Improve handling of IRA distributions, including QCDs and Roth conversions

Catherine · February 2023

I am aware that Quicken is not a tax program. I am not asking it to file my taxes. I am asking if there is a way to get money out of a "Retirement" Account and into a "Cash" Account. If I mark them both as IRA Taxable Distribution, a Quicken supplied category within the 1099-R parameters, they wipe each other out. What if the 1099-R income comes from an asset that the customer owns? Like a Retirement Savings brokerage account? I am trying several General Ledger type dummy transactions. Do you have any suggestions?

Jim_Harman · February 2023

@Catherine,
This FAQ discussion describes how to enter IRA distributions so that Quicken shows them correctly in the Tax reports.
https://community.quicken.com/discussion/7072150/faq-best-way-to-handle-distributions-from-ira-also-rmd

For the distributions to show up as "income" in Spending reports, you should customize the report so that it does not include the IRA account and on the Advanced customization tab, set Transfers to "Exclude internal."

If you are still having problems, please post back with more details about what you are seeing.

Tom Scott · February 2023

> @Catherine said:
> I am aware that Quicken is not a tax program. I am not asking it to file my taxes. I am asking if there is a way to get money out of a "Retirement" Account and into a "Cash" Account. If I mark them both as IRA Taxable Distribution, a Quicken supplied category within the 1099-R parameters, they wipe each other out. What if the 1099-R income comes from an asset that the customer owns? Like a Retirement Savings brokerage account? I am trying several General Ledger type dummy transactions. Do you have any suggestions?>

Any transfer out of an IRA account to another cash account is treated as a 1099 Normal Distribution, assuming you have chosen that option in the IRA Account settings under Tax Schedule. It will automatically appear as Income when you run an Income and Expense Report. It will appear as "FROM IRA Account." There is no need to have Income category for these transfers.

Boatnmaniac · February 2023

Catherine said:

I am aware that Quicken is not a tax program. I am not asking it to file my taxes. I am asking if there is a way to get money out of a "Retirement" Account and into a "Cash" Account. If I mark them both as IRA Taxable Distribution, a Quicken supplied category within the 1099-R parameters, they wipe each other out. What if the 1099-R income comes from an asset that the customer owns? Like a Retirement Savings brokerage account? I am trying several General Ledger type dummy transactions. Do you have any suggestions?

It seems you are trying to use Quicken as an accounting program which it is not. It is a personal finance management program. Trying to use General Ledger double entries will provide undesirable results as you have observed. It's not just with IRA-to-Cash Account transactions that are affected. It is also with most any account-to-account transactions...they will cancel each other out in the reports and other Quicken planning tools.

Quicken is set up to make extensive use of transfers when moving funds between accounts when both accounts are set up in Quicken. This includes money movements from tax deferred Retirement Account distributions to taxable Cash Accounts. There are quite a few threads in this forum regarding how to set up and manage retirement account distributions. One which you lays it out step-by-step and is most accurately captured in the Tax Reports and in Tax Planner, I think, is https://community.quicken.com/discussion/comment/20319145#Comment_20319145 but you might want to conduct a search to see what others are saying.

leishirsute · February 2023

@Boatnmaniac RMD's do not have to be cash transactions.

Boatnmaniac · February 2023

leishirsute said:

@Boatnmaniac RMD's do not have to be cash transactions.

I never said they have to be. But my prior post along with the 2 posted replies immediately prior to mine were in specific response to a question about how to manage a retirement account cash distribution transaction so it gets properly captured in reports.

markus1957 · February 2023

Catherine said:

I have a Self Directed IRA. We are now taking distributions about every quarter to live on. My Custodian sends us a check, I deposit it into our checking account, and code it as an IRA distribution, which is indeed taxable. Because the IRA is a Retirement Account, Quicken will NOT let me simply transfer the money out. I've tried the dummy account, and twisting up the distributions into pretzels, but this income still doesn't show up in - even the customized reports that purport to show income and expenses. I have to manually add it with a pencil on the printout.

If the Tax Schedule section of the IRA account details is set up with the correct tax line, it will show up as taxable income when transferred to a spending account. There is a bug which will not display as taxable income if transferred to a taxable investment account.

