Tax Planner and FedTaxWH?

Here are detailed instructions for recording IRA distributions

It can be tricky to record distributions such as RMDs from a tax deferred account to a taxable account in Quicken so that the tax implications are captured correctly.   

There are no built-in Categories for IRA tax withholding; you must set them up yourself. I use these:

• Tax Fed:Fed IRA WH with a tax line item of 1099-R:IRA federal tax withheld
• Tax State:State IRA WH with a tax line item of 1099-R:IRA state tax withheld

In the IRA, click on the gear at the top right and select Edit account details. Click on Tax Schedule and set Transfers out to "1099-R:Total IRA taxable distrib." If you don’t see the Tax Schedule button at the bottom of the Account Details dialog, click on View in the top menu and select “Tabs to show”. In the list of tabs, select Planning.

Enter one or more Sold transactions for the securities that were sold. This will put a cash balance in the account equal to the total amount of the distribution, including any taxes that were withheld.

If no taxes are withheld from the distribution, you can simply enter the distribution in the IRA as a transfer to the receiving account.

If taxes are withheld from the distribution, the process is more complicated because you must record the gross distribution as well as the withholding(s) in the taxable receiving account. To do this, go to the receiving account and:

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

2)  Split the Category:

• Line 1 of the split:  Category = the IRA account name in [square brackets] for the gross amount as a positive number. This will create a transfer from the IRA.
• Line 2 of the split:  Category = the Fed tax withholding category that you use, as a negative number.
• Line 3 of the split:  Category = the State tax withholding category that you use, as a negative number.
• Total of the split:  Must equal the net amount of the deposit.

If the deposit is made to a banking account between Jan. 1 and April 15, you will see a dialog titled “Confirm Your Contribution Tax Year”, even though this is a distribution and not a contribution. Select the current year, not the default of the previous year, and click on OK. This seems to be a bug.

If you receive the distributions regularly, you can save repeated manual entry by setting up this transaction as an Income Reminder.

If taxes were withheld in the IRA account, you must delete or not accept any downloaded transactions in the IRA for the net distribution and the withholding.

With this setup, the taxable income will be shown in the Tax Planner and the “1099-R Total IRA Taxable distrib.” and any tax withholding in the withholding sections of the Tax Schedule report.