1035 Annuity Transfer in Quicken 2005

I'm consolidating three annuity contracts into one account using a 1035 transfer. Two contracts are already in Quicken 2005 as tax free investment accounts, the third one is not in Quicken yet. What's the
best way to set up this new account in Quicken?
Should I sell all the shares in the existing accounts and transfer the money to the new account? If I do that, how can I keep track of the basis? There's not much information in Quicken help on this matter. Any help or advice would be appreciated.
Thanks, Don
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Don R wrote:

I would set up the new account as a tax deferred brokerage account.
I would duplicate the 'real-world' as closely as possible. Did the FI sell the holdings and transfer cash - or did they transfer security holdings?
As to basis - do you have a cost basis from a future tax standpoint?; i.e., did you make after-tax contributions? If the contributions are/were 100% pre-tax, then your cost basis, from a future tax standpoint, is zero. There is no basis to be concerned about. The draws will be 100% taxable as ordinary income.
Post back with more detail if this does not answer your query.
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Thanks for the quick answer to my question. I still have some concerns about basis. The original accounts were funded with after-tax dollars so I do have a basis to worry about.
In answer to your questions, the securities were sold and the cash transferred to the new account. Then variable annuity shares were purchased in the new account.
What's the best way to set up my basis when I create the new Quicken Brokerage account? Don
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Don R wrote:

I think this gets complicated and not sure I have an answer or if QW can handle it easily.
Let my briefly recount my experience with a 401k and perhaps there is a parallel. I made both pre-tax and after-tax contributions to a 401k account. The cost basis [for future tax purposes] is the sum total of all after-tax contributions. Any gain attributed to the after-tax contributions was tax free and essentially co-mingled with the pre-tax contributions, and their gain. Thus, any gain [or loss] from the after-tax contributon performance did not affect the cost basis. The after-tax funds will be withdrawn tax-free [up to the total of contributions] and everthing else is ordinary income. The split is on a pro-rata basis and is recalculated each year using some special IRS form.
I tracked these contributions in QW using classes; appending '/PT' or '/AT' to the transactions. I can easily recreate the totals by running a class report. Years ago I had tried to track performance for AT & PT separately [thinking at the time it was significant] but could not come up with a method in a single account - needed sub-accounts I think.
Speculating now for your situation - seems your cost basis would be the after-tax contributions and that it would not change with performance. If this reasoning is correct, you would first go back and determine what that basis is for each account [the after-tax contributions]. Would then make two cash transfers from each old account to the new account; one cash transfer earmarked after-tax and one earmarked pre-tax. This will clearly document basis for future use. I don't think QW's cost basis calculations are applicable here as events such as re-investment of earnings on securities will have altered the original cost basis.
If you don't get a definitive answer here on what is the true basis [something better than my speculation :<)], you might want to try a search and/or query in Googles' misc.taxes.moderated forum. Seem to be some very knowledgible tax folks hanging out there. Picked up on how to handle my 401k situation from searching the archives.
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I understand the difficulty of keeping track of your basis in a 401K account that has both pre tax and after tax contributions. Fortunately in my case, the annuity contributions are all after tax.
I started to set up a new brokerage account in QW and discovered that you can enter the basis for the account during setup. That should take care of my problem for now. Thanks for the reply to my questions.
Don
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The answer depends upon which VERSION of Quicken you're using.
In H&B 2005, I'd use a "Shares Transferred Between Accounts" transaction.
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I'm using Quicken 2005 Premier. You might have the answer on how to maintain my cost basis. If the shares are transferred out of the old account, the cost basis should go with them. Then I can sell the old shares and buy the new shares in the new account. Don
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