Handling recording of account transfers (IRA)

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27 May, 2023 03:56 AM

I've been fairly creative in creating inventory assets and such, but I've been recording IRA disbursal sort of second hand (I put such in a memo and add it up by looking at the previous one)

I'm about to create a withdrawal scenario to show I have continual income. Any thoughts on creating a methodology to have a category showing how much has been disbursed over time, while still making the transaction show the account transfer? Yes, this is the traditional - record the transaction in two places while still observing accounting rules.

Any thoughts on "transfer the amounts" as well as "record the concept in some category"? Like IRA DISBURSEMENT?

  1. 1 Posted by dwg on 27 May, 2023 05:28 AM

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    You have a few options.

    1. A transfer transaction. Then a separate transaction sort of similar to how you handle salary/wages with a category on each side of the transaction, your IRA category on one side and a drawdown on the other is one way. What I often do is the transfer from the Investment account to the drawdown category, then the entry to the bank account really does mirror a salary type transaction

    2. An all in one split transaction. I assume the money is coming from an investment sale so you have a cash balance in the Investment account to transfer. Switch to the Bank Register in the Investment account. Start a new transaction and click to create a split. Clearly you can enter the transfer, but you add some extra transactions. at the simplest level 2 extra transactions. One extra transaction you assign to the category you require, the other transaction you assign it to a category you have created to offset the amount, I have a catch all category I use to capture anything I need to offset for reporting purposes.

  2. 2 Posted by dwg on 27 May, 2023 05:31 AM

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    Here is a screen shot of a split for a drawdown

  3. 3 Posted by dtd on 27 May, 2023 07:21 PM

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    I considered both of the above (or something extremely similar), so it's good to have verification that both of my thoughts would work.


  4. 4 Posted by dwg on 27 May, 2023 11:01 PM

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    I've used both methods successfully, especially at times when I have had to pay some tax on the draw down (We are into Australian Tax law, somewhere you probably don't want to go into :) ).

    It is the sort of thing you can try various options in a test data set and decide which you prefer. The outcome is generally the same, it is just the journey that is a little different and a lot of it is how you like to seen the transactions in the accounts, some methods are more obvious than others.

  5. 5 Posted by Stuart Beesley ... on 28 May, 2023 07:48 AM

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    So, how would you best handle this.

    Investment (pension drawdown) account receives dividend income. These are normal div txns.

    Monthly. £x is taken as drawdown income and therefore needs to be charged to cat: income (note, nothing is sold). From £x, £tax is taken and to be charged to cat: tax. £net is transferred to bank account.

    I have a method but curious as to your approach?

  6. 6 Posted by dwg on 28 May, 2023 08:49 AM

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    No I would not say it is a dividend.

    Normally when you have a draw down it could well cause an investment sale, if you do not have sufficient accumulated funds from Investment returns in a cash account in the investment, even if it is from investment returns the actual draw down is not a Div amount in itself that transaction occurred at a different time when the funds went into the account.

    In the situation you have described Stuart I do whatever I have to do in the investment to ensure I have the cash in the account.

    To get the funds out of the Investment account it is just a Xfr, the simplest method here is to transfer it to an Investment:Drawdown category. Then in the bank account create a deposit like you would for a paycheck using a split transaction starting with the gross, deducting taxes and having the balance going to that account.

    If I want to combine it all in one transaction I'll just create a split transaction in the Investment accounts Bank Register - this in one of the things that register can be used for. The question here is just how "visible" do I want the transactions to be. A split in the Investment account tends to make the transactions a little less obvious, but it tends to be neat.

    What you are working within is the accounting need for two sides, as the goal is to get money out of an investment account into a bank account as well recording the funds against categories, that means for each amount effectively 3 legs and we need 4 legs to keep everything happy.

  7. 7 Posted by dwg on 28 May, 2023 09:42 AM

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    FWIW I have tended to use the first method I described with a transfer to a drawdown category then a salary type deposit.

    There were a number of reasons to do it this way.

    When I retired I took what we call an allocated pension, it made sense to do so, but it meant some tax was payable with each drawdown.

    I could continue to use a salary type transactions the same as when I worked, in fact I could take one of those make a duplicate, change some details and I had my new transaction.

    Things are different now, but I have just continued to follow the approach, I could change but for what benefit.

    Also in those days I didn't know Moneydance as well as I do now, but whether I would have take the alternative approach I do not know, I suspect I would not.

  8. 8 Posted by dtd on 28 May, 2023 06:18 PM

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    I also chose the first method, as well as using the drawdown category as an intermediary. Basically one more transaction per drawdown (and as you say, allows for drawdowns that end up paying something other than yourself (i.e. fees)).

    Doing so yesterday reminded me how I did similar things when I converted from Quicken to Moneydance because of the problem with QIF import transfers/action steps to/from investment accounts - I created accounts/categories called Money Flux:XXXX to unweave years of problems in that sense, then put it back together in ways that Moneydance was satisfied with.

  9. System closed this discussion on 27 Aug, 2023 06:20 PM.

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