Re: [GNC] Recommended Method of Entry for IRA Distributions

[Milton Stern]

Hi Everyone,

I was thinking, perhaps to have the initial 401k/IRA in the "Assets" as a
Deferred Income under the standard categories/subcategories (ex. Stocks,
Mutual Funds, Treasury Bills, CDs, etc.) (or Visa versa)?
When a distribution is taken, the vehicle is sold with proceeds going to
"Income" (perhaps to a sub-account descriptive of the vehicle and the
category?
Then a transfer of income to a bank-type account from the income account?
(Though it may not meet accounting standards, it should be able to track
the 401k/IRA and produce an income and asset reports.)
(Note that this does not directly address vesting, withholding nor
premature distributions.)

Thoughts?

Moshe




> Message: 8

Date: Fri, 13 Jan 2023 17:10:35 -0500
> From: Michael or Penny Novack 
> To: R Losey , "David T." 
> Cc: gnucash-user@gnucash.org
> Subject: Re: [GNC] Recommended Method of Entry for IRA Distributions
> Message-ID: <378e51c5-61d1-4c7f-18c8-1db8c6a83...@comcast.net>
> Content-Type: text/plain; charset=UTF-8; format=flowed
> On 1/13/2023 11:48 AM, R Losey wrote:
> > Thanks. The only minor drawback is that I seem to be entering the data
> > twice under "Income" just to keep track of IRA distributions?on their
> > own. But hey, it's one way to make it work.
> >
> > And, as has been pointed out, since this is not really "income", it
> > makes sense that the transaction has no net income. I think I'll adopt
> > this method for 2023.
> >
> > In hindsight, since the Fiduciary Trust that keeps the IRA has to
> > report to me on distributions, I haven't felt a need to have an
> > account for this and to double-check them.
> >
> >
> >
> > On Thu, Jan 12, 2023 at 10:56 PM David T.  wrote:
> >
> > Two separate entries. In my mind, this would best be put in one
> > transaction, to make the association obvious.
> >
> > CR - Assets: IRA $1000
> > DB - Assets: Checking $1000
> > DB - Income: Deferred Income $1000
> > CR - Income: IRA Distribution $1000 *
> >
> <<< it most certainly COULD be in one entry. A transaction can have more
> than two accounts. It is only when entering via the shortcut "enter
> directly into the ledger" that gnucash allows you to do that is limited
> to two accounts. When entering a "split" in "journal mode" you can have
> more than two. In the old days ALL transactions were entered first in
> the journal and then posted to the ledger. But even in pen and ink days
> we had SOME shortcut possibilities, like "cashbook accounting" << where
> a small subset of the ledger allowed direct entry skipping the journal.>>
>
>
BUT -- I would not have "deferred income" under income, because it is
more like a standing account. The money that you put into the 401k/IRA
did not get counted in your income in those years. The money contributed
by your employer (401k) did not get counted as income back then, nor the
annual increases in fund value as you perhaps marked to market at year
end (the investment income of the fund).

When you take distributions later is when it becomes income << you are
undeferring that amount >>

This is accounting, not gnucash

Michael D Novack


>
> * Income: IRA Distribution is used to document the distribution
> for tax purposes.
>
> David T.
> On Jan 13, 2023, at 7:21 AM, R Losey  wrote:
>
> Thanks for all of the information... however, getting back to the
original
> question, I'm not sure how to record IRA taxable distributions. I
thought I
> was doing it, but I am apparently not.
>
> Let me write through a couple of cases.  In the first one, I'm
selling
> $1000 worth (10 shares) of security A and having it go directly
to my
> checking account with no income tax withholding. (some of these
may be
> USA-centric terms; I apologize for that).
>
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Michael or Penny Novack]

On 1/14/2023 1:07 AM, David T. wrote:


.
As for counting as income, most paychecks I've seen list the 
employee's gross income at the top, with contributions to tax-deferred 
accounts listed as deductions from the gross amount. This is why I 
placed deferred income under income; the income that my employer lists 
at year end includes this deferred income. I can, I imagine, chalk 
this up to another case of "their books, my books" (as in, "On their 
books, it's income; on my books it's not."), but I'd be happy to 
understand a little better.


The case of an IRA can be even more confusing, in that a person can 
make IRA contributions entirely separately from income transactions 
and have those contributions affect income at tax time.


David T.



This is accounting, not a matter of how to do in gnucash...

You are too focused on the term "income"

We'll back a few years (decades) to when I was getting a salary check. 
There would of course be a gross amount,  but notice I am not saying 
"income". There would be various deductions like you might expect, tax 
withholding, insurance, etc. But there could also be additions! For 
example, I was carrying 5 years group term, paying for four (deduction) 
but also receiving "imputed income" for the first year (the company paid 
for that, but the IRS considers the premium for coverage >$50,000 to be 
income). BUT one of the deductions from gross was money going into the 
401k (NOT counted as current income) and the company matched that (also 
no counted as current income). THAT is what a 401k/IRA is all about, 
deferring income.


