Add support for Roth 401(k)s

Jim_Harman
Jim_Harman SuperUser ✭✭✭✭✭
The Roth option for 401(k) accounts has been available since 2001. As of 2020, over 86 % of employers' 401(k) accounts offer a Roth option and over 26% of workers use it. (1) Quicken currently has no support for Roth 401(k)s.

The ability to distinguish between traditional and Roth contributions and balances is important to users because it has significant tax implications, both during the contribution phase and for retirement planning.

Often plan sponsors track the Roth contributions, holdings, and balances as part of a single employee account, and this is the only account that downloads into Quicken.

The contribution issues are not difficult to work around, and this Idea
https://community.quicken.com/discussion/comment/20197511
covers suggested improvements in this area. 

Adding the ability to track and report on 401(k) holdings split between traditional and Roth is the subject of this Idea.

Quicken currently supports downloading of "Cash Source" data for 401(k) transactions, and if the sponsor supports it, this information is displayed in the transaction entry window. Unfortunately "Roth" is apparently not one of the supported cash sources, and there is no report that breaks out an account's holdings by Cash Source. 

Of course if separate Roth and Traditional balances were available in Quicken, it would be very useful for this information to feed the Lifetime Planner.  

Please add full support for Roth 401(k)s to Quicken.

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(1) https://www.cnbc.com/2021/12/27/roth-401k-availability-grows-rapidly.html
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Comments

  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭
    Got my vote.
    (QW Premier Subscription: R39.23 on Windows 10)
  • sterling
    sterling Member
    excellent summary of the problem...none of the work-arounds on this forum are viable for the average user.
  • mikek753b
    mikek753b Member ✭✭
    yes, I need this badly, please
    I've asked for this for a long time
    Best Regards
  • MollyG
    MollyG Member
    I don't think anyone monitors this page - maybe in the Community forum. I have the same problem and just don't see any response or solution - the work arounds are onerous.
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    Product management monitors Idea posts like this and sometimes implements them. Posts with the most votes tend to get the most attention. Make sure to cast your vote by clicking on the little up arrow below the vote count in the big yellow box in the first post.
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  • Boatnmaniac
    Boatnmaniac SuperUser ✭✭✭✭
    edited February 1
    Another thing to keep in mind:  The Product Ideas posted here are things users request for future product improvement or enhancement.  They are not for reporting current product performance issues.  Think "planning" instead of "reacting".  As such, the announcement about whether or not an idea will be implemented is usually at least months and in some cases years after it is first posted.  And just because an idea is posted here it does not mean that it will be implemented.   At some point, it will be announced whether or not the idea will be implemented.
    And always remember:  If a Product Idea that has been posted is important to you, always be sure to cast your vote for it.  Ideas that don't have many votes are not as likely to be added to Quicken's development plan.
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  • Drinkingbird
    Drinkingbird Member ✭✭✭
    I've been using the workaround of having a $0 traditional transfer then adding an after tax item for the roth transfer.  It isn't elegant but it now works (it didn't used to, it would confuse the retirement account and mess things all up with missing transactions etc).  But this doesn't show up on reports (unless you search for memo "roth" and use that memo in your paycheck).  I agree it has been far too long without support for this.  HSA support is also long overdue.
  • richard13
    richard13 Member ✭✭✭
    Definitely need this!  Please implement, Quicken!
    Quicken Premier - Windows 10 VM on a Mac
  • BK
    BK Member ✭✭✭✭
    Got my vote too.  Thanks for initiating this @Jim_Harman
    - QWin Deluxe user since 2010, US subscription on Win11
    - I don't use Cloud Sync, Mobile & Web, Bill Pay/Mgr

  • mikek753b
    mikek753b Member ✭✭
    > @Drinkingbird said:
    > I've been using the workaround of having a $0 traditional transfer then adding an after tax item for the roth transfer.  It isn't elegant but it now works (it didn't used to, it would confuse the retirement account and mess things all up with missing transactions etc).  But this doesn't show up on reports (unless you search for memo "roth" and use that memo in your paycheck).  I agree it has been far too long without support for this.  HSA support is also long overdue.

    hello Drinkingbird,

    would you share how to separate Roth and Traditional 401k when those are downloaded from the same and single Fidelity 401k account by Quicken?

