Admin Fee's IRA Entry

Posted by bill on October 19, 2008, 5:49 pm

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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?

Posted by R. C. White on October 19, 2008, 9:30 pm

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Hi, Bill.

> how to enter admin fee's ??

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
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Quicken 2009 Deluxe in Vista Ultimate x64 SP1)

> 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?

Posted by bill on October 20, 2008, 7:17 am

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The company (IRA) did everything. Seems they removed shares to cover
cost of admin fee. # of shares did decline slightly.But also shows 2
such transactions--memo says one for employee and other for employer.
So im assuming it had to be a sale and not taken from contributions.
Thanks for your quick reply.

> Hi, Bill.

> > how to enter admin fee's ??

> How were they paid?

> Remember the 2-step process:

> Step 1: =A0Understand what happened in The Real World.

> Step 2: =A0Record THAT in Quicken.

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

> In the Real World, HOW did you pay the fees? =A0Did you write a check on =

your

> personal checking account - outside the IRA? =A0Or did you have the Trust=

> sell shares, collect the proceeds within the IRA, then use that cash to p=

> the fees?

> The tax rule was (last time I looked, about 20 years ago) that if you pai=

> 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 th=

> fee, then it was not deductible. =A0(You get your deduction - sort of =A0=

- but

> only after you retire and collect less in taxable distributions because t=

> cash had long ago bee used to pay the fees.)

> RC

> --

> R. C. White, CPA

> San Marcos, TX

> (Retired. =A0No longer licensed to practice public accounting.)

> r...@grandecom.net

> Microsoft Windows MVP

> (Currently running Quicken 2009 Deluxe in Vista Ultimate x64 SP1)

> > 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. =A0After 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?- Hide quoted text -

> - Show quoted text -

Posted by R. C. White on October 20, 2008, 9:02 am

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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
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Quicken 2009 Deluxe in Vista Ultimate x64 SP1)

> The company (IRA) did everything. Seems they removed shares to cover

> cost of admin fee. # of shares did decline slightly.But also shows 2

> such transactions--memo says one for employee and other for employer.

> So im assuming it had to be a sale and not taken from contributions.

> Thanks for your quick reply.

>> Hi, Bill.

>> > how to enter admin fee's ??

>> 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

>> > 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?

Posted by bill on October 20, 2008, 9:25 am

Please log in for more thread options

> Hi, Bill.

> Well, the managers can't pay the fee (even to themselves) with shares. =

=A0They

> have to pay it with cash and they have to get the cash from somewhere. =

=A0If

> you didn't contribute extra cash - before fee payment time - then they mu=

> have sold shares.

> I've never had an IRA and never had a client with an IRA in Quicken, sinc=

e I

> didn't start using Quicken until after closing my practice. =A0But, 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. =A0From the fund investor's perspective, it seems that

> management paid the fee (or dividend) in shares and the Quicken user trie=

> to record it as a single transaction - reduce shares, record fee. =A0That

> doesn't work well because it really is TWO transactions: =A0sell shares a=

> collect cash; use cash to pay fee.

> In your situation, you probably need to record those two transactions ins=

ide

> your IRA. =A0It's only slightly more work and makes a much clearer pictur=

e of

> what happened in the Real World. =A0;^}

> RC

> --

> R. C. White, CPA

> San Marcos, TX

> (Retired. =A0No longer licensed to practice public accounting.)

> r...@grandecom.net

> Microsoft Windows MVP

> (Currently running Quicken 2009 Deluxe in Vista Ultimate x64 SP1)

> > The company (IRA) did everything. Seems they removed shares to cover

> > cost of admin fee. =A0# of shares did decline slightly.But also shows 2

> > such transactions--memo says one for employee and other for employer.

> > So im assuming it had to be a sale and not taken from contributions.

> > Thanks for your quick reply.

> >> Hi, Bill.

> >> > how to enter admin fee's ??

> >> How were they paid?

> >> Remember the 2-step process:

> >> Step 1: =A0Understand what happened in The Real World.

> >> Step 2: =A0Record THAT in Quicken.

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

> >> In the Real World, HOW did you pay the fees? =A0Did you write a check =

> >> your

> >> personal checking account - outside the IRA? =A0Or did you have the Tr=

ustee

> >> sell shares, collect the proceeds within the IRA, then use that cash t=

> >> 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 itemiz=

> >> and

> >> subject to some limitations), but if you had the IRA Administrator pay

> >> the

> >> fee, then it was not deductible. =A0(You get your deduction - sort of =

=A0-

> >> but

> >> only after you retire and collect less in taxable distributions becaus=

> >> the

> >> cash had long ago bee used to pay the fees.)

> >> RC

> >> > To make a long story short, to get everything straight, i wiped wife=

> >> > 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, =

> >> > have 2 accounts for this ira account, cash contributions and the

> >> > actual ira account itself where purchased funds transactions are hel=

> >> > using other account for funds required for purchase. Quicken shows i=

> >> > as a transfer in register. =A0After doing 3 years of entries a littl=

> >> > 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?- Hide quoted text -

> - Show quoted text -

Thanks for the quick reply again. i have been trying to record as 2
transactions, but any "sale" of shares generates cash back to the
account or its cash account. Which will that throw off my totals. The
question is how do i get rid of the cash generated from a sale?