How To Handle IRA Withdrawl

greg-2012's Avatar

greg-2012

16 May, 2022 10:03 PM

I have a brokerage account with an IRA and a regular checking account. I record the transaction as a direct transfer, but is there a way I can show the amount being withdrawn from IRA as income as well? I suspect that this is quite simple, but its not obvious to me.

  1. 1 Posted by sprimost on 17 May, 2022 02:08 AM

    sprimost's Avatar

    From: sprimost (just a user)

    Question has come up before in this forum. You may need to search the
    archives.

    Basically, you have two transactions to deal with: (1) a sale of a
    investment (stock or mutual fund), and (2) a reporting of income, less
    federal and state taxes (US based).
    (1) Do a "sell" of the stock or mutual fund which increases the amount
    of the cash in the account by the withdrawn (such as a Required Minimum
    Distribution). as _RMD distribution
          Setting up a "contra account", do a misc expense of that stock or
    mutual fund (the transaction requires to assign a fund or stock), to the
    contra account INCOME).
    (2) Enter in your checking account, transaction with an INCOME category
    of the total amount, and less the EXPENSE account for taxes. My income
    category is "RMD distribution"

    Your income and expense report will show two income categories, One will
    have a positive amount (this is your INCOME), and another will show
    negative (this is the contra account that can be filtered out when out
    run the report. I like to show both though a pain to adjust the total
    income because it is a check to see that I did it correctly each month
    (notice that I am working with two different account)

    I am sure there are other ways but this has worked for me for many
    years. I did it this way for the use case run an "EXPENSE" report
    (negative income) for RMDs) as a function of determining by real ROI on
    the 401(k) account.

    /scp.

  2. 2 Posted by dwg on 17 May, 2022 02:28 AM

    dwg's Avatar

    I'm a fellow user.

    Yes it can be done. It must be remembered that Moneydance is based on accounting rules so the approach that needs to be taken must follow these rules.

    Currently you would be entering a single transaction with the bank account as the category. The solution is to use two transactions plus an extra category.

    The first transaction draws the Money out of the investment account and you use the created category for the destination, you could call the category something like IRA Drawdown for example.

    The second transaction is for the same amount of course, you enter it in your cheque account with the category being your desired income category.

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