I am receiving 401k and IRA distributions which are taxable. How do I input these so that Quicken r

Walt LyonsWalt Lyons Member
edited January 26 in Investing (Windows)
I am receiving 401k and IRA distributions which are taxable. I don't know how to input these so that Quicken recognizes them as income. How do I do it? Thanks.

Comments

  • q_lurkerq_lurker SuperUser ✭✭✭✭✭
    edited January 26
    You input the transaction as a transfer of funds from the 401k account to your "other" account - checking, investment, etc.

    The settings for the 401k account details should have that transfers out are treated as taxable income.  Applicable "tax" reports will pick those transfers up and report accordingly.  

    Outside of the taxation issue, the transfer is not really income.  It is moving a 401k asset to a 'Checking account' asset -- from one pocket to another.

    As I recall, it is recommended that the transfer be initiated from the receiving account and therein record it as a split transaction with the gross amount withdrawn from the 401k and the withheld tax amount recorded as a second line such that the net amount of the transaction into the checking account is the net (gross less tax withheld) amount.  That way the tax withheld will also be found for applicable tax reports.

    HTH
  • Jim_HarmanJim_Harman SuperUser ✭✭✭✭✭
    edited January 22
    If you are tracking the 401k and IRA accounts in Quicken, the distributions should be set up as transfers to other accounts. Go to the Account Details for each tax deferred account click Tax Schedule at the bottom, and for Transfers out select 1099-R: Total IRA Gross Distrib.

    This tells Quicken that the distributions should be treated as taxable IRA distributions, and they will show up as such on your tax reports and elsewhere.

    If you are not tracking the 401k/IRA accounts in Quicken, you should set up an Income category called IRA Distributions or something similar and assign it the same tax category.
    -- Jim QWin Premier subscription
  • Jeff StumpJeff Stump Member
    edited January 17
    q.lurker said:

    You input the transaction as a transfer of funds from the 401k account to your "other" account - checking, investment, etc.

    The settings for the 401k account details should have that transfers out are treated as taxable income.  Applicable "tax" reports will pick those transfers up and report accordingly.  

    Outside of the taxation issue, the transfer is not really income.  It is moving a 401k asset to a 'Checking account' asset -- from one pocket to another.

    As I recall, it is recommended that the transfer be initiated from the receiving account and therein record it as a split transaction with the gross amount withdrawn from the 401k and the withheld tax amount recorded as a second line such that the net amount of the transaction into the checking account is the net (gross less tax withheld) amount.  That way the tax withheld will also be found for applicable tax reports.

    HTH

    Right now I have an annuity distribution that deposits into my checking. I use a transfer from my annuity account to match the deposit. It does not show as income but a transfer. Its an income distribution with tax withholding. How do i set this up to show income?
  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited January 17
    q.lurker said:

    You input the transaction as a transfer of funds from the 401k account to your "other" account - checking, investment, etc.

    The settings for the 401k account details should have that transfers out are treated as taxable income.  Applicable "tax" reports will pick those transfers up and report accordingly.  

    Outside of the taxation issue, the transfer is not really income.  It is moving a 401k asset to a 'Checking account' asset -- from one pocket to another.

    As I recall, it is recommended that the transfer be initiated from the receiving account and therein record it as a split transaction with the gross amount withdrawn from the 401k and the withheld tax amount recorded as a second line such that the net amount of the transaction into the checking account is the net (gross less tax withheld) amount.  That way the tax withheld will also be found for applicable tax reports.

    HTH

    Take a look at the FAQ post for handling distributions from an IRA. You would use a similar method for a pension or an annuity.


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    Quicken user since Q1999. Currently using QW2017.
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  • Tom YoungTom Young SuperUser ✭✭✭✭✭
    edited January 17
    q.lurker said:

    You input the transaction as a transfer of funds from the 401k account to your "other" account - checking, investment, etc.

    The settings for the 401k account details should have that transfers out are treated as taxable income.  Applicable "tax" reports will pick those transfers up and report accordingly.  

    Outside of the taxation issue, the transfer is not really income.  It is moving a 401k asset to a 'Checking account' asset -- from one pocket to another.

    As I recall, it is recommended that the transfer be initiated from the receiving account and therein record it as a split transaction with the gross amount withdrawn from the 401k and the withheld tax amount recorded as a second line such that the net amount of the transaction into the checking account is the net (gross less tax withheld) amount.  That way the tax withheld will also be found for applicable tax reports.

    HTH

    You're dealing with an intractable issue here, namely the difference between proper "generalized" accounting vs. "statutory" accounting, i.e., how the IRS views the issue.

    From a generalized accounting standpoint the annuity is your asset and the income earned inside that account is your income.  It's not taxable income, (that's the statutory accounting aspect), but it serves to increase your net worth, just like income earned in a regular checking or investing account increases your net worth.

