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rollover from 401k or IRA into another IRA treated as a contribution, why?

 
 
Scott Lindner
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      03-26-2007, 12:18 AM
> Of course, the IRS really doesn't care how you handle this in Quicken.
> But they DO CARE how you handle it on your tax return, whether you use
> TurboTax or a pencil to prepare your return. Quicken SHOULD transfer the
> info correctly to TT, but it might not. It's up to YOU the taxpayer, not
> Intuit, to make sure that the tax return is correct.


You're absolutely right. The IRS doesn't care how I handle this in Quicken,
but I care greatly to know the state of my finances. This is what I use
Quicken for. I can only assume that all Quicken users use Quicken to
capture the state of their finances. When things happen in the real world
regarding my finances, I like to capture them in Quicken. All of my
questions in this thread are about Quicken. None of them are about IRS
rules, law, my CPA's education, or the means of how the funds got from one
account to another. My questions are 100% about Quicken, and nothing more.

So.. coming back to the beginning. When I transfer funds from my 401k to my
IRA *IN QUICKEN* the Quicken software asks what year I am making this
contribution to my IRA account. The problem is, it isn't a contribution.
How do I handle this properly *IN QUICKEN*. I hope you don't feel I'm being
rude, but you're completely missing the question I'm asking. My CPA is
qualified. I know the law. The IRS doesn't care how I use Quicken, but I
do care how Quicken captures my financial state and my questions are wholly
about Quicken.

Cheers,
Scott


 
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R. C. White
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      03-26-2007, 06:42 PM
Hi, Scott.

I'm sorry if I made this question more complicated than it should have been.
I should have assumed that your plan assets were properly transferred
directly from the old plan to the new one. But when your first post said
you were moving your money to a new account, it triggered my "alert
response" and I reacted with the standard caution to be sure you didn't
handle the funds personally, even for a moment. That would have caused more
complications, probably including penalties.

I was not even thinking of how to handle it in Quicken, and I should have
made that clear. On that point, I'll gladly defer to John Pollard.

RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
(E-Mail Removed)
Microsoft Windows MVP
(Currently running Vista Ultimate x64)

"Scott Lindner" <(E-Mail Removed)> wrote in message
news:(E-Mail Removed)...
>> It's something that Quicken has NO control over. You make the transfer
>> and then tell Quicken how you did it. The tax rules (I'm 90% sure that
>> this rule has not changed) say that if YOU get your hands on the assets
>> of the IRA, then it is taxable to you immediately, even if you turn all
>> the assets over to the new trustee on the same day. The only way to
>> avoid immediate taxation - and penalties - is to have the old Trustee
>> deliver the assets (cash, stock, whatever) to the new Trustee directly.

>
> It is something Quicken has control over. I'm talking strictly about
> Quicken and nothing more. So it is definitely something Quicken has
> control over. I had a 401k, now I have an IRA. The funds from that 401k
> are now in that IRA. As the diligent uber Quicken geek that I am, I want
> to capture the nature of this transaction in my Quicken data set. Prior
> to entering this, I had a crapload of money in a 401k account which I had
> recorded in Quicken. Today, I have a crap load of money in an IRA
> account. Those funds in that IRA account are not a contribution, they are
> a rollover. Quicken is asking me what tax year I made the contribution.
> The problem is, I never contributed those funds to that IRA account.
>
>
>> This Trustee-to-Trustee warning is probably in BIG LETTERS on page 1 of
>> the Financial Planner's Handbook. If she doesn't know this rule, then
>> you need a new CPA.

>
> She's completely fine with her understanding of 401k to IRA rollovers.
> What she can't help me with is why Quicken on my computer wants to treat
> it as a contribution instead of a rollover.
>
> Scott


 
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Scott Lindner
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      03-27-2007, 01:02 AM
> I'm sorry if I made this question more complicated than it should have
> been. I should have assumed that your plan assets were properly
> transferred directly from the old plan to the new one. But when your
> first post said you were moving your money to a new account, it triggered
> my "alert response" and I reacted with the standard caution to be sure you
> didn't handle the funds personally, even for a moment. That would have
> caused more complications, probably including penalties.


No problems. I understand very well how easy it is to misinterpret the
intent of a post online.


> I was not even thinking of how to handle it in Quicken, and I should have
> made that clear. On that point, I'll gladly defer to John Pollard.


Duh... all technical questions regarding Quicken end with John Pollard. :-)

Cheers,
Scott


 
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Oilcan
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      03-27-2007, 02:08 AM
On Mar 26, 6:02 pm, "Scott Lindner" <(E-Mail Removed)> wrote:
> > I'm sorry if I made this question more complicated than it should have
> > been. I should have assumed that your plan assets were properly
> > transferred directly from the old plan to the new one. But when your
> > first post said you were moving your money to a new account, it triggered
> > my "alert response" and I reacted with the standard caution to be sure you
> > didn't handle the funds personally, even for a moment. That would have
> > caused more complications, probably including penalties.

>
> No problems. I understand very well how easy it is to misinterpret the
> intent of a post online.
>
> > I was not even thinking of how to handle it in Quicken, and I should have
> > made that clear. On that point, I'll gladly defer to John Pollard.

>
> Duh... all technical questions regarding Quicken end with John Pollard. :-)
>
> Cheers,
> Scott


If you transferred 100% of your 401K to an IRA (which I have done), I
just renamed the Account and adjusted the securities (buys and sells)
as it was a cash transfer). I entered a comment on the Account that
it was my 401K, (plus all of the historical statements would indicated
that).

 
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Scott Lindner
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      03-27-2007, 03:50 AM
> If you transferred 100% of your 401K to an IRA (which I have done), I
> just renamed the Account and adjusted the securities (buys and sells)
> as it was a cash transfer). I entered a comment on the Account that
> it was my 401K, (plus all of the historical statements would indicated
> that).


That's not a bad idea. It defeats the apparante program flaw in Q07. Of
course, that's not how it happened, but do I care? Hmm.. are there
downsides to using your creative (and lazy :-) ) shortcut?

I'm curious though, what are the tax planning implications of Quicken
treating my transfer of funds incorrectly?

Scott


 
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Scott Lindner
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      04-12-2007, 10:50 PM
There definitely is something wrong with how Quicken is handling this. I
just noticed that when I go to the Performance tab for all of my investment
accounts the graph's total value is exactly double the real value. I
suspect it's related to Quicken treating my rollover as a contribution. The
old account values are $0.00, so I don't completely understand how Quicken
can show the net value of all investment accounts as double what they really
are in the Growth of $10,000 graph. Any thoughts?

Cheers,
Scott


 
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