    I don't have issue with the paycheck, but Quicken that doesn't understand multiple Sources from Fidelity and other 401k providers.
    to be clear - there is just 1 401k account at Fidelity that has before and after tax positions, the Quicken doesn't see any differences for those

    No, Fidelity can't provide account per 401k source , just single account that has all.

    that's why such ask to Quicken

    tnx
    Best Regards
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    One way to keep the Roth holdings separate is to pick a different investment option for the Roth contributions. So for example if you have been using the Target Retirement 2030 fund for your regular investments, pick the 2035 fund for the Roth contributions. Then the Roth dividend reinvestments will be credited to that fund.
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  • Drinkingbird
    Drinkingbird Member ✭✭✭
    edited February 19
    mikek753b said:

    hello Drinkingbird,

    would you share how to separate Roth and Traditional 401k when those are downloaded from the same and single Fidelity 401k account by Quicken?

    I don't have issue with the paycheck, but Quicken that doesn't understand multiple Sources from Fidelity and other 401k providers.
    to be clear - there is just 1 401k account at Fidelity that has before and after tax positions, the Quicken doesn't see any differences for those

    No, Fidelity can't provide account per 401k source , just single account that has all.

    that's why such ask to Quicken

    tnx
    I don't have one with Fidelity, but with my previous Trowe and current Prudential, the "buy" transactions come through as 2 separate ones, one for Roth and one for Traditional, in the same account.  So the two paycheck transfers (my Roth contribution and my company's Traditional match) match up with the two "buy" transactions and it works fine.  Within each buy transaction (if Fidelity supports it which most do) you can even click on "cash source" and set the Roth purchase to "Employee After Tax".  However that categorization doesn't really seem to get used much in quicken, there is no report where you can track that etc.  Dividend/capital gains also come through as separate transactions and the cash source can be set on those too.

    Currently Quicken does not show you how much of your balance is Traditional and how much is Roth - but if they could implement a report that can pull from that "cash source" field that would do it (assuming Fidelity sends it through correctly or you manually change it).  If what you're looking to do is have quicken show you how much of your balance is of each then yes they would need to implement an enhancement to do that as I'm not aware of any way to see that.

    You can look under "Tools->online center", there is a tab for balances and one for holdings, and see what Fidelity is classifying/reporting them as, and if they are separating out Roth and Traditional it will show you the balance of each in there.  However my provider just classifies them both as pre-tax so that doesn't work for me.  I just have to rely on what is shown on my statements/provider's website.
  • Drinkingbird
    Drinkingbird Member ✭✭✭
    mikek753b said:

    hello Drinkingbird,

    would you share how to separate Roth and Traditional 401k when those are downloaded from the same and single Fidelity 401k account by Quicken?

    I don't have issue with the paycheck, but Quicken that doesn't understand multiple Sources from Fidelity and other 401k providers.
    to be clear - there is just 1 401k account at Fidelity that has before and after tax positions, the Quicken doesn't see any differences for those

    No, Fidelity can't provide account per 401k source , just single account that has all.

    that's why such ask to Quicken

    tnx
    I don't have one with Fidelity, but with my previous Trowe and current Prudential, the "buy" transactions come through as 2 separate ones, one for Roth and one for Traditional, in the same account.  So the two paycheck transfers (my Roth contribution and my company's Traditional match) match up with the two "buy" transactions and it works fine.  Within each buy transaction (if Fidelity supports it which most do) you can even click on "cash source" and set the Roth purchase to "Employee After Tax".  However that categorization doesn't really seem to get used much in quicken, there is no report where you can track that etc.

    Currently Quicken does not show you how much of your balance is Traditional and how much is Roth - but if they could implement a report that can pull from that "cash source" field that would do it (assuming Fidelity sends it through correctly or you manually change it).  If what you're looking to do is have quicken show you how much of your balance is of each then yes they would need to implement an enhancement to do that as I'm not aware of any way to see that.

