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Posted by JM on June 16, 2007, 11:25 am
Please log in for more thread options > If you were to take distributions from this accout, how would you allocate
> between non-taxable and taxable portion?
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> >> My new employer offers a 401k with both before-tax and after tax
> >> contributions. Has anyone come across this? How would you set up the 401k
> >> account in Quicken if contributions are both before-tax and after tax?
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> > Yes, I took advantage of it back when I was still getting a paycheck.
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> > I'll assume you are using QW's 'Paycheck' and QW's 401k account.
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> > Enter your pre-tax contributions and employer match [if any] in the
> > appropriate section of the paycheck.
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> > Enter the after-tax contribution using 'Other After-Tax Deduction' and
> > show as transfer to the 401k account. Have tested this and QW seems to
> > handle it correctly from a tax reporting standpoint.- Hide quoted text -
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> - Show quoted text -
Can not give you a definitive answer but it involves filing IRS Form
8606. This form apparently calculates the taxable/non-taxable portions
of the distributions.
Here is a link to a thread in another forum which briefly discusses
this:
http://tinyurl.com/27638o
You will note that, according to this refence, it is the owners [your]
responsibility to track the after-tax contributions. I did this by
appending a Class, "AT", to the transfer indication in QW - e.g.,
after-tax contributions showed a category "[401k Account]/AT". A
simple Class Report for "AT" itemized these contributions.
Unfortunately, QW does not have the ability to handle a partially
taxable distribution - while keeping the tax reporting function
correct. With this situation, and the advent of the Roth 401k, QW will
hopefully upgrade the 401k account feature.
FWIW, I managed to avoid the distribution issue - not by design. I
rolled the 401k acct over to another tax-deferred vehicle. This was
before recent tax law changes and the FI issued two checks; one for
the exact cumulative total of ny after-tax contributions [non-taxable
distribution] and a second check for everything else [tax-deferred
distribution]. The later was deposited too the new account and my
distributions are 100% taxable as ordinary income.
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