IRA investment shares vs. Roth investment shares

Posted by Gary on September 12, 2009, 9:26 am

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I'm currently using Quicken '0p9 Deluxe. At some time in the past I
discovered it was necessary to differentiate between shares of stock in
regular investment or IRA accounts vs. shares of stock in Roth accounts.

I have, for example,
Fidelity Spartan Total Market Index,
and also
Fidelity Spartan Total Market Index Roth.
They are both designated as FSTVX.

I cannot remember why I differentiated any longer, but the
differentiation is getting me into trouble.
For example, last year I converted some IRA to Roth and had the whole
problem of accounting for the name change (Index -> Index Roth).
Later I partially recharacterized and, once again, the name change
(Index Roth -> Index).

What's the proper way to handle this mess?

Posted by John Pollard on September 12, 2009, 10:14 am

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Gary wrote:

> I'm currently using Quicken '0p9 Deluxe. At some time in the past I

> discovered it was necessary to differentiate between shares of stock

> in regular investment or IRA accounts vs. shares of stock in Roth

> accounts.

> I have, for example,

> Fidelity Spartan Total Market Index,

> and also

> Fidelity Spartan Total Market Index Roth.

> They are both designated as FSTVX.

> I cannot remember why I differentiated any longer, but the

> differentiation is getting me into trouble.

> For example, last year I converted some IRA to Roth and had the whole

> problem of accounting for the name change (Index -> Index Roth).

> Later I partially recharacterized and, once again, the name change

> (Index Roth -> Index).

> What's the proper way to handle this mess?

I can't think of any reason to need a different name for the same security
because it exists in a Regular and a Roth IRA account. [I can think of a
reason for having two names for a security (apparently) held in a 401k
account and any other investment account type.]

The cumbersome (but clean) method for "fixing" the problem would be to
manually change the name of the security that occurs in the fewest Quicken
transactions, then deleting the unused name.

The only other way I know of to handle the situation, is to use a
Corporate Acquisition transaction, to have one fund name "acquire" the
other fund name, issuing one new share for each currently held share.

--

John Pollard

Posted by John Pollard on September 20, 2009, 4:55 pm

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Gary wrote:

> said:

>> Gary wrote:

>>> I'm currently using Quicken '0p9 Deluxe. At some time in the past I

>>> discovered it was necessary to differentiate between shares of stock

>>> in regular investment or IRA accounts vs. shares of stock in Roth

>>> accounts.

>>> I have, for example,

>>> Fidelity Spartan Total Market Index,

>>> and also

>>> Fidelity Spartan Total Market Index Roth.

>>> They are both designated as FSTVX.

>>>

>>> I cannot remember why I differentiated any longer, but the

>>> differentiation is getting me into trouble.

>>> For example, last year I converted some IRA to Roth and had the

>>> whole problem of accounting for the name change (Index -> Index

>>> Roth). Later I partially recharacterized and, once again, the name

>>> change (Index Roth -> Index).

>>>

>>> What's the proper way to handle this mess?

>> I can't think of any reason to need a different name for the same

>> security because it exists in a Regular and a Roth IRA account. [I

>> can think of a reason for having two names for a security

>> (apparently) held in a 401k account and any other investment account

>> type.] The cumbersome (but clean) method for "fixing" the problem would

>> be

>> to manually change the name of the security that occurs in the

>> fewest Quicken transactions, then deleting the unused name.

>> The only other way I know of to handle the situation, is to use a

>> Corporate Acquisition transaction, to have one fund name "acquire"

>> the other fund name, issuing one new share for each currently held

>> share.

> I was just in the process of removing "IRA" and "Roth" from my

> transactions, using only the name of the fund, because I couldn't

> recall the reason I had, for example, a "Fidelity Total Market" and,

> separately, a "Fidelity Total Market IRA" and a "Fidelity Total Market

> Roth".

> Then it occurred to me that the reason I separated them in the first

> place was to be able to report my assets by investment goal. Only one

> goal is alllowed per security, and I wanted to be able to generate

> reports such as the one below (numbers doctored):

> Portfolio Values By Investment Goal - As of 7/1/2009:2

< snip >

Now that you mention it, I do seem to recall others reporting doing
something similar. I have never been enamored of the idea myself.

I see Investing Goal as the goal of the security ... not the goal of the
account where the security is held. The goal of a security is basically
determined by the management of the company. The goal of a "growth" fund
is to produce growth, no matter what account-type you hold it in. The
goal of an "income" fund is to produce income, no matter what account-type
you hold it in.

And, as you've noticed, the practice of creating multiple Quicken
securities for the same real-world security, has its drawbacks. I guess
you'll have to decide for yourself if the benefits are worth the cost.

--

John Pollard

Posted by Gary on September 21, 2009, 8:00 am

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> Now that you mention it, I do seem to recall others reporting doing

> something similar. I have never been enamored of the idea myself.

> I see Investing Goal as the goal of the security ... not the goal of the

> account where the security is held. The goal of a security is basically

> determined by the management of the company. The goal of a "growth" fund

> is to produce growth, no matter what account-type you hold it in. The

> goal of an "income" fund is to produce income, no matter what account-type

> you hold it in.

> And, as you've noticed, the practice of creating multiple Quicken

> securities for the same real-world security, has its drawbacks. I guess

> you'll have to decide for yourself if the benefits are worth the cost.

Good point, and I haven't yet decided.

But I'd just like to add one more observation (no, I'm not debating,
except within myself):

Roth money is after-tax money, so on a net worth report, $1 of Roth
money has a totally different interpretation than $1 of investment
money or IRA money.

IRA money is the only money I have that can become Roth money (I'm
retired, no earned income). That's also a very good number to know.

Investment money is the only money I have to pay for IRA-Roth
conversions (technically, but not practically, I could also pay for the
conversion with converted IRA money itself).

As you might infer, I'm trying to move toward a tax-reduced (already
paid) financial life.

Posted by John Pollard on September 21, 2009, 9:21 am

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Gary wrote:

> said:

>> Now that you mention it, I do seem to recall others reporting doing

>> something similar. I have never been enamored of the idea myself.

>> I see Investing Goal as the goal of the security ... not the goal of

>> the account where the security is held. The goal of a security is

>> basically determined by the management of the company. The goal of

>> a "growth" fund is to produce growth, no matter what account-type

>> you hold it in. The goal of an "income" fund is to produce income,

>> no matter what account-type you hold it in.

>> And, as you've noticed, the practice of creating multiple Quicken

>> securities for the same real-world security, has its drawbacks. I

>> guess you'll have to decide for yourself if the benefits are worth

>> the cost.

> Good point, and I haven't yet decided.

[Having only one Quicken name for the same real-world security also
permits reports/displays that provide information about the same security
no matter which account it's held in. Sometimes that can be useful.]

> But I'd just like to add one more observation (no, I'm not debating,

> except within myself):

> Roth money is after-tax money, so on a net worth report, $1 of Roth

> money has a totally different interpretation than $1 of investment

> money or IRA money.

> IRA money is the only money I have that can become Roth money (I'm

> retired, no earned income). That's also a very good number to know.

> Investment money is the only money I have to pay for IRA-Roth

> conversions (technically, but not practically, I could also pay for

> the conversion with converted IRA money itself).

> As you might infer, I'm trying to move toward a tax-reduced (already

> paid) financial life.

It seems like the Quicken account determines the "goal" for your purposes.

You could create two or three Portfolio Value reports - customized to show
only the accounts that have the same "goal" - and Save each one.

If you feel you really have to have it all in one report, you could export
to Excel, and create a report there that grouped accounts and subtotalled
according to your goal

--

John Pollard