Entering Interest in IRA Account

Posted by rc_watkins on October 16, 2007, 11:19 pm

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When entering interest in a tax deffred account like an IRA,should you
entered it as _IntInc or _IntIncTaxFree? Also, when a fund in your IRA
pays interest in the form of reinvesting the dividends, should you
first make a entry (_IntInc or _IntIncTaxFree) and than buy the number
of shares that were issued or should you enter it as reinvest income
reinvested? What is the best way? This is for Quicken 2008 Premier

Posted by JM on October 17, 2007, 8:28 am

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On Oct 16, 9:19 pm, rc_watk...@yahoo.com wrote:

> When entering interest in a tax deffred account like an IRA,should you

> entered it as _IntInc or _IntIncTaxFree? Also, when a fund in your IRA

> pays interest in the form of reinvesting the dividends, should you

> first make a entry (_IntInc or _IntIncTaxFree) and than buy the number

> of shares that were issued or should you enter it as reinvest income

> reinvested? What is the best way? This is for Quicken 2008 Premier

You can safely use the "_IntInc" category in a tax-deferred account.
The tax-deferred status of the account, by default, excludes interest,
dividends, cap gains/losses, etc. from the tax reports.

The "_IntIncTaxFree" category is intended for use with tax free
holdings in a taxable account; e.g., income on munis, etc.

Posted by R. C. White on October 17, 2007, 9:05 am

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Hi, RC. (Love that name!)

You shouldn't enter it in YOUR books at all, because it isn't YOUR income.

I've never had an IRA, 401(k) or similar plan, and have never used Quicken
to account for one, even for a client. But I was in practice when
Congressman Keogh got Congress to pass the first of such retirement plans
back in the 1960s. These plans were invented to allow self-employed
individuals to get tax benefits similar to those enjoyed only by employees
whose employers established retirement plans.

The essential theory in all these plans is that a TRUST is created. Money
is contributed to the Trust and no longer belongs to the contributor. It is
technically owned by the Trustee, who has a fiduciary duty to manage it, in
accordance with the Trust agreement, for the benefit of the beneficiary -
the future retiree. So, while the beneficiary has a strong interest in what
happens to the funds in the Trust, that money does not belong to the
beneficiary until it is paid out of the Trust to him, at retirement (or
early termination of the Trust). The beneficiary's income statement should
not reflect any transactions or growth in the Trust, except maybe by a
footnote. And the beneficiary's balance sheet should not include the
balance in the Trust - again, except in a footnote.

As I said, I've never used Quicken for such a plan, but I THINK it should be
in a separate Quicken "file" - actually a set of related files - established
for the Trust by the Trustee. All that should show up in YOUR Quicken file
should be contributions from your checking account, or via payroll
deductions, to the Trustee - and the eventual retirement checks coming from
the Trust. The Trust's file should reflect receipt of the contributions,
plus all income, expenses and other transactions by the Trustee, including
eventual pension payouts.

I know that most IRA beneficiaries ignore the legal niceties of all this
theory. As I said, I've never used Quicken to account for such a plan, so I
don't know how Quicken deals with blurring the lines between the employee
and the Trustee. I'll let others tell you how, in practical terms, to
handle these retirement plans. I haven't even bothered to read Quicken's
Help file about this; have you?

Remember that I've been retired for over a dozen years, so be sure to check
all this with your own CPA, who should be familiar with the current rules -
and might be familiar with Quicken, too.

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 2008 Deluxe in Vista Ultimate x64 SP1 beta)

> When entering interest in a tax deffred account like an IRA,should you

> entered it as _IntInc or _IntIncTaxFree? Also, when a fund in your IRA

> pays interest in the form of reinvesting the dividends, should you

> first make a entry (_IntInc or _IntIncTaxFree) and than buy the number

> of shares that were issued or should you enter it as reinvest income

> reinvested? What is the best way? This is for Quicken 2008 Premier

Posted by Andrew DeFaria on October 17, 2007, 11:42 am

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R. C. White wrote:

> Hi, RC. (Love that name!)

> You shouldn't enter it in YOUR books at all, because it isn't YOUR

> income.

> I've never had an IRA, 401(k) or similar plan,

Really? So I'm curious now. What sort of retirement plan did you have?
Just a pension? Independently wealthy? Currently eating dog food and
loving it? :-)

> and have never used Quicken to account for one, even for a client.

> But I was in practice when Congressman Keogh got Congress to pass the

> first of such retirement plans back in the 1960s. These plans were

> invented to allow self-employed individuals to get tax benefits

> similar to those enjoyed only by employees whose employers established

> retirement plans.

> The essential theory in all these plans is that a TRUST is created.

> Money is contributed to the Trust and no longer belongs to the

> contributor. It is technically owned by the Trustee, who has a

> fiduciary duty to manage it, in accordance with the Trust agreement,

> for the benefit of the beneficiary - the future retiree. So, while

> the beneficiary has a strong interest in what happens to the funds in

> the Trust, that money does not belong to the beneficiary until it is

> paid out of the Trust to him, at retirement (or early termination of

> the Trust). The beneficiary's income statement should not reflect any

> transactions or growth in the Trust, except maybe by a footnote. And

> the beneficiary's balance sheet should not include the balance in the

> Trust - again, except in a footnote.

