Creating a 401(k) vs traditional IRA accounts in Quicken

BK · February 27

A family member and a Quicken user asked me the following question I pasted:

"Within the Windows Quicken program only, is there really a difference between setting up a new account as a traditional IRA vs 401(k)? Yes there is a difference in the UI of course, but putting that aside does it really matter which one to use for paycheck contributions? The paycheck wizard allows you to direct the contributions to either account with the same end result."

I played around in a test file and couldn't find anything unless I missed something. So is there a difference?

Chris_QPW · February 27

If you use the Paycheck wizard and have an employer contribution, I do believe there is a difference.

There is a hidden tax account, and the employee and employer contributions are handled differently. This might be more an artifact of the Paycheck wizard though. I haven't tried it with an IRA account.

If you look at the underline split transaction of a paycheck you will see this:

BK · February 27

@Chris_QPW

You are correct and here is the difference in the hidden Tax Impact of 401(k) Accounts:

When directing the paycheck contribution to an IRA, the transfer does NOT appear in the hidden tax account.
When directing the paycheck contribution to a 401(k), the transfer does appear in the hidden tax account. And flows into the Tax Summary and Tax Schedule Reports.

So this is the answer I believe.

Chris_QPW · February 27

If you use the Paycheck wizard and have an employer contribution, I do believe there is a difference.

There is a hidden tax account, and the employee and employer contributions are handled differently. This might be more an artifact of the Paycheck wizard though. I haven't tried it with an IRA account.

If you look at the underline split transaction of a paycheck you will see this:

BK · February 27

When you say a hidden tax account, are you referring to the _401EmployerContrib component in row 9?

I'll play around and report back later.

Chris_QPW · February 27

https://community.quicken.com/discussion/comment/20478759#Comment_20478759

I'm saying that gives you a peek at the process. The employee transfer does more than just transfer the money to the 401K account. It also transfers information to a hidden tax account (not shown above). The employer contribution is handled by that hidden offset split line which is handled/shown in the row 9.

At the moment I forget how to access the hidden tax account. Hopefully one of the SuperUsers will post how that is done. It is a trick with following a given transfer transaction.

BK · February 27

Aha, you are referring to the "Tax Impact of 401(k) Accounts". Thanks, I'll dig in …

Chris_QPW · February 27

Yes, exactly.

BK · February 27

@Chris_QPW

You are correct and here is the difference in the hidden Tax Impact of 401(k) Accounts:

When directing the paycheck contribution to an IRA, the transfer does NOT appear in the hidden tax account.
When directing the paycheck contribution to a 401(k), the transfer does appear in the hidden tax account. And flows into the Tax Summary and Tax Schedule Reports.

So this is the answer I believe.

BK · February 27

I am not given a choice to accept your response at the answer, so I gave you thumbs up. Thanks @Chris_QPW

Creating a 401(k) vs traditional IRA accounts in Quicken

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