On Thu, Jul 3, 2014 at 9:47 AM, Martin Blais <[email protected]> wrote: > Also, personally I don't like to bake estimations manually in transactions, > like this. I think this is information that should be derived from the > balances computed by the command-line bookkeeping system.
That's a fair point. >> No, they are all folded into the same account. It's irritating as all >> heck, but that's the way it is (at least across 2 mgmt companies >> I've dealt with). > > Crazy indeed... do they at least track it for you? In other words... is > anyone counting, or is the government just trusting that you're going to be > reporting the right numbers? Well, if you get audited it's your responsibility to have the paperwork to prove that you put such and such an amount into it on an after-tax basis, so I keep all my paystubs, until I get the year-end paystub with the totals for the year. That said, the companies will usually provide you, on your quarterly or end-of-year statements, the total contributions that came in on a pre-tax vs post-tax basis. But I don't think that's guaranteed, and I've never seen a company show you the *total* across multiple years. That could just be saying something about the quality of the mgmt companies my employeers have been dealing with though. :) > For the record, Vanguard does break down the pre-tax employee contribution > and employer-match, though I don't see the point: both are pre-tax money. Agreed, but it's nice to have more information than you need rather than less. :) > BTW, I think you're overloading the word "cost basis" here, it's confusing. > It's confusing because if the account is able to hold both pre-tax and > after-tax contributions, the terms cost basis doesn't bear much resemblance > to the cost basis of an investment (it would, it all you had is after-tax > contributions in there). What you mean is counting the amount of after-tax > contributions to the account that you should not have to pay tax on when you > take a distribution, even in the presence of pre-tax contributions. Let's > call it, say, the "pre-tax basis" and the "after-tax basis". Sure, that's fine. I used the term due to the way the IRS treats these tax-defered retirement accounts: Everything in the account is taxable as income except for after-tax dollars you originally used to make the purchase. To my mind that was the same as a cost basis in a traditional individual investment account (the former just at a higher tax rate than the latter). > Right, this is also what I understand. What I'm suggesting above is a method > to keep track of the "after-tax basis" that lives in your account, that is, > the sum total of all non-deductible contributions you made in the past (what > you called the "cost basis"). You would add legs with another "commodity", > say "AFTERTAX" or "ROTH" or whatever you prefer to call it, something like > this: > > 2014-01-01 * MyCo Paycheck > ... > Income:Prepaid Tax:Income:Federal -400.00 AFTERTAX > Assets:401k:MyCo 400.00 AFTERTAX > > The sum of all "AFTERTAX" units will tell you how much money you can get a > non-taxable distribution of. > If you do take a distribution, you have to remember to also add matching and > appropriate legs to it: > > 2014-01-01 * MyCo Paycheck > Assets:401k:MyCo $-2100.00 > Assets:Bank:Checking $2100.00 > Assets:401k:MyCo -2100.00 AFTERTAX > Expenses:Distributions 2100.00 AFTERTAX > > This works: > > Assets:401k:MyCo's AFTERTAX units count how much of that account is > after-tax basis > > Income:Prepaid Tax:Income:Federal counts the total of your after-tax > contributions made during the exercise period > > Expenses:Distributions's AFTERTAX units tells you how much after-tax > distributions you receives during the exercise period Am I understanding correctly that you are saying to just flag a certain dollar amount into the Assets:401k:MyCo account as being after-tax, and to track that over the years? I'm not sure I following what the Expenses:Distributions account entry is for, why is it an expense? Jim -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
