I am running Quicken 6 R4 and have recently run into a problem in recording the distribution from a mutual fund account into a savings account.
The event was entered as a sale with the proceeds going to the savings account. However since taxes were withheld from the proceeds, I edited the savings account to show a split transaction with negative amounts entered for the taxes (similar to a payroll transaction). The net proceeds are then deposited. I have done this in the past with no apparent problems.
If I then review the transaction ledger for the mutual fund account, it has been changed to reflect a large negative Commission amount and erroneous investment amount.
Can anyone shed any light as to what is happening and what to do about it??
I'm not sure that I understand what happened here. Was it a sale? Or was the fund paying you a dividend in cash? Or was it distributing cash that you already had in the account - from some prior dividend or sale that had not yet been reinvested, perhaps?
Remember the two-step process:
Step 1: Understand what really happened.
Step 2: Record that in Quicken.
Trying to do Step 2 before Step 1 is a recipe for confusion - or worse.
And until WE understand what happened, our advice might not be very helpful.
My best guess is that you had the fund sell some of your shares and send you the proceeds. But that doesn't explain why taxes were withheld. How much tax, and how was that amount computed? Federal income tax, or some other tax?
My best guess - again - is that you need to record TWO transactions. The first would be for the sale of your shares, resulting in a cash balance in your fund Account. This entry would be a split transaction, with your gain (or loss) on the sale going to your Capital Gain Income Category; Quicken's Sale - Shares Sold transaction should handle this automatically.
The second entry would be for distribution of the cash to your savings account. This also would be a split transaction, but the income tax withheld would not be an expense of any kind. It would be a Transfer to another of your Asset Accounts. The name of this other account doesn't matter, but it is could be whichever account you use to hold taxes withheld from your wages. It probably makes sense - and easier reconciliation with Forms W-2 and 1099 at yearend - to create a new Asset Account for taxes withheld from such distributions. I'm running Q2007 Basic now and the only "withdrawal" transaction offered in the drop-down Enter transaction box is Withdraw, under Cash Transactions. You'll have to enter it as a Split transaction, showing transfers to your Savings Account and to your prepaid taxes (by whatever name) Account.
When all the dust has settled, you should have the proper numbers in your gain and loss category, and in your Fund Account, and in your Savings Account - and in your prepaid taxes (by whatever name) Account. And NO commission.
Please post back and let us know if my guesses are wrong. Also, remember that I've been retired for over a decade and tax rules change daily, so be sure to check with your own CPA to see if my advice fits your situation.
IF I'm understanding this right, the following should work.
Go to your Savings account and create a deposit for $800 (this should be the actual amount deposited ... I'm making up an example). Split the deposit transaction. On the 1st line, enter the name of your m/f account and the amount of $1000 (the total value of m/f sold) and on the 2nd line (which will already show -$200) the name of your "Taxes Withheld" account. Record this transaction.
Go to your m/f account and record the sale of m/f (total value $1000) which will offset the $1000 entry you created in the prior step. Record this transaction.
This was cash from a sale initiated by an IRA MRD requirement.
The fund sold the shares to meet the MRD requirement with the proceeds (after withholding Federal and State taxes) being deposited into my savings account.
Being an IRA account, no capital gains involved.
Why would this be any different than my pension direct deposit as a split transaction with the gross amount showing a positive amount in the split and the various deductions showing as negative amounts and allocated to the appropriate categories with the net amount being deposited?
I don't see this as a tax issue but most likely a pilot error. Does my attempt to clarify the transaction give any clue as to what might happening?
Am wondering if you are by chance using a 'SellX' transaction here??
If memory serves me right [dangerous assumption] there have been prior discussions where one gets strange results using this single transaction in an IRA Acct. If this is the case, suggest re-enter as two transactions - a Sell and then a Transfer and see what happens.
I have been using your general procedure for recording regular distributions from a tax-deferred retirement account; Sell securities to generate cash, Transfer gross proceeds to Checking, edit the deposit [Transfer] in Checking to add splits to reflect tax [Fed & State] with-held. I get proper tax reporting this way - the gross distribution is taxable and the with-holding is properly recorded.
