IRA Rollover of Stock

Posted by Luka on October 24, 2009, 10:23 am

Please log in for more thread options

What is the best way to enter a Rollover of Stock from a pre-tax IRA
to a Roth IRA. I want to make sure that the value is reflected in the
tax planner as a taxable event.

Posted by John Pollard on October 26, 2009, 11:29 am

Please log in for more thread options

Luka wrote:

> What is the best way to enter a Rollover of Stock from a pre-tax IRA

> to a Roth IRA. I want to make sure that the value is reflected in the

> tax planner as a taxable event.

I can tell you a bit about the mechanics - which don't work correctly
(Q2009 RPM R6).

Quicken intends to determine the tax impact of transfers of cash into and
out of investment accounts by looking at the "Tax Attributes" for the
account. [Click "Options > Set Tax Attributes" on the Account Attributes
pane on the Overview tab of the account to see how your Tax Attributes are
set.]

If Quicken was working correctly, I assume the steps to take would be:
sell securities in IRA account; transfer cash to Roth IRA account; buy
securities in Roth IRA account. [Alternatively, you might be able to use
Remove Shares transactions in the IRA, a cash adjustment in the IRA for
the value of the securities, a transfer of cash to the Roth IRA, then
multiple Add Shares transactions in the Roth IRA account.]

But if you transfer cash out of a Quicken tax-deferred account into
another investment account; Quicken doesn't treat the transfer according
to the Tax Attributes setting. In order to get the correct tax treatment
in Quicken, you need to transfer the cash to a non-investment account.

To overcome that problem, you could setup a dummy intermediate
non-investment account; transfer the cash from the IRA to that
intermediate account, then immediately transfer the funds out of the
intermediate account and into the Roth IRA. The transfer out of the IRA
will appear in the Tax Planner and the Tax Schedule report (assuming
you've assigned the correct Tax Line Item to the transfer out in the Tax
Attributes of the IRA account).

Even that transfer into the Roth IRA will not be treated correctly (though
Quicken would have no way of knowing what to do in this case); Quicken
will call the transfer into the Roth IRA a "contribution" ... but since
it's a Roth IRA, I don't think this has much significance.

I don't use Turbo Tax, so I can't comment on the effects there.

[Ideally, Quicken would have some sort of rollover transaction ... as of
Q2009, it doesn't.]

--

John Pollard