementation soon.

In the meantime, 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 them as negative amounts. If the deposit is made to a banking account between Jan. 1 and April 15, you will see a dialog titled “Confirm Your Contribution Tax Year”, even though this is a distribution and not a contribution. Select the current year, not the default of the previous year, and click on OK. This seems to be a bug.
4. In the same taxable account on the same day, separately record a transfer of the net amount to the Roth account. I record these as two transactions because Quicken sometimes gets confused with zero-amount transactions.
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.

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

Tommy

Thanks Jim_Harman. Yes this workaround method does work. In fact, it works so well that Microsoft Copilot uses it as the DeFacto method to resolve this Quicken shortfall. Your workaround is famous!

I am hoping that Quicken programmers will take another look at this as there are thousands of users (especially those of us that have been using Quicken for over 30 years) that really have a need for them to fix this obvious problem with one simple entry. It shouldn't be this difficult to record a simple Roth conversion taxable event.

NotACPA

I have to disagree with @Jim_Harman on one minor point.

In a Tax-deferred account, Cost Basis is still important for investment performance calculations … although not for tax calculations.

I manage the investments in my IRA accounts as closely as I do in the taxable accounts.