Standing accounts  in the old days of pen and ink on paper the P 
was created in the "closing the books" operation. All the income and 
expense accounts would be closed into an account called "Profit and 
Loss" and then that account closed to equity by whatever "net profit" or 
"net loss" brought the Profit and Loss account to zero. AT THIS POINT 
all the temporary accounts (like income and expense accounts) would have 
zero balances and we are ready to begin the net accounting period. The 
"standing accounts" are the accounts that were not closed to zero in 
this process (accounts of types asset, liability, and equity.


You do what you want. But I would be considering "deferred income" to be 
a standing account. I would not expect its ever increasing balance 
(during the contributing and waiting years) to be appearing in total 
income each year. It eventually does appear in income for a current year 
when distributions are taken later in life. Because income accounts are 
"really" temporary accounts of fundamental type equity, under equity is 
where I would be keeping it.


BUT --- I am not an accountant. Do whatever YOUR accountant advises.

Michael D Novack



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Re: [GNC] Recommended Method of Entry for IRA Distributions

[David T. via gnucash-user]

Michael, 

Thanks again for your perspective. I admit to being a little confused by your 
comments here. 

My breakdown was based on an earlier post that emphasized the need to isolate 
the initial deposits into a "deferred income" account and add the extra entries 
at distribution time. I interpreted that to mean a separate income account; I 
don't know what a "standing account" is or where it would be placed in the 
hierarchy. Equity?

As for counting as income, most paychecks I've seen list the employee's gross 
income at the top, with contributions to tax-deferred accounts listed as 
deductions from the gross amount. This is why I placed deferred income under 
income; the income that my employer lists at year end includes this deferred 
income. I can, I imagine, chalk this up to another case of "their books, my 
books" (as in, "On their books, it's income; on my books it's not."), but I'd 
be happy to understand a little better. 

The case of an IRA can be even more confusing, in that a person can make IRA 
contributions entirely separately from income transactions and have those 
contributions affect income at tax time.

⁣David T. ​

On Jan 14, 2023, 1:10 AM, at 1:10 AM, Michael or Penny Novack 
 wrote:
>On 1/13/2023 11:48 AM, R Losey wrote:
>> Thanks. The only minor drawback is that I seem to be entering the
>data 
>> twice under "Income" just to keep track of IRA distributions on their
>
>> own. But hey, it's one way to make it work.
>>
>> And, as has been pointed out, since this is not really "income", it 
>> makes sense that the transaction has no net income. I think I'll
>adopt 
>> this method for 2023.
>>
>> In hindsight, since the Fiduciary Trust that keeps the IRA has to 
>> report to me on distributions, I haven't felt a need to have an 
>> account for this and to double-check them.
>>
>>
>>
>> On Thu, Jan 12, 2023 at 10:56 PM David T. 
>wrote:
>>
>> Two separate entries. In my mind, this would best be put in one
>> transaction, to make the association obvious.
>>
>> CR - Assets: IRA $1000
>> DB - Assets: Checking $1000
>> DB - Income: Deferred Income $1000
>> CR - Income: IRA Distribution $1000 *
>>
><<< it most certainly COULD be in one entry. A transaction can have
>more 
>than two accounts. It is only when entering via the shortcut "enter 
>directly into the ledger" that gnucash allows you to do that is limited
>
>to two accounts. When entering a "split" in "journal mode" you can have
>
>more than two. In the old days ALL transactions were entered first in 
>the journal and then posted to the ledger. But even in pen and ink days
>
>we had SOME shortcut possibilities, like "cashbook accounting" << where
>
>a small subset of the ledger allowed direct entry skipping the
>journal.>>
>
>BUT -- I would not have "deferred income" under income, because it is 
>more like a standing account. The money that you put into the 401k/IRA 
>did not get counted in your income in those years. The money
>contributed 
>by your employer (401k) did not get counted as income back then, nor
>the 
>annual increases in fund value as you perhaps marked to market at year 
>end (the investment income of the fund).
>
>When you take distributions later is when it becomes income << you are 
>undeferring that amount >>
>
>This is accounting, not gnucash
>
>Michael D Novack
>
>
>>
>> * Income: IRA Distribution is used to document the distribution
>> for tax purposes.
>>
>> David T.
>> On Jan 13, 2023, at 7:21 AM, R Losey  wrote:
>>
>> Thanks for all of the information... however, getting back to
>the original
>> question, I'm not sure how to record IRA taxable
>distributions. I thought I
>> was doing it, but I am apparently not.
>>
>> Let me write through a couple of cases.  In the first one,
>I'm selling
>> $1000 worth (10 shares) of security A and having it go
>directly to my
>> checking account with no income tax withholding. (some of
>these may be
>> USA-centric terms; I apologize for that).
>>
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Michael or Penny Novack]

On 1/13/2023 11:48 AM, R Losey wrote:