New Roth 401K feature not working correctly

What you're asking for is something totally different from what is being discussed here.

I added another workaround to your list in that thread, making use of the tag but preventing it from getting categorized as pre-tax. Still does nothing to address many of the other issues. This new feature is essentially useless, other than creating a tag that you can make use of (and triggering me to realize that you can add a tag to a transfer by adding /[Tag] after the account in the category). I think I did actually know this at one point but forgot it as it wasn't something I thought I needed, but it does help in this case. Makes it easy to run a report at the end of the year to see how much was roth and how much was regular (since I contribute both types). Before I just ran a report for anything with memo "employee roth" which worked too since my after tax transaction has those keywords in it. So this makes it slightly easier to run a report to find roth contributions.

Another option is to use their new "feature" but uncheck the roth tag in tax reports. This only fixes reports though, not tax planner etc. And it still runs the roth contributions through the hidden "tax impact" account and classifies them as pretax, so really don't recommend using their new "feature" at all. It will make things worse, not better. They have done nothing to account for withdrawals and being able to classify them as Roth or Traditional, so that is yet another issue with this "feature".

They do seem to have added a section to one of the tax planner screens to show how much was tagged as roth, but on the same screen it shows the amount being deducted from taxable income. Anyone using this new feature is going to end up in a big mess, I think they should pull the feature quickly until they figure out the correct way to implement it.

I made a post in this thread last night with some screen shots and workarounds but I guess it is awaiting approval due to the images.

At this point, I'm not making use of the new after tax type or even the tag. I'm sticking with my manual generic after tax line item, and report that searches for the memo "Employee Roth" until they get this figured out. Going back and editing previous paychecks often messes up the memos on the transfers in the 401k account, a bug that has been around for years, so no sense in dealing with all that until I see what they plan to do (if anything).

Support can't help with a product design issue. It isn't that it isn't working just for me, it was implemented wrong and several others have reported the same thing.

The new Roth 401k paycheck deduction is in the "After Tax" section. But in the tax reports, it is showing as deducted BEFORE tax, due to being transferred through the hidden "tax implication" account. This is causing taxable income to be reported incorrectly (less than it should be), which is a problem for people planning their tax liability for the year or exporting the data to tax software.

The other issue is that withdrawals from the 401k account are going to be shown as taxable, when Roth withdrawals are tax free. It needs to prompt for which type of withdrawal it is and treat it differently depending on the type.

I've attached 3 screen shots showing various places where it is deducting this AFTER TAX amount from taxable income. I made a dummy file and put in a $1000 paycheck with $500 roth deduction, and it shows my taxable income as $500, when it should be $1000.

As a workaround one can exclude the new tag from reports, but that doesn't seem possible on tax planner, and still doesn't address the issue of withdrawals being shown as taxable.

Other possible workarounds are to not use the new roth deduction, just create another after tax deduction and manually add the tag in the 401k account. That at least lets you run a report to show how much is roth and how much isn't. Again, does not address the withdrawal issue though.

I started with a brand new file, set up a couple dummy accounts and a dummy paycheck. With $0 traditional contribution, and $100 roth, it was showing $100 as _401Contrib. Maybe the $0 traditional contribution (in order to register the traditional employer match) has something to do with it. But the roth contribution was definitely being sent to the "tax implications" hidden account and counted as pre-tax. I will have to try a few scenarios in a new dummy file to see. But if you create a new file and do what I did you should see the same as my screenshots.

OK, it is related to having $0 for traditional contribution, so it actually seems related to previous issues with having $0 for traditional, which has been an on and off issue for a while now. It seems to really confuse Quicken when there is $0 for employee pre-tax.

If I enter a check with
$125 Traditional Employee Contribution
$150 Employer Match (which is traditional)
$200 Roth

$125 is transferred via the hidden Tax Implications account and counted as _401Contrib, which is correct. Reports and tax planner look correct.

If I enter a check with
$0 Traditional Employee Contribution
$150 Employer match (traditional)
$200 Roth

Then $200 is transferred via the hidden Tax Implications account and counted as _401Contrib, which is wrong.

In my case, I only contribute Roth, not traditional, however the employer match is traditional, so scenario 2 applies (and applies to many others as well).

And in playing around with it, the first roth after I edited the transaction is now being counted twice so tax planner is showing $600 instead of $400 for Roth too. I think this all goes back to the inability of Quicken to understand not having an employee pre-tax transfer. With Roth 401K, there needs to be the ability to have the employee contribution be after tax (roth) and the employer match to be pre-tax (traditional). That's how most Roth 401Ks work (recently they've started allowing employer contribution to be after tax but that is not yet common, though it is something Quicken is going to need to account for soon).

In reality, there should be an employer match for traditional, and a totally different employer match for Roth.

Problem is that doesn't work if you have both traditional and Roth in the same account. It does appear that this feature works with traditional 401K account but ONLY if you make a traditional contribution along with the roth contribution. So if they fix that bug, we may be onto something.

Of course there is still the matter of withdrawals etc. One step at a time.

For me it happens in both a new file and my normal/existing file. But as we've discovered, in both cases for me it is only when the traditional contribution is $0 (in order to get the employer match field to work). There have always been bugs with doing this but for a couple years it finally worked consistently, transferring $0, plus employer match, plus after tax, as 3 transactions to the 401K. Now the $0 amount does not get transferred (which is actually fine, less clutter), it gets assigned to the checking account now in order to prevent it from showing as uncategorized. But that seems to have messed something up again. Honestly the paycheck wizard has never "liked" more than 1 transfer to the same account, I saw this with ESPP transactions when I had one of those too.

At this point I've changed nothing, my previous workaround of just making my own after tax deduction and calling it "ROTH" is what I'm using until this gets sorted out. At least then I can run a report searching for memo to see my total for the year.

It looks as though the $0 transaction is telling quicken that it needs to run a transfer through the "tax implications" hidden account but because the traditional is $0, it is putting the roth there instead.

Worth noting for your design team, there are several possible combinations these days:

Employee Traditional Contribution + Employer Traditional Match
Employee Roth Contribution + Employer Traditional Match (until recently employer match had to be pre-tax)
Employee Roth Contribution + Employer Roth Match (a fairly recent thing that not many support yet)
Employee Traditional + Employee Roth + Employer Traditional (for those that contribute to both)
Employee Traditional + Employee Roth + Employer Traditional + Employer Roth (again not that common yet).

And of course there are just plain after tax contributions to 401K/IRA but I don't think that is an issue (other than when combined with one of the above and confusing Quicken potentially).