Alight 401Ks and 2026 "catchup" contribution changes

Question

I can't really figure out what to do with this one.

I have a 401K at Alight through my employer. This year, there was a change to force 401K "50+ catch up" contributions to a Roth account instead of traditional 401K.

I've now gotten my first paycheck of the year. The Quicken download automation shows contributions to my traditional 401K, no change. I checked the online account console, expecting that my HR hasn't made the change yet or something, but that's not the case. It shows contributions going to the same account, and there's notation that the catch up transaction is "Tax free Roth".

So it looks like this is being handled on their end as a mixed bucket, or in the alternative I guess you could think of it as sort of a sub-account. In either case the only thing I can think of to use to distinguish them is to manually tag the "Roth" one, and that still means I have one account containing two sets of funds subject to different taxation, and I don't think either Quicken or my brain is really set up for that situation.

Anyone else seen this? If so, any clever ideas? Or even bad ones?

Jon · Answer

Back when I had a 401K I didn't have any Roth contributions but I did always go slightly over the limit at the end of the year & end up with a little bit of after-tax money going in to it in December. The transaction history broke out the different portions of the contributions so I could see how much pre-tax and after-tax money was going into each fund every paycheck, but the quarterly and annual statements didn't go into as much detail. There was a table showing how much of each type of money was invested (but not where) and a second table showing which funds I was invested in (with all types of money lumped together), so it would have been difficult to reconcile to a Quicken account broken down by both asset type and by money type, so I didn't bother trying to track tax-deferred vs after-tax in Quicken. Once I retired & rolled everything into IRAs the different monies got broken out into different IRA accounts, so it's pretty easy to deal with now.

John_in_NC · Answer

Thanks @notintuitlobbyist and @hurwi

The fact that the transx are commingled is worrisome to me. If they are indeed separate buys for the traditional/Roth amounts, then I would be less concerned. I that case, I would do the same as Jacob suggested and Tag the Roth contributions (or both types) so you can isolate them if needed. That is about the most you can do. I do not suggest keeping the transactions in a separate account because I, like Jacob, prefer that my Quicken file mirrors how things occur in the real world. Reinventing the wheel usually causes problems down the line.

I expect to see more questions regarding this.

jacobs · Answer

I just don't see any way Quicken can track this without a pretty significant change in the program. As I noted in a different thread about this issue, you (or Quicken, eventually) could use Tags to identify contributions to the account which are Roth — but there would be no way to separate and track dividends and capital gain payments between Roth and non-Roth components of the account unless the financial institution splits those transactions.

Quicken's architecture is built around its accounts matching real-world accounts which are of a single type; there is no provision for a single account to be partly traditional and partly Roth. The OFX and FDX standards used for downloading transactions are focused on the account rather than the tax implications of individual transactions within the account. That means every financial institution is likely to have its own way of identifying Roth contributions, and without a standard, Quicken would need to custom-program  each financial institution's labeling of such transactions.

This is an issue which seemingly affects all of Quicken's products (Quicken Mac as well as Quicken Windows and Quicken Simplifi), so it would be interesting to know if senior management is aware of this issue and if they have devised a way they aim to change the programs to track this in the future — but there's no way to ask or get an answer about that.