How to get my 401K distribution to show up as income on my Budget?

vrden's Avatar

vrden

15 Jan, 2017 04:39 AM

I have been struggling with the process of Budgeting. I have a semi functional setup now, however, I can't seem to understand how to get my 401K withdrawal (distribution) to show up as income on my Budget line. I have my savings account set up with my Investment broker (Vanguard, the holder of my 401K), so that when I take a distribution that money gets deposited directly into my savings account. Here are the Moneydance entries:

Vanguard Account entry -> $25,000 distribution - a split category entry: $5,000 to Fed Tax, $20,000 to Savings Account.

I then move money from Savings to Checking each month and spend it. No where is this transaction captured as "INCOME". How is is suggested to set this up so that the $20,000 gets seen by Moneydance as income and getting it to show up as Income on my Budget?

Thanks,
Den.

  1. 1 Posted by vrden on 03 Feb, 2017 10:04 PM

    vrden's Avatar

    Hello, is anyone willing to share their method of taking a 401K distribution (withdrawal) from their investment or asset account and somehow identifying the transaction as "Income"?

    Since I take my distribution from my asset account (Vanguard) and enter the transaction as a withdrawal, I enter my savings account as the "Category" since, that is where it goes. I don't know how to get Moneydance to see this as "Income".

    Please help if you have worked this out.

  2. 2 Posted by dwg on 03 Feb, 2017 11:42 PM

    dwg's Avatar

    I do not use budgeting but I do draw on an allocated pension, that is partially taxable and I have to report on it, so this describes the method that I use that may also work for what you want.

    I have set up an Category called Investment Drawdowns, I never report on this category but it is there to facilitate the double entry requirements of Moneydance.

    When I draw down funds out of the investment account for the pension I assign it to this category. Thus I have the Investment being reduced by the appropriate amount.

    I then record the amount in another transaction assigned it to a income category, in my case called Allocated Pension, in fact you record it exactly as you would your Salary/Wages, and you can use split transactions etc, this allows me to record things like the tax deducted.

    So I have reduced the value of my investment and record the sums involved as I need for reporting, thus giving me the results I need. I would envisage this would also work for budgeting.

  3. 3 Posted by vrden on 04 Feb, 2017 12:45 AM

    vrden's Avatar
    Hi Dwg,

    Thank you for your response. I understand what you did. I did not think of creating a "new" category for the double entry design of Moneydance. Instead, I tried to work within the given categories by making the withdrawal from "Asset" account directly into my "Savings" account. This did not produce the side effect of earmarking the transaction as "Income" since the deposit to savings is not seen as an "Income Category" assignment.

    Your suggestion should solve this shortcoming. And I do appreciate you understanding my problem and offering a working solution.

    Den.

    On Fri, 2017-02-03 at 23:42 +0000, dwg wrote:

    // Please reply above this line
    ==================================================

    From: dwg

    I do not use budgeting but I do draw on an allocated pension, that is partially taxable and I have to report on it, so this describes the method that I use that may also work for what you want.

    I have set up an Category called Investment Drawdowns, I never report on this category but it is there to facilitate the double entry requirements of Moneydance.

    When I draw down funds out of the investment account for the pension I assign it to this category. Thus I have the Investment being reduced by the appropriate amount.

    I then record the amount in another transaction assigned it to a income category, in my case called Allocated Pension, in fact you record it exactly as you would your Salary/Wages, and you can use split transactions etc, this allows me to record things like the tax deducted.

    So I have reduced the value of my investment and record the sums involved as I need for reporting, thus giving me the results I need. I would envisage this would also work for budgeting.

    On Fri, Feb 03 at 02:04 PM PST, vrden wrote:

    Hello, is anyone willing to share their method of taking a 401K distribution (withdrawal) from their investment or asset account and somehow identifying the transaction as "Income"?

    Since I take my distribution from my asset account (Vanguard) and enter the transaction as a withdrawal, I enter my savings account as the "Category" since, that is where it goes. I don't know how to get Moneydance to see this as "Income".

    Please help if you have worked this out.

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  4. System closed this discussion on 06 May, 2017 12:50 AM.

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