How to enter a Roth conversion into Quicken?

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Sleepless
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How to enter a Roth conversion into Quicken?

Post by Sleepless » Thu Jul 08, 2010 9:42 am

Quicken question: When converting a traditional IRA to a Roth IRA, do I just move the shares between the accounts? Any tips? Thanks!
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Jack
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Post by Jack » Thu Jul 08, 2010 1:08 pm

Generally, you aren't just moving shares from one account to another. You are selling shares in one account and buying them in the other.

In Quicken, in your traditional account enter a sales transaction and in the same transaction form you should see "Record Proceeds?". You can deposit it as cash in the same account and then use another transaction to transfer the proceeds to the new Roth account. This transaction is recorded as "Sell". And the second transaction is a Transfer.

But it is easier do this in one step instead of two. Under "Record Proceeds?" check the button "To:" and select the new Roth account (you have to create the new Roth account first). So you have a single transaction that sells the old shares in your traditional IRA and deposits the cash proceeds in your new Roth account. This transaction is recorded as "SellX", that is, sell and transfer. Then you enter a transaction in the Roth account to buy new shares with the cash. In the memo field you should note that this is a Roth conversion so that it doesn't get confused with an annual contribution.

sscritic
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Post by sscritic » Thu Jul 08, 2010 1:24 pm

If your accounts are at Vanguard or most other firms, you can just download the transactions. While I haven't done a Roth conversion, if you download a transaction for an account that does not yet exist in Quicken, Quicken will ask if you want to put it into an existing account or create a new account (you don't have to create the new account before the download).

I have done a conversion of an individual account to a trust account at Vanguard, and the download contains all the required information: the two account numbers, the conversion from the first account (it is not labeled as a sale; it is a MS - move shares) and the conversion into the new account (not labeled a purchase; it also is a MS).

hudson4351
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Re: How to enter a Roth conversion into Quicken?

Post by hudson4351 » Sun Jun 26, 2016 11:33 am

I had the same question as the OP and found this post. Here is my follow up question:

In my rollover IRA, I sold TSM and TISM to buy only TISM in my Roth IRA. In my Rollover IRA, the TSM transaction shows up as an "Exchange From", and the TISM transaction shows up as a "Transfer". Would both of these be entered into Quicken as "Sell" transactions in the Rollover IRA, and "Buy" transactions in the Roth IRA? Are the terms "Exchange From" and "Transfer" just shorthand for buy/sells between Vanguard accounts?

In contrast, the deductible contributions in my IRA that I moved to a 401k before the conversion show up as a "Sell" in my Vanguard transaction history, which makes sense.

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grabiner
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Re:

Post by grabiner » Sun Jun 26, 2016 2:41 pm

Jack wrote:Generally, you aren't just moving shares from one account to another. You are selling shares in one account and buying them in the other.

In Quicken, in your traditional account enter a sales transaction and in the same transaction form you should see "Record Proceeds?". You can deposit it as cash in the same account and then use another transaction to transfer the proceeds to the new Roth account. This transaction is recorded as "Sell". And the second transaction is a Transfer.
The reason to do it this way is that you will have to report the shares taken out of the traditional IRA as a withdrawal on your taxes. By treating it as a sale in Quicken, you will get the tax records right. (If you made non-deductible contributions, you will still report the full sale on your taxes, and file Form 8606 to determine how much is taxable.)
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jacoavlu
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Re: How to enter a Roth conversion into Quicken?

Post by jacoavlu » Tue Jan 24, 2017 9:44 pm

Jack wrote:Generally, you aren't just moving shares from one account to another. You are selling shares in one account and buying them in the other.



In Quicken, in your traditional account enter a sales transaction and in the same transaction form you should see "Record Proceeds?". You can deposit it as cash in the same account and then use another transaction to transfer the proceeds to the new Roth account. This transaction is recorded as "Sell". And the second transaction is a Transfer.



But it is easier do this in one step instead of two. Under "Record Proceeds?" check the button "To:" and select the new Roth account (you have to create the new Roth account first). So you have a single transaction that sells the old shares in your traditional IRA and deposits the cash proceeds in your new Roth account. This transaction is recorded as "SellX", that is, sell and transfer. Then you enter a transaction in the Roth account to buy new shares with the cash. In the memo field you should note that this is a Roth conversion so that it doesn't get confused with an annual contribution.
I am new to quicken, just started using quicken 2017

Does this advice still describe the right way to enter a backdoor Roth in quicken?

I have downloaded all vanguard data but it's only 18 months worth. I'll have to manually enter a few years back worth.

Lacrocious
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Re: How to enter a Roth conversion into Quicken?

Post by Lacrocious » Thu Jan 26, 2017 9:40 pm

Yes - this is the right way. I just did a contribution to my TIRA from a Taxable account as the first step in a back-door Roth. Here is how the downloaded transactions came through from Vanguard and what I changed to make the money flow from account to account:

The downloaded transaction in the Taxable is a "Remove Shares" - which causes the shares and $ to just disappear in smoke from the account. The downloaded transaction in the TIRA is a "Add Shares" - which causes the shares and $ to just appear from smoke into the account. Nothing, except date, really ties the two transactions together, which I don't like.