In the case of a check being issued, it should also show up as taxable income if the check is coded with a proper tax line when deposited in the checking account.

Boatnmaniac · February 2023

@Catherine - I would check to confirm that the Tax Schedule for the IRA account is set up with the correct tax line item. I have noticed in many cases that Transfers Out is not set up correctly. You can check on this by going to Account Register > upper right Gear icon > Edit Account Details > click on the Tax Schedule button which will bring up the Tax Schedule Information pop-up. Make sure Transfers out shows the following:

Then when you enter the deposit transaction to the "Cash" account, enter the transfer from the IRA into the category field and Quicken will properly capture the distribution in the Tax Reports and Tax Planner.

As you can see from the discussion you've been involved with here, there is a real need for Quicken to make some significant improvements as to how distributions from tax deferred/tax exempt accounts are handled by Quicken. Not only are there issues with how well Quicken can currently manage the distributions but there are also differences of opinion as to which workaround process is the best one to use. We need Quicken to standardize the process and make it much more intuitive about how to use it for these distributions. If you have not already done so, please be sure to cast your vote for this Idea thread by clicking on the upward pointing triangle directly under the first post in this thread.

Jim_Harman · February 2023

For best results, go to the taxable receiving account and enter it as a Deposit transaction, not as a transfer.

If the receiving account is a banking account, enter the IRA account in [brackets] as the Category.

Steve54@ · February 2023

Quicken is not an accounting software package. It is a "Personal Finance" program. I.E. for those of us who are not accountants or tax professionals. If I want an accounting program, I would get QuickBooks or a similar program. What is Quicken's target market? Is it an average user who doesn't understand accounting and wants a tool to simplify the management of their finances? Or is the smaller segment of the market that is comfortable with accounting and excel / google sheets. Apparently Quicken has targeted the latter. As soon as the recommendation is to use excel or google sheets, we have stepped outside the average user's knowledge. Of course,
My expectation of a "personal finance" program is that it will provide interactive TOOLS to guide the unsophisticated person in managing finances such as household budgets, investments including IRAs and bills and banking accounts. And might even provide tutorials for the average user. In my dreams Quicken would provide a tool to manage RMDs, QCDs and withdrawals from IRAs, etc. Something along the lines of: I get RMD values from my financial org. I enter my expected tax bracket possibly by entering last year's 1040 income. I enter my age. RMD target(s) for each 401(k) and IRA account in Quicken's IRA tool. The tool then allows me to enter a withdrawal amount and to budget withdrawals. I enter the withdrawal either already made or my planned withdrawals. Quicken would tell me what the taxable RMD would be and the amount of RMD remaining to be taken. I could enter QCDs. Quicken would recalculate the taxable amount of my RMD after QCDs. Another useful function would be to have the Quicken tool to enter the planned RMDs and QCDs with the appropriate Tax categories and transaction types. Kind of like it does for investments. I know I'm silly to think that this or something similar would be implemented. I have been a Quicken user since the beginning. Never have I heard of Quicken management considering this type of tool. So their target market is NOT personal finance for the unsophisticated user. I understand Quicken's limitations, and I have had to go elsewhere to get 401(k), 0IRA, QCD help.

Of course, Quicken's lawyers would provide the fine print that this tool does not provide tax advice, etc. and Quicken is not liable for any of that.

Mark1104 · February 2023

@Steve54@ - what would be interesting is to understand the demographics of the Quicken User.... the issues of Roth Conversions, RMDs, distributions from TRAD IRAs, QCDs and the like are mainly issues of the "older crowd". There has always been this issue of where the 'line in the sand' is when it comes to tax income vs. 'personal finance'.. how much tax implication does Quicken provide and not provide? it may be that us Baby Boomer users are not the target audience (although from the comments on these boards most 'everyone' has a file that goes back into the 1990s, so they are 'the older crowd'.

Pumphouse · February 2023

Files that go back to the 1980s, more like it.

