Q2007 - Roth IRA Gain/Loss Calculation

Posted by Dunbar on April 24, 2007, 1:30 am

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I just loaded all of the info for my Roth IRA in Quicken 2007 Deluxe. It
looks like it is ignoring the dividends and capital gains that go reinvested
into the same fund for the gain/loss calucation. This obviously reduces the
apparent gain in the value of the fund(s). The cost basis gets increased
with the reinvestments but I still think gain should be calcluation by
subtracting current value by original purchase price. Am I wrong in my
thinking?

Posted by John Pollard on April 24, 2007, 9:49 am

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Dunbar wrote:

> I just loaded all of the info for my Roth IRA in Quicken

> 2007 Deluxe. It looks like it is ignoring the dividends

> and capital gains that go reinvested into the same fund

> for the gain/loss calucation. This obviously reduces the

> apparent gain in the value of the fund(s).

> The cost basis gets increased with the reinvestments

That's how Quicken does it and that's the way it should be done.

It's no different than if a dividend check was mailed to you,
and you used the dividend check to purchase more shares of the
security. A reinvestment is really a Dividend plus a Buy.

> but I still think

> gain should be calcluation by subtracting current value

> by original purchase price. Am I wrong in my thinking?

You should check the Quicken "Glossary" (and follow up any
links/references to other Quicken Help) for the definitions of
the various "return" values that Quicken can display. Amount
"invested" and amount "reinvested" can play different roles in
different return calculations.

--
John Pollard
First initial underscore Last name at mchsi dot com
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Posted by MMGilbert on April 28, 2007, 12:22 am

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Well, John is certainly correct as to how Quicken does it, and if he
thinks its the way it should be, that's ok too. However, I've taken
the approach that (in a IRA?401(k) type of account) you only care
about gain - no matter whether it's appreciation or dividends paid.
Why? Simply because there is no tax consequences (different) and so
there is no concept of "increasing your cost basis."

So how do I handle it - very simply by letting the new shares show up
in the account as reinvested dividends or whatever, but set the cost
of those shares to $0. Then you track the growth of the fund without
the cost basis increasing over what "you" invested into the IRA, etc.
Works for me.