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Admin Fee's IRA Entry

To make a long story short, to get everything straight, i wiped wife's ira account in quicken and started over. Trust me, it will work much better this way. I have got all transactions from IRA company after calling them. Its a simple question, but a little explaining first, i have 2 accounts for this ira account, cash contributions and the actual ira account itself where purchased funds transactions are held using other account for funds required for purchase. Quicken shows it as a transfer in register. After doing 3 years of entries a little report i ran showed i was only off by a handful of shares and $0 in the cash part. I started going back over the 3 years and found a few errors which when i try to correct cause more problems. The question, how to enter admin fee's ??

Currently (incorrect) i have cash going into cash account and than a sold in other account removing shares and actually zero's out cash account correctly.

If i remove the cash transactions for these admins and do just the sale of shares to cover admin costs, it than gives me a cash balance in one or other account.

whats the proper way?

Reply to
bill
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Hi, Bill.

How were they paid?

Remember the 2-step process:

Step 1: Understand what happened in The Real World.

Step 2: Record THAT in Quicken.

Don't try to do Step 2 before Step 1!

In the Real World, HOW did you pay the fees? Did you write a check on your personal checking account - outside the IRA? Or did you have the Trustee sell shares, collect the proceeds within the IRA, then use that cash to pay the fees?

The tax rule was (last time I looked, about 20 years ago) that if you paid the fee outside the IRA, it was deductible on your 1040 (if you itemized and subject to some limitations), but if you had the IRA Administrator pay the fee, then it was not deductible. (You get your deduction - sort of - but only after you retire and collect less in taxable distributions because the cash had long ago bee used to pay the fees.)

RC

Reply to
R. C. White

Hi, Bill.

Well, the managers can't pay the fee (even to themselves) with shares. They have to pay it with cash and they have to get the cash from somewhere. If you didn't contribute extra cash - before fee payment time - then they must have sold shares.

I've never had an IRA and never had a client with an IRA in Quicken, since I didn't start using Quicken until after closing my practice. But, the fee-payment transaction you are dealing with is probably like the reinvestment of mutual fund management shares - and we get that question here quite often. From the fund investor's perspective, it seems that management paid the fee (or dividend) in shares and the Quicken user tries to record it as a single transaction - reduce shares, record fee. That doesn't work well because it really is TWO transactions: sell shares and collect cash; use cash to pay fee.

In your situation, you probably need to record those two transactions inside your IRA. It's only slightly more work and makes a much clearer picture of what happened in the Real World. ;^}

RC

Reply to
R. C. White

Hi, Bill.

Use it to pay the fee - immediately !

RC

Reply to
R. C. White

You can enter a MiscExp transaction - category of your choice (IRA Fee, for example) - date it same day as the sale. MiscExp transactions reduce the cash balance in the account.

Reply to
John Pollard

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