    You can look under "Tools->online center", there is a tab for balances and one for holdings, and see what Fidelity is classifying/reporting them as, and if they are separating out Roth and Traditional it will show you the balance of each in there.  However my provider just classifies them both as pre-tax so that doesn't work for me.  I just have to rely on what is shown on my statements/provider's website.
  • mikek753b
    mikek753b Member ✭✭
    hello Drinkingbird and Jim_Harman,

    thank you for trying to help me.
    in short - it doesn't work for me :-(

    as I mentioned I have 1 401k Fidelity account that Quicken downloads from, all transactions are "the same" in the Quicken tax wise.
    Yes, I set Fidelity to buy one set for Roth and another set for before tax - I have clear separation on Fidelity side which set is for before tax or after tax, as the same Fidelity shows this in appropriate Source.

    No, on Quicken side I can't figure out for to separate those transactions tax wise. All transactions are per this single account type, in my case it's set as 401k before taxes. All transactions as result are incorrectly set as before taxes.

    I don't have any issues in paycheck to define contributions before and after tax, this isn't my issue.

    No, I don't understand how to select cash source per transaction as there is only 1 cash source of the Fidelity 401k account, which in my case is before tax.

    in the paycheck I set to use another fake Fidelity account that I named 401k AT (after tax) and set as after tax - this account accumulates all cash from my paychecks for after tax Roth.
    this account has a lot of cash and no transactions. Where my 401k before tax has huge negative cash and all bought transactions

    I'm thinking about manual transfer bought shares for each payday to that fake 401k AT account, but it will not solve cash issue as shares were bought in 401k BT account, as result I have a mess ...

    thanks
    Best Regards
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited February 19
    What I am suggesting is not a complete solution, it is a workaround until Quicken gets around to implementing real Roth support for 401(k)s. It only works if you choose different securities for the Roth portion of the account.

    You still have one account in Quicken for downloading, but by investing your pretax contributions in one security or set of securities and your Roth contributions in different securities, you can tell by looking at the holdings in your combined account how much is traditional and how much is Roth.

    You could make two Portfolio views for the account, one that includes just the traditional securities and one with just the Roth securities, so Quicken will show the total value of each.

    If you really want to show the Traditional and Roth as two accounts in Quicken, you could create a fake Roth account and direct the Roth contributions to the Roth account as you describe above. Then you would move the transactions for the Roth securities to the Roth account. This will use the cash in the Roth account to buy the Roth securities. The Move Transactions option is accessed from the real account's Gear menu.

    If you have the Compare account portfolio option enabled, Quicken will complain after each download that the Roth securities are missing. You will have to either ignore this warning or turn off the Compare option.

    Back up your data file before trying this, in case you do not like the result.
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  • mikek753b
    mikek753b Member ✭✭
    hello Jim,

    yes, that is as close as possible to track BT and AT from single 401k by manual move transactions per security.
    I'll try to do this way and see how far it can address tax wise reports, especially long time planning.

    my goal is to see tax wise per year assets to know when to start Roth conversions and etc - but this is off-topic for this OP request.

    thank you
    Best Regards
  • Umesh Patel
    Umesh Patel Member ✭✭
    Need this feature, may be quicken can create sub account or what not but since we pay subscription now it is important to have this feature for retirement planning.
  • Drinkingbird
    Drinkingbird Member ✭✭✭
    mikek753b said:
    hello Drinkingbird and Jim_Harman,

    thank you for trying to help me.
    in short - it doesn't work for me :-(

    as I mentioned I have 1 401k Fidelity account that Quicken downloads from, all transactions are "the same" in the Quicken tax wise.
    Yes, I set Fidelity to buy one set for Roth and another set for before tax - I have clear separation on Fidelity side which set is for before tax or after tax, as the same Fidelity shows this in appropriate Source.

    No, on Quicken side I can't figure out for to separate those transactions tax wise. All transactions are per this single account type, in my case it's set as 401k before taxes. All transactions as result are incorrectly set as before taxes.

    I don't have any issues in paycheck to define contributions before and after tax, this isn't my issue.