> As I said, I've never used Quicken for such a plan, but I THINK it

> should be in a separate Quicken "file" - actually a set of related

> files - established for the Trust by the Trustee. All that should

> show up in YOUR Quicken file should be contributions from your

> checking account, or via payroll deductions, to the Trustee - and the

> eventual retirement checks coming from the Trust. The Trust's file

> should reflect receipt of the contributions, plus all income, expenses

> and other transactions by the Trustee, including eventual pension

> payouts.

I'd say most people use Quicken merely to get control over their
spending. IOW they get it to manage their checking account. Some enter
accounts for their savings and their credit cards. Damn credit cards and
debts - what a bother. But still I want to account for them and pay
them, hopefully off. Some then get into online banking to make paying
off such debts and other expenses in an easier fashion. Some look at
/the bottom line/ and realize it's largely negative. I mean I have my
checking account then mostly liabilities like credit card accounts,
perhaps a car loan and mortgage. So some then think "Well gee I do have
a car worth some money and a house worth some money" and enter in asset
accounts for those. Then they start thinking about their retirement and
how those are assets too. Plus they want to make sure that their
investment choices don't suck. So entering in 401(k) and other
retirement accounts and/or other non retirement accounts become
something they want to have in Quicken so as to have /The Big Picture/.

As such tracking retirement accounts makes sense in the same Quicken
file so one can take advantage of Quicken's tools to get an accurate
financial picture of ones finances. Additionally such information helps
with Quicken's financial planning tools.

Technically, legally perhaps the money isn't the individuals until
withdrawn, however people rightfully see it as theirs as they are one of
the few people who are allowed to gain access to it either at retirement
or by paying early withdrawal penalties.

> I know that most IRA beneficiaries ignore the legal niceties of all

> this theory.

Most people see it as it's money that belongs to them.
--
Andrew DeFaria <http://defaria.com>
If quitters never win, and winners never quit, what fool came up with,
"Quit while you're ahead"?

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R. C. White wrote:
RC.  (Love that name!)
 
 
You shouldn't enter it in YOUR books at all, because it isn't YOUR
income.
 
 
I've never had an IRA, 401(k) or similar plan,</blockquote>
Really? So I'm curious now. What sort of retirement plan did you have?
Just a pension? Independently wealthy? Currently eating dog food and
loving it? :-) 
and have never used Quicken to account for one, even for a client.  But
I was in practice when Congressman Keogh got Congress to pass the first
of such retirement plans back in the 1960s.  These plans were invented
to allow self-employed individuals to get tax benefits similar to those
enjoyed only by employees whose employers established retirement plans.
 
 
The essential theory in all these plans is that a TRUST is created. 
Money is contributed to the Trust and no longer belongs to the
contributor.  It is technically owned by the Trustee, who has a
fiduciary duty to manage it, in accordance with the Trust agreement,
for the benefit of the beneficiary - the future retiree.  So, while the
beneficiary has a strong interest in what happens to the funds in the
Trust, that money does not belong to the beneficiary until it is paid
out of the Trust to him, at retirement (or early termination of the
Trust).  The beneficiary's income statement should not reflect any
transactions or growth in the Trust, except maybe by a footnote.  And
the beneficiary's balance sheet should not include the balance in the
Trust - again, except in a footnote.
 
 
As I said, I've never used Quicken for such a plan, but I THINK it
should be in a separate Quicken "file" - actually a set of related
files - established for the Trust by the Trustee.  All that should show
up in YOUR Quicken file should be contributions from your checking
account, or via payroll deductions, to the Trustee - and the eventual
retirement checks coming from the Trust.  The Trust's file should
reflect receipt of the contributions, plus all income, expenses and
other transactions by the Trustee, including eventual pension payouts.
 
</blockquote>
I'd say most people use Quicken merely to get control over their
spending. IOW they get it to manage their checking account. Some enter
accounts for their savings and their credit cards. Damn credit cards
and debts - what a bother. But still I want to account for them and pay
them, hopefully off. Some then get into online banking to make paying
off such debts and other expenses in an easier fashion. Some look at the
bottom line and realize it's largely negative. I mean I have my
checking account then mostly liabilities like credit card accounts,
perhaps a car loan and mortgage. So some then think "Well gee I do have
a car worth some money and a house worth some money" and enter in asset
accounts for those. Then they start thinking about their retirement and
how those are assets too. Plus they want to make sure that their
investment choices don't suck. So entering in 401(k) and other
retirement accounts and/or other non retirement accounts become
something they want to have in Quicken so as to have The Big Picture.
 
 
As such tracking retirement accounts makes sense in the same Quicken
file so one can take advantage of Quicken's tools to get an accurate
financial picture of ones finances. Additionally such information helps
with Quicken's financial planning tools. 
 