The tax with-holding transaction(s) are recorded outside of the tax-deferred account and thus QW picks them up in it's default Tax Schedule Report. I do not use an account for the with-holding; rather categorize these as an Expense with the proper tax-line assignment. Also, the 'Transfers Out' tax attribute for the tax-deferred acount is set to record the transfer as a taxable event.
Agreed. My first "best guess" would have been different if the IRA had been mentioned originally.
But the basic idea remains the same, except that the "capital gain" will go to a non-taxable category. And the second entry I suggested (for the actual withdrawal, split into two transfers - to savings and to prepaid taxes - would still apply.
Much of this confusion is because Quicken (and most taxpayers) ignore the fact that an IRA creates a separate legal entity: the custodial account that holds the IRA's investments. In theory, the IRA assets should be excluded entirely from your own Quicken file. Thus, purchases and sales, including gains and losses, would not be recorded in your personal file at all. Only the withdrawal received from that outside party (the IRA custodian) would be recorded in your personal Quicken file. The IRA custodian (or trustee) would have a separate set of books (Quicken or otherwise). In this separate set of books, the custodian would first record the sale (and gain) and then would record the disbursement to you of the MRD, less withholding. Of course, the custodian would also have to handle remittance of the withheld taxes to the IRS and the state tax agency.
As I said, I've long been retired and haven't had to deal with IRA transactions for a long time - and never in Quicken. So I'll back off and let Dan Brown or some other experienced user provide any further help - which I will read as an interested observer.
I've handled the MRD distribution from another account previously with no problem. In recording the sale in the IRA account the only options are to transfer the proceeds to one of several cash accounts. In recording the sale the proceeds transfer correctly to the cash account. It is only after editing the cash account to show a split transaction does the original sell entry get automagically get changed to reflect the large commission and erroneous investment amount. The share balance remains correct.
Could this be a case of the same fund (symbol) be>I've been handling MRD distributions in a similar way for several years
The only option in the sell transaction is to record proceeds to a single account. If I record the proceeds in the same account the there is no option to then transfer cash to another account.
Agreed. This is what I have been doing except the proceeds are recorded directly in the cash account.
I don't quite understand the term 'Transfers Out' tax attribute statement.
Ok - you are using a 'Single Mutual Fund' account. If possible, you might try changing it to a regular account [still an IRA]. Look under 'Account Attributes' for this option. This change will let you carry/show a cash balance i the account.
The 'Transfers Out' attribute I referred to serves to notify QW to treat transfers out of a tax-deferred account as taxable income. In the account summary view under Options, select 'Set tax attributes'. For 'Transfers Out:' select 1099-R:Total IRA taxable distribution' from the drop-down list. QW will now include these distributions in the Tax Schedule Report for tax purposes and this should sync with the 1099-R you get from the FI at year-end.
I've been handling MRD distributions in a similar way for several years without any problems. I set up an account called "Tax Fed WH IRA" for the withheld tax. Then I make two transactions (could be one with a split, I suppose) with the withheld amount going to the withholding account and the remainder being an "XOut" transaction to the account where the cash goes. If you have state tax withheld too you would need an account for that too.
Have not yet tried this w/07p, but with 06p I had to transfer MRD to a cash acc't before transferring to a taxable investment acc't. Qkn would not recognize it as a taxable event if the $'s were transferred directly to an investment acc't even though $ out were appropriately categorized (1099R, etc.). As the op was transferring to a savings acc't, this should not be an issue.
Dan, If I proceed as you suggested by first entering the deposit then recording the sale, when the sale of the m/f is recorded the proceeds show up as an additional deposit in the savings account.
TURN OFF the "Single Mutual Fund" attribute. It's what causing the advice I gave previously (before you stated that the a/c was SMF) to not work. SMF is one of Intuit's WORST inventions and regularly causes much difficulty of the trivial assistance it brings.
Summary reply to all suggestions and thanks to all for the suggestions.
The only approach that worked for me was to create a "dummy" cash account which doesn't show in the totals. The m/f sale proceeds are then recorded in the "dummy" account. Then the funds are transferred to the real savings account as a split transaction with the appropriate amounts allocated to the tax categories. The "real" source of the funds in the savings account are noted as a memo in the register. It is sort of a PITA but it works until I can determine why this happened.
I will have another MRD from a different account in October and will see what happens when I try to record this sale as I had in the past.
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