    So from a generalized accounting standpoint a distribution from the annuity to your checking account is simply a transfer of funds.  It's not considered "income", just like moving cash from your savings account to your checking account is not considered income. 

    From the statutory accounting viewpoint that transfer is income, reportable on your income tax return.

    The way Quicken solves this conflict is by assigning the transfer from the annuity to checking as a taxable ("statutory") event, reportable on a 1099-R.  So if you run a regular income and expense report in Quicken with all transfers excluded you won't see the transfer as a Income/Expense event.  But if you run a Quicken tax report the transfer will be reported as taxable income and will import into TurboTax or other tax preparation software as taxable income.

    You can customize Quicken's spending reports to include the transfer from the annuity to the checking account as a form of "income" such that the dollars are included in the "TOTAL INCOME" figure, but it won't read "annuity income", it will read "FROM [title of annuity Account]"
  • PaulPaul Member
    edited January 22

    If you are tracking the 401k and IRA accounts in Quicken, the distributions should be set up as transfers to other accounts. Go to the Account Details for each tax deferred account click Tax Schedule at the bottom, and for Transfers out select 1099-R: Total IRA Gross Distrib.

    This tells Quicken that the distributions should be treated as taxable IRA distributions, and they will show up as such on your tax reports and elsewhere.

    If you are not tracking the 401k/IRA accounts in Quicken, you should set up an Income category called IRA Distributions or something similar and assign it the same tax category.

    Thanks, that was helpful.

    But why choose "1099-R Total IRA gross distrib." rather than "1099-R Total IRA taxable distrib."? It is taxable, after all.
  • J_MikeJ_Mike SuperUser ✭✭✭✭✭
    edited January 22

    If you are tracking the 401k and IRA accounts in Quicken, the distributions should be set up as transfers to other accounts. Go to the Account Details for each tax deferred account click Tax Schedule at the bottom, and for Transfers out select 1099-R: Total IRA Gross Distrib.

    This tells Quicken that the distributions should be treated as taxable IRA distributions, and they will show up as such on your tax reports and elsewhere.

    If you are not tracking the 401k/IRA accounts in Quicken, you should set up an Income category called IRA Distributions or something similar and assign it the same tax category.

    I use tax line item "1099-R Total IRA taxable distrib.".

    The main difference that I am aware of is that if one uses "1099-R Total IRA gross distrib.", the distributions do not show up as taxable income in the QWins' Tax Planner.
    QWin & QMac (Deluxe) Subscription
    Quicken user since 1991

  • Jim_HarmanJim_Harman SuperUser ✭✭✭✭✭
    edited January 22

    If you are tracking the 401k and IRA accounts in Quicken, the distributions should be set up as transfers to other accounts. Go to the Account Details for each tax deferred account click Tax Schedule at the bottom, and for Transfers out select 1099-R: Total IRA Gross Distrib.

    This tells Quicken that the distributions should be treated as taxable IRA distributions, and they will show up as such on your tax reports and elsewhere.

    If you are not tracking the 401k/IRA accounts in Quicken, you should set up an Income category called IRA Distributions or something similar and assign it the same tax category.

    Usually the way you enter these distributions in Quicken is to show the full amount of the distribution before any tax withholding as the amount transferred to another account. In the receiving account, you split the transaction to show any taxes that were withheld, with the net amount deposited to the receiving account. 

    If you know the distribution is taxable, "taxable distrib." is best, as JM points out above. The "gross dsitrib" can be used if for example this might be a rollover to another IRA. 
    -- Jim QWin Premier subscription
  • SherlockSherlock SuperUser ✭✭✭✭✭
    edited January 22

    If you are tracking the 401k and IRA accounts in Quicken, the distributions should be set up as transfers to other accounts. Go to the Account Details for each tax deferred account click Tax Schedule at the bottom, and for Transfers out select 1099-R: Total IRA Gross Distrib.

    This tells Quicken that the distributions should be treated as taxable IRA distributions, and they will show up as such on your tax reports and elsewhere.

    If you are not tracking the 401k/IRA accounts in Quicken, you should set up an Income category called IRA Distributions or something similar and assign it the same tax category.

    The tax lines refer to box 1 and box 2a on the 1099-R form: https://www.irs.gov/pub/irs-pdf/i1099r.pdf
    Quicken user since 1997 
    Premier on Windows 7 
  • PaulPaul Member
    edited January 22

    If you are tracking the 401k and IRA accounts in Quicken, the distributions should be set up as transfers to other accounts. Go to the Account Details for each tax deferred account click Tax Schedule at the bottom, and for Transfers out select 1099-R: Total IRA Gross Distrib.

    This tells Quicken that the distributions should be treated as taxable IRA distributions, and they will show up as such on your tax reports and elsewhere.

    If you are not tracking the 401k/IRA accounts in Quicken, you should set up an Income category called IRA Distributions or something similar and assign it the same tax category.