Technically, legally perhaps the money isn't the individuals until
withdrawn, however people rightfully see it as theirs as they are one
of the few people who are allowed to gain access to it either at
retirement or by paying early withdrawal penalties. 
know that most IRA beneficiaries ignore the legal niceties of all this
theory. 
</blockquote>
Most people see it as it's money that belongs to them. 
<div class="moz-signature">-- 
<a href="http://defaria.com">Andrew DeFaria</a> 
If quitters never win, and winners never
quit, what fool came up with, "Quit while you're ahead"?
</div>
</body>
</html>

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Posted by R. C. White on October 17, 2007, 11:53 pm

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Hi, Andrew.

> Really? So I'm curious now. What sort of retirement plan did you have?

> Just a pension? Independently wealthy? Currently eating dog food and

> loving it? :-)

No pension except Social Security. Not independently wealthy. Just a good
education, hard work and long hours for 30 tax seasons, spending less than
we made - and good luck, I guess. As I think I've said before, it's partly
a matter of my personal philosophy and partly a matter of timing. The
current Keogh/IRA/401(k) climate did not occur all at once. It arrived in
incremental stages during my working years in the 1960s to 1980s, with each
stage a couple of years too late to do me any good. By the time I might
have qualified, I had stopped paying interest and started earning some.
THAT's the hump that most folks never get over. From there, it was just a
matter of investing and reinvesting our savings until it snowballed into a
nest egg. Haven't had to eat dog food yet. ;<)

> Damn credit cards and

> debts - what a bother. But still I want to account for them and pay

> them, hopefully off.

Credit cards are a wonderful tool, when properly used. We've used them for
decades and never pay any interest or annual fee. We use THEIR money - and
earn interest on it - instead of letting them use ours. We never even look
at the interest rates on our cards because we're not going to pay it,
anyhow.

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 2008 Deluxe in Vista Ultimate x64 SP1 beta)

> R. C. White wrote:

>> Hi, RC. (Love that name!)

>> You shouldn't enter it in YOUR books at all, because it isn't YOUR

>> income.

>> I've never had an IRA, 401(k) or similar plan,

> Really? So I'm curious now. What sort of retirement plan did you have?

> Just a pension? Independently wealthy? Currently eating dog food and

> loving it? :-)

>> and have never used Quicken to account for one, even for a client.

>> But I was in practice when Congressman Keogh got Congress to pass the

>> first of such retirement plans back in the 1960s. These plans were

>> invented to allow self-employed individuals to get tax benefits

>> similar to those enjoyed only by employees whose employers established

>> retirement plans.

>> The essential theory in all these plans is that a TRUST is created.

>> Money is contributed to the Trust and no longer belongs to the

>> contributor. It is technically owned by the Trustee, who has a

>> fiduciary duty to manage it, in accordance with the Trust agreement,

>> for the benefit of the beneficiary - the future retiree. So, while

>> the beneficiary has a strong interest in what happens to the funds in

>> the Trust, that money does not belong to the beneficiary until it is

>> paid out of the Trust to him, at retirement (or early termination of

>> the Trust). The beneficiary's income statement should not reflect any

>> transactions or growth in the Trust, except maybe by a footnote. And

>> the beneficiary's balance sheet should not include the balance in the

>> Trust - again, except in a footnote.

>> As I said, I've never used Quicken for such a plan, but I THINK it

>> should be in a separate Quicken "file" - actually a set of related

>> files - established for the Trust by the Trustee. All that should

>> show up in YOUR Quicken file should be contributions from your

>> checking account, or via payroll deductions, to the Trustee - and the

>> eventual retirement checks coming from the Trust. The Trust's file

>> should reflect receipt of the contributions, plus all income, expenses

>> and other transactions by the Trustee, including eventual pension

>> payouts.

> I'd say most people use Quicken merely to get control over their

> spending. IOW they get it to manage their checking account. Some enter

> accounts for their savings and their credit cards. Damn credit cards and

> debts - what a bother. But still I want to account for them and pay

> them, hopefully off. Some then get into online banking to make paying

> off such debts and other expenses in an easier fashion. Some look at

> /the bottom line/ and realize it's largely negative. I mean I have my

> checking account then mostly liabilities like credit card accounts,

> perhaps a car loan and mortgage. So some then think "Well gee I do have

> a car worth some money and a house worth some money" and enter in asset

> accounts for those. Then they start thinking about their retirement and

> how those are assets too. Plus they want to make sure that their

> investment choices don't suck. So entering in 401(k) and other

> retirement accounts and/or other non retirement accounts become

> something they want to have in Quicken so as to have /The Big Picture/.

> As such tracking retirement accounts makes sense in the same Quicken

> file so one can take advantage of Quicken's tools to get an accurate

> financial picture of ones finances. Additionally such information helps

> with Quicken's financial planning tools.

> Technically, legally perhaps the money isn't the individuals until

> withdrawn, however people rightfully see it as theirs as they are one of

> the few people who are allowed to gain access to it either at retirement

> or by paying early withdrawal penalties.

>> I know that most IRA beneficiaries ignore the legal niceties of all

>> this theory.

> Most people see it as it's money that belongs to them.

> --

> Andrew DeFaria <http://defaria.com>