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how to account RMD transactions RRS feed

  • Question

  • RMD's (minimum required distributions) are not income. Do I account for them as expenses?
    Monday, February 9, 2015 8:24 PM

Answers

  • You should have the IRA account marked as a RetirmentAccount in the AccountSettings. Then Money will not put the capital gains from the sale onto your taxes.
    • Marked as answer by guschwa Friday, February 27, 2015 4:57 AM
    Wednesday, February 11, 2015 2:10 AM
    Moderator

All replies

  • I assume that you are in the US and are asking about required minimum distributions (RMDs) from a retirement account such as an IRA or 401k.  If not, post back.

    In Money, these should be handled as a transfer from the retirement account to the account where the distribution is deposited.  The distribution is not income because it's already "your money" and it is just moving from one account to another.

    However, the distribution could be a taxable event if the funds that are distributed were deposited in the account without paying taxes on them (pre-tax contributions).  In that case you must show the pre-tax part of the distribution as income on your federal tax return and, typically, have the appropriate amount of federal tax withheld at the time of the distribution.

    In addition, Money does not show these transfers in the tax reports and does not include them is the Tax Software Report (txf file) that it can generate.  So if you are using a tax software program such as TurboTax or H&R Block, you will need to enter them manually.


    Bill Becker

    Tuesday, February 10, 2015 2:30 AM
  • Bill, thanks for the prompt reply.
    The info was very helpful. 
    The only problem I have now is that the RMD comes out of an investment IRA account,   so I had to sell stock to satisfy the dollar amount. Problem is I never designated this account as being an IRA account and Microsoft Money insisted on using the FIFO and came up with a huge capital gain. I erased the transaction, designated the account as IRA and repeated the transaction. to no avail MS Money still insists on using FIFO. Sorry to bore you with all this I just thought you might have some insight and it  really does not matter except it throws off my Income and Expense Report.  
    I wish MS Money was based on good old book keeping with debits and credits.
    Thanks again         Gunther Schwarz 
    Tuesday, February 10, 2015 6:20 PM
  • Yes, Money does keep track of capital gains and losses in every account.  And if you sell an appreciated asset in a retirement account, Money will keep track of the capital gain, even though that gain is not reportable as such on your federal tax return.

    To avoid having these gains show up in your income and expense reports (and the capital gains report), I suggest that you customize those reports to exclude retirement accounts.

    As for the FIFO issue, you should be able to select which lots you sell.  When you enter the sell transaction  you will see a pop-up window that offers "FIFO" or "Let me specify which shares I wish to sell or transfer".  If you select the latter you will see a list of purchases. Then you can select the shares that you actually sold.  This is important in a taxable account because you need to report the capital gains from the sale and maintain the correct basis of the remaining shares. That level of detail is not needed in a retirement account.


    Bill Becker

    Tuesday, February 10, 2015 10:15 PM
  • You should have the IRA account marked as a RetirmentAccount in the AccountSettings. Then Money will not put the capital gains from the sale onto your taxes.
    • Marked as answer by guschwa Friday, February 27, 2015 4:57 AM
    Wednesday, February 11, 2015 2:10 AM
    Moderator