IRA Distribution

  • Thread starter Duane Gullixson
  • Start date

D

Duane Gullixson

I took money out of my IRA. Money handles it like a
simple transfer from my IRA account into "Cash" or
whatever. How do I get it to show up as Income, IRA
taxable distribution?
 
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J

John DeMastri

From the IRS's perspective it is income.

In the year it was contributed to the IRA, it was not
considered taxable income and deducted from your taxable
total (Make 10000, contribute 2000, pay tax on 8000).

In the year it's removed, it is NOW considered taxable
income. In the best case, you're retired and you pay tax
at a lower rate. In the worst case, it's a hardship and
you have to pay tax on it at your current income rate
plus a penalty.

In either case, there has to be a way to characterize
that transfer as a taxable income entry. Any guesses on
how?

I recently did this, and the clunky solution I came up
with was to:
1) delete the transfer
2) enter a withdrawl in the IRA acct (as if I wrote a
check to someone
3) enter a deposit for the same amount in my bank
account, which can be characterized as an IRA
Distribution, and as taxable income.

The net result is that the money's out of your IRA, and
into your account in a way that can be tracked as taxable
income, which is pretty much what you're looking for.

There should be a better way than this, but Money's
inability to characterize transfers is maddenning (just
try to add recurring credit card payments, which are
transfers, to a budget without using the debt planner -
good luck).

Hope this helps, and I hope even more that someone else
comes up with a better solution.

- John
 
D

Dick Watson

Yah, I forgot about the deductible IRA case.

A Transfer cannot be categorized because it is neither Income nor Expense. I
guess how I'd handle this is as the special case of a Transfer from the
deferred account and collect the totals that way or the way you cite is an
(ugly) alternative. I agree that Money does not provide good ways to manage
drawing down retirement accounts. It focuses exclusively on building them
up. All Money developers/designers must be young.

I don't agree that transfers need to be categorized as a general rule and
specifically disagree that payment to a credit card should ever be a
categorized expense (if the card is an account) to make BP happy. This just
masks where the real spending is. Budget the spending ($17.00 Food:Groceries
today)not the cash flow ($1,234.56 Transfer:Credit Card next month).
 
C

Cal Learner-- MVP

Yah, I forgot about the deductible IRA case.

A Transfer cannot be categorized because it is neither Income nor Expense. I
guess how I'd handle this is as the special case of a Transfer from the
deferred account and collect the totals that way or the way you cite is an
(ugly) alternative.
It sounded not all that ugly to me, but it does lack the tying of
the two ends together.
I agree that Money does not provide good ways to manage
drawing down retirement accounts. It focuses exclusively on building them
up. All Money developers/designers must be young.
.... or cease to be developers. ;-(

There is also no distinction made in Money between a Roth and a
traditional IRA. I had checked to see if a transfer from a
retirement account to a non-retirement account might automatically
be treated as income, but that does not appear to be the case.
 
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John DeMastri

I agree with your comments about characterizing CC
transfers - they mask where the money's being spent. My
point was that if I want to buy something over time - say
$1000 over 5 months - I know the expense does (and
should) happen up front, but there's no clean way to put
the $200/month transfer payments into the budget. I'm
not trying to characterize them from an accounting
perspective. I'm trying to account for them from a cash
flow perspective.

I know I'm confusing the accounting/cash flow views in my
own head, but it isn't clear to me that dropping the
$1000 into the budget in Jan matches my "real world" view
of paying $200/month from Feb-Jun.

I'm not saying this clearly...I expect my monthly budget
to be more cash-flow than accounting centric, that's all -
sorry to be so long winded.

Tx for your comments - John
 

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