    No, I don't understand how to select cash source per transaction as there is only 1 cash source of the Fidelity 401k account, which in my case is before tax.

    in the paycheck I set to use another fake Fidelity account that I named 401k AT (after tax) and set as after tax - this account accumulates all cash from my paychecks for after tax Roth.
    this account has a lot of cash and no transactions. Where my 401k before tax has huge negative cash and all bought transactions

    I'm thinking about manual transfer bought shares for each payday to that fake 401k AT account, but it will not solve cash issue as shares were bought in 401k BT account, as result I have a mess ...

    thanks

    So Fidelity only shows one "Buy" transaction that covers both Traditional and Roth funds?  If that's the case, there is nothing you can do other than manually dividing those transactions into two separate ones, or just relying on your balances on Fidelity.  Luckily all retirement providers have to be very good about tracking this and transferring this information if you roll it to another provider.  The government is watching after all.  Of all of them, I would trust Fidelity the most.  My Prudential 401K is the one that I don't trust as much and keep a closer eye on.

    However, I have accepted that Quicken isn't going to show me my Roth vs Traditional balances.  Even though I classify the transactions as pre-tax and after-tax using the cash source button, currently that doesn't do anything in Quicken.  Hopefully it will in the future.

    For tax tracking you can track how much you've contributed by having the two separate line items on your paycheck.  You can then run reports using keywords to track how much transfer is Roth and how much isn't.  You can also tag dividend, capital gains, etc distributions with Roth or Traditional assuming fidelity tells you what each one was for (if the don't, you'd have to calculate it manually which would probably be too much work).
  • jmoverton
    jmoverton Member
    I have been a Quicken user since the 1990's. Quicken has never had a report that included an option to include "cash source" as one of the pieces of data (or column) that could be included in the report. It would be useful to include a column option for this data in the various canned investment reports.

    I want to point out that although Quicken never had the "cash source" information available in its reports, earlier versions (probably in the 2000's) displayed investment information by cash source when you viewed "holdings" for the investment account. I remember that the displayed information included the specific stocks and values by "cash source". I don't think that it included number of shares. This functionality was dropped at some point.

    The data is there...please give us a way to access the data!
  • BassMan
    BassMan Member ✭✭
    Wow... just added Roth piece into my 401K and noticed that it does not differentiate between my Roth vs Traditional (pre-tax) contributions. Have to say, I didn't see that coming. Been using Quicken since the 80's and have been through multiple versions of Quicken. Stumped on how Quicken can't help keep Roth and Traditional 401k distributions separate in the same account. Ouch. Is Quicken for Windows working on a solution that keeps all transactions within the same account?
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited May 18
    There is no way to know what Quicken is working on or when it might be released. 

    As discussed above, one workaround to keep your Roth holdings separate in Quicken is to choose different investments for the Roth contributions. That way the earnings on the Roth part of the account will be reinvested in the Roth securities.

    When it comes time to take distributions, you can usually split up the 401(k) and roll it over to separate Traditional and Roth IRAs. You will probably want to do that anyway because usually 401(k) administrators require you to take distributions pro rata. The 401(k) rules require you to take RMDs from the Roth part of the account along with the taxable RMDs.

    I am not a tax advisor. Please consult your tax advisor for any tax related issues.
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  • Damian
    Damian Member ✭✭✭✭
    edited May 18
    Long story short Quicken is not a participant recordkeeping system.  Your 401(k) plan provider uses 2 systems to reconcile and maintain your 401(k) information and balances - 1) a brokerage type system (trust account, custodial account) that keeps all of the investment level information at a plan level, and, 2) a participant recordkeeping system, which holds all of the participant level information - balances, sources of money, vesting information, personal data.  Quicken has the brokerage system, but not the participant level recordkeeping system.  It would be VERY expensive and not cost effective for Quicken to develop recordkeeping capabilities.  As it stands right now, Quicken cannot create and separate out employer match from employee deferral sources (balances) for reporting.  In order to do this correctly, you would need to split out EVERY transaction by source.  That being said, it wouldn't be realistic for Quicken, Inc. to even think about Roth, until they can handle splitting out employee deferral and employer match.  If you need information on your retirement plans it is best to go to your employer or your plan providers'.  Most plan providers today have very sophisticated websites which will show you all participant recordkeeping information that you are asking for and more.  This is where you should go to make retirement decisions, not Quicken.  (And believe me, they spent millions upon millions, to create and maintain, or lease these systems).
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