I like to tie things together closer - so I changed the "Remove Shares" into a SellX from PrimeMM in Taxable, transferring the $ to my [TIRA] account. The TIRA now has a balance of cash with no mutual funds purchased. I change the "Add Shares" to a Bought of PrimeMM in the TIRA - using $ from the account balance. My holdings in the TIRA now show $ in PrimeMM and no cash balance. Everything is ticked and tied together appropriately. You can follow the cash through the transaction.

When I backdoor roth from the TIRA to RothIRA - I expect the same "Remove Shares" and "Add Shares" downloads from Vanguard that I will correct to the proper SellX and Bought.

If you are new to Quicken - I suggest you always enter transactions following the cash. I also recommend having a "Cash" Account. Mine maintains a 0 balance, but I use it as a helpful tool to record various transactions. Say I have 3 checks to deposit in the bank and I deposit them in one transaction. One way to do this is to enter a deposit with the 3 checks entered in the category field as a split transaction. This works, but makes it difficult to find how the checks were from. I handle this by entering 3 deposits to my cash account of the 3 checks, recording each separately - so I can enter the names of who they came from "Pay to/Receive From" field. These are easy to find later on. When I deposit in the bank, it is a transfer from Cash to Checking of a single, combined amount. This "follows the money". I received cash (in the form a check) from 3 people. I can see that int he cash account. I then deposited all that in checking. Easy Peasy.
- L

jacoavlu
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Re: How to enter a Roth conversion into Quicken?

Post by jacoavlu » Thu Jan 26, 2017 11:42 pm

Thanks for the reply!

I need to go back and check quicken for the data that was downloaded and auto entered from vanguard. I feel like the transactions in my tIRA and Roth weren't "remove shares" or "add shares" transactions but rather just "sell" and "buy"

jacoavlu
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Re: How to enter a Roth conversion into Quicken?

Post by jacoavlu » Sun Jan 29, 2017 11:56 am

my downloaded Vanguard transactions in tIRA and Roth are just "Bought" and "Sold" transactions, not "add shares" or "remove shares".

I'm going back and changing things, recording the conversion as "SellX" in the tIRA with proceeds to the Roth.

Then when I go over to the Roth in Quicken a "Contrib" shows up for the amount coming from the tIRA. There is still a separate Buy transaction in the Roth.

Do I just leave the Contrib transaction as is, and also leave the Bought transaction in the Roth as well? Or is there some other way this should be recorded, so that the Contrib coming from the tIRA and the Buy transaction with the Roth are just one transaction instead of 2?

(Hopefully this makes sense)

Lacrocious
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Re: How to enter a Roth conversion into Quicken?

Post by Lacrocious » Sun Jan 29, 2017 12:47 pm

That makes sense. The Contrib you see is the other end of the SoldX transaction (combination of Sold + Transfer)

Quicken doesn't know about the logic of your other Vanguard accounts - so doesn't know you transferred from one to the other. You need to provide that info. You can either do a Sold + Transfer (Withdrawl+transfer) + Bought or you can use a SoldX (sell+transfer) + Bought or you can use a Sold + BoughtX (transfer + buy). The Sold/Bought work with money from the local account. SoldX/BoughtX first transfer money from another account. You can't do 3 things in one (ie: SoldX linked to BoughtX).

If you search for previous threads on Vanguard and Quicken - you will see that sometimes the transactions don't download exactly as you would expect (in my case Remove Shares/Add Shares vs. Sold/Bought). I would expect that the Sold/Bought would be correct, but oh well.

- L

jacoavlu
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Re: How to enter a Roth conversion into Quicken?

Post by jacoavlu » Sun Jan 29, 2017 1:03 pm

thanks for the help. All seems to make sense.

Of course I have 18 months of transactions download but I have to go back to 2012 for manual entry to have a permanent record (besides statements) of my IRAs (and wife's) going forward in quicken. So about 3 years of manual entry. I assume once I have all those transactions entered, I delete the automatically created "Opening cash balance" transaction that quicken created?

Doesn't look so daunting except the little transcations, such as fund MM in tIRA, convert a day later to Roth, and then an 11cent dividend shows up in the tIRA and is swept to Roth.

Lacrocious
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Re: How to enter a Roth conversion into Quicken?

Post by Lacrocious » Mon Jan 30, 2017 8:33 am

For your back filling of transactions - keep in mind that if you do buy shares with a "Bought" or "BoughtX" transaction, the money needs to come from either the current account balance or another account. Do you have Quicken history going back that far? Do you have a savings/checking account that you track that has transactions where you represented a Roth purchase with a category, not a transfer to the Roth account? If not, then the balance of your account will not be correct - as there is no balance of money in the account. You could deposit the required amount of money into the account in the "opening balance" transaction. Alternately, you could use the "Add Shares" transaction to add shares w/o requiring cash in the account. Give a few a try see which way you prefer.

To make filling in history less daunting, but have a balance that looks correct right away - again, you could use a temporary "Add Shares" to give you the correct amount of shares and then as you fill in your history, remove the balance in the add shares transaction until you no longer need it because your history is fully in place.
- L

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