    Thanks, all!
  • Jim_HarmanJim_Harman SuperUser ✭✭✭✭✭
    edited January 22

    If you are tracking the 401k and IRA accounts in Quicken, the distributions should be set up as transfers to other accounts. Go to the Account Details for each tax deferred account click Tax Schedule at the bottom, and for Transfers out select 1099-R: Total IRA Gross Distrib.

    This tells Quicken that the distributions should be treated as taxable IRA distributions, and they will show up as such on your tax reports and elsewhere.

    If you are not tracking the 401k/IRA accounts in Quicken, you should set up an Income category called IRA Distributions or something similar and assign it the same tax category.

    The tax lines refer to box 1 and box 2a on the 1099-R form: https://www.irs.gov/pub/irs-pdf/i1099r.pdf

    Right. I think the confusion comes because you have to pick gross or taxable for the transfer. For a normal taxable distribution, both will be filled in with the same amount. The same form is used for rollovers (not taxable) and Roth conversions (taxable).

    In the case of an indirect rollover, where the FI sent you a check and you might or might not have forwarded the money to the new FI, the issuer of the 1099 does not know whether the distribution will be taxable or not.


    -- Jim QWin Premier subscription
  • SherlockSherlock SuperUser ✭✭✭✭✭
    edited January 22

    If you are tracking the 401k and IRA accounts in Quicken, the distributions should be set up as transfers to other accounts. Go to the Account Details for each tax deferred account click Tax Schedule at the bottom, and for Transfers out select 1099-R: Total IRA Gross Distrib.

    This tells Quicken that the distributions should be treated as taxable IRA distributions, and they will show up as such on your tax reports and elsewhere.

    If you are not tracking the 401k/IRA accounts in Quicken, you should set up an Income category called IRA Distributions or something similar and assign it the same tax category.

     I think the confusion comes because you have to pick gross or taxable for the transfer.  For a normal taxable distribution, both will be filled in with the same amount. 
    If you really want both tax lines, you may use an escrow account (a second transfer with the taxable tax line assignment).
    Quicken user since 1997 
    Premier on Windows 7 
  • Jeff StumpJeff Stump Member
    edited January 26
    q.lurker said:

    You input the transaction as a transfer of funds from the 401k account to your "other" account - checking, investment, etc.

    The settings for the 401k account details should have that transfers out are treated as taxable income.  Applicable "tax" reports will pick those transfers up and report accordingly.  

    Outside of the taxation issue, the transfer is not really income.  It is moving a 401k asset to a 'Checking account' asset -- from one pocket to another.

    As I recall, it is recommended that the transfer be initiated from the receiving account and therein record it as a split transaction with the gross amount withdrawn from the 401k and the withheld tax amount recorded as a second line such that the net amount of the transaction into the checking account is the net (gross less tax withheld) amount.  That way the tax withheld will also be found for applicable tax reports.

    HTH

    I used the following method for my IRA distribution (Annuity
    actually) into checking acct. I am removing the shares from the annuity
    acct. If I take them out as a sale it shows that entry as a capital
    gain. Is this what I should be doing?

    Thanks for all the responses I'm getting.

    Set the tax attribute "Transfers Out:" for the IRA account to "1099-R:Total IRA taxable distrib."

    Go to the destination account - the Checking Acct.

    Enter a Deposit transaction - scroll down to the Cash Transactions at the end of the transaction list to find Deposit.

    Select Split in the transaction window and record 3 split entries;

    The first split is the gross distribution with the category indicating a transfer from the IRA Acct.

    The second and third entries are the fed & state withholdings - with appropriate categories.

    The net of this transaction is the net deposit to the Checking Acct.
  • J_MikeJ_Mike SuperUser ✭✭✭✭✭
    edited January 26
    q.lurker said:

    You input the transaction as a transfer of funds from the 401k account to your "other" account - checking, investment, etc.

    The settings for the 401k account details should have that transfers out are treated as taxable income.  Applicable "tax" reports will pick those transfers up and report accordingly.  

    Outside of the taxation issue, the transfer is not really income.  It is moving a 401k asset to a 'Checking account' asset -- from one pocket to another.

    As I recall, it is recommended that the transfer be initiated from the receiving account and therein record it as a split transaction with the gross amount withdrawn from the 401k and the withheld tax amount recorded as a second line such that the net amount of the transaction into the checking account is the net (gross less tax withheld) amount.  That way the tax withheld will also be found for applicable tax reports.

    HTH

    Jeff wrote;
    I used the following method for my IRA distribution (Annuity actually) into checking acct. I am removing the shares from the annuity acct. If I take them out as a sale it shows that entry as a capital gain. Is this what I should be doing? 
    You enter Sell(s) transactions in the IRA/Annuity account to generate the cash for the distribution.
    Yes, you will realize Capital Gains/Losses for these sales.
    The gains/losses are realized within the IRA/Annuity account and have no tax implications.



    QWin & QMac (Deluxe) Subscription
    Quicken user since 1991

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