Investments funding checking account
I have an Investment that is under Long Term Investing:Retirement Investments, but when I try to show that I have deposited money from the Account, it decreases the investment but does not show that Long Term Investments:Retirement has been withdrawn and deposited to checking causing an INCOME from Long Term Investments: Retirement.
However earlier in the year in an unconnected 403b account I recorded a 403 distribution and it did show up as Long Term Investment:403b INCOME.
What do I need to do to the account set up to make these two transactions to be reflected the same, as now that I have transferred the 403 to a RO IRA are exactly the same event.
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1 Posted by dwg on 15 Sep, 2023 11:00 PM
I'm a fellow user.
You are trying to create a three legged transaction, which as Moneydance follows accounting rules is invalid. You are fundamentally moving money between two assets, an Investment account on one side and a bank account on the other, hence the use of a transfer transaction, but you are also wanting to record it as an income item in a c category, that is effectively trying to count the money twice on one side and only once on the other, it just does not work.
There are way to do what you want but you have to approach it from an accounting perspective.
I have made some notes on handling Monies from retirement investment accounts to do this. I've included them below as a worked example of one method, it has more then what you asked for as it encompasses a number of prospective extra transactions:
Retirement Accounts are often investment accounts, normally funds are moved from Investment Accounts to Bank Accounts using a transfer action, however this does not provide any categorization as it is a transfer. In many cases it may be desirable to also categorize this as Retirement Income, for Budgeting purposes for example, there may be taxation considerations as well. The following example shows one of the ways of handling this.
I have used an amount of 200 being taken out of the investment with a tax payable amount of 30.
I am assuming that the money exists in the Investment account in the form of a cash balance, if a share sale is necessary this needs to be complete first. Also there needs to be a category for the Draw-down, I have it as a subcategory of pensions and called it Drawdown.
In the Bank account I have completed the basics of the date, description & memo then I select the split option in the category.
The first line I entered was for the retirement income, categorized as such with a suitable description and the gross amount i.e. 200 as a deposit.
The second split it to pull the monies from the Investment account so again a deposit of 200 and a category of the Investment account.
The third split is to account for the investment draw down so a Payment entry with a category of the draw down.
The fourth split line is for the 30 tax paid categorized accordingly as a payment. when the split is exited you end up with a deposit of 170 to the check account.
It may look like there is double handling of the amounts here, but in order to draw money from the Investment account, categorize it as a Pension and allow for the monies to be assigned to Taxation and the Bank account, the number of entries is necessary in order to comply with double entry accounting rules
2 Posted by dwg on 15 Sep, 2023 11:08 PM
Hmm, I may need to look at that example again I may have the investment account and drawdown the wrong way round.
The principle is OK however.
3 Posted by dwg on 15 Sep, 2023 11:55 PM
Looking at it it appears to work as written, it may need some rewording to improve the explanation, I believe my earlier response was because l was not looking at the transaction from the perspective of the Bank account.
System closed this discussion on 16 Dec, 2023 12:00 AM.