Pumphouse · February 2023

The discussion on "personal finance software" vs "accounting software" vs "tax software" is interesting. I use Quicken as personal finance software but I bet that means different things to people. For me, it comes down to a few critical things:
* making it easy to generate data for my tax accountant each year
* making it easy to monitor my accounts for unauthorized activity
* making it easy to monitor my spending for "leaks" (stupid expenses I can easily do without
* (new) helping me track my QCDs. I even now have a report for that to hand my tax guy.
It's not my primary system for taxes (I got a guy for that) nor tracking asset allocation for investments (I use a spreadsheet) nor paying bills (I wish it was). It's kind of a mirror to all the other ways I interact with money.

leishirsute · February 2023

I use the tax planner to help estimate quarterly estimated taxes. So, I consider Quicken tax planner to be tax software. Even without the tax planner, I was using the Tax Schedule and Tax summary reports to estimate quarterly taxes.

Johnson55 · February 2023

I have RMD out of IRA monthly with Fed & State taxes paid.The net amount is transferred to an invest Acct. The only way I have found to get the total gross inc. is to report properly is to setup a dummy taxable account that i enter the total RMD each month. I'm learning now that estimated tax payments for RMDs can be done at the end of the year. So this year i will do QCDs all through the year and then do one transfer out with the taxes that are needed..

Boatnmaniac · February 2023

Johnson55 said:

I have RMD out of IRA monthly with Fed & State taxes paid.The net amount is transferred to an invest Acct. The only way I have found to get the total gross inc. is to report properly is to setup a dummy taxable account that i enter the total RMD each month. I'm learning now that estimated tax payments for RMDs can be done at the end of the year. So this year i will do QCDs all through the year and then do one transfer out with the taxes that are needed..

I used to do it that way but haven't for some time now. What I think is the simpler and more accurate way to capture the RMD transactions is as noted above but with one change. Here is the entire process, step-by-step:

IN THE RECEIVING ACCOUNT:

1) Enter a deposit transaction for the net amount of the RMD...a positive number.

2) Split the category:

Line 1 of the split: Category = transfer from the IRA account for the gross amount...a positive number.
Line 2 of the split: Category = the Fed taxes category that you use...a negative number.
Line 3 of the split: Category = the State taxes category that you use...a negative number.
Total of the split: Must equal the net amount of the deposit.

IN THE IRA ACCOUNT: Delete the downloaded brokerage transactions for

The net distribution
The Fed taxes withheld
The State taxes withheld

That's it. Done.

I set up a recurring Income (not Transfer) Reminder for my monthly IRA distributions to be automatically entered into my checking account. All I need to remember is to 1X per month delete those brokerage downloaded transactions for the net distribution and withheld taxes. I've found this process to be simpler, faster and easier to use than when I used to use an interim dummy taxable spending account.

And the Tax Schedule and Tax Summary reports now captures the data perfectly (more accurately than using the dummy account). It is also captured well in Tax Planner.

Catherine · February 2023

Thanks for all the input. I see now that this is one of the fundamental differences between Quicken for Windows and Quicken for Mac. I was perusing all categories on this question, sometimes the Windows folks are having the same problem - but my Quicken for Mac does not have a "Tax Schedule button" in the Account Settings/Detail menu at all. Tax treatment is set at the Security Level, and for certain categories, but not for an account per se. Hmmm. The money from the Pension Plan is doing just fine in terms of Income and Expense reports, because we don't own that asset, only the deposits need be recorded, no transfers involved.

Tom Scott · February 2023

@Catherine It seems that you'll have to forget trying to do a transfer transaction from the IRA for to be it be automatically classified as income.
Instead you might try the following (adapted from Boatnmaniac):
1) Enter a deposit transaction in you receiving account for the net amount of the RMD.
2) Split the category:
Line 1 of the split: Category = "Income: IRA Distribution" for the total amount Net + taxes
Line 2 of the split: Category = "Expense: Fed taxes IRA"...a negative number.
Line 3 of the split: Category = "Expense: State taxes IRA" ..a negative number.
Total of the split: Must equal the net amount of the deposit.

Then leave the transactions in the IRA register alone without any categorization of the amounts so you can reconcile the account correctly.

Catherine · February 2023

Found a funky workaround for Quicken for Mac - added a split line for "Adjustment", wherein I entered a negative amount to offset the Transfer, and added another split line to record the income. Three lines, 1) for the transfer 2) for the income 3) Using the Adjustment category to force the Distributions to show up as income in my Quicken reports. All splits in the checking account, just the transfer recorded in the IRA account. These were gross distributions, not RMDs no taxes were withheld, making it especially important to make note of the fully taxable revenue. Anyway - this works: https://community.quicken.com/discussion/7902160/help-with-rmd-adjustment/p1

Bob31 · March 2023

Most of these solutions ae about tax reporting, which I don't care about, since I can get all the tax-related values I need from my 1099-Rs. I just want to have the investment account my RMD comes out of have the correct share balances and no cash balance.

I think my mistake was setting the RMD deposit to my savings account as a transfer from the investment account, and then messing up the investment account trying to correct the problems that caused. My new plan is to stop setting it as a transfer, and just download the transactions from the investment account and adjust the share balances and cache balance manually when necessary.

rjstephan · March 2023

LONG time Quicken user and recently retired. Would like to continue using Quicken in retirement but very dissapointed by the lame Lifetime Planner and lack of retirement withdrawl related features. If they don't materialize soon, I'll be canceling my suscription and switching to NewRetirement.

Scooterlam · March 2023

https://community.quicken.com/discussion/comment/20350192#Comment_20350192

@rjstephan

Agree that LTP needs some withdrawal strategy features. Please have a look at, comment in, and vote for these two related ideas pertaining to LTP withdrawal features (one is actually a bug….)

Sorry to say, dont hold your breath re: LTP changes anytime soon.

Steve54@ · March 2023

I shouldn't have made the target market comment as it becomes something of a rabbit hole. Distracted from my point which is that there is enough discussion to indicate it would be useful for a QCD assistant in Quicken.

I look at the many comments and workaround suggestions have been made on the topic. Yes, there are many users of Quicken that have found workable solutions. I read boatmainic's algorithm for tracking QCDs. Would this be difficult for Quicken's software engineers to implement with a nice user interface? I guess so. Or maybe they could come up with a better algorithm. Oh well.

I just heard a sound from a tree! Does a comment in the Quicken community make a sound?

Pumphouse · March 2023

I hope Steve54's comment on QCD tracking will be taken seriously by Quicken product managers: "there are many users of Quicken that have found workable solutions". Many solutions, all different - that increases the use case variance among users and makes future upgrades and current testing more difficult. A standard way - perhaps automated with an "assistant" would give Quicken something to regression test to avoid future bugs.

JWC-2 · May 2023

If Quicken claims to be THE program I should use for managing my money, it needs to provide the capability to do just that. For those of us who are retired, RMD's are a fact of life, and a necessity for survival. Yet, Quicken does not provide a way for us to categorize RMD's for what they are — taxable income!! It is NOT just "moving dollars from one asset to another asset." When you remove money from an IRA, that is deemed income. Quicken needs to acknowledge that.

NotACPA · May 2023

@JWC-2 Just set the tax attribute of your IRA so that transfers out reflect the proper tax line

FlyerFran · May 2023

@JWC-2 For my RMD payments: since, I wanted them to show us as "Other Income" I used the "Create a New SubCategory" Feature in Quicken" (to access, right click while you're viewing the Category List). I called the new SubCategory "Required RMD's" and entered it under "Other Income." In the "Edit Category" window I clicked on "Tax Reporting" and selected "1099-R:Total IRA taxable distrib." Works perfectly, especially when creating the Q' Tax Reports for my taxes.

Unknown · May 2023

This content has been removed.

lawrs21813 · September 2023

[Removed - Rant] We need a lot more help with Qualified Charitable Deductions

and gifts of stock, real property

Boatnmaniac · September 2023

https://community.quicken.com/discussion/comment/20386164#Comment_20386164

FYI: If you go to the 1st post in this thread it says that this Product Idea is now planned.

Improve handling of IRA distributions, including QCDs and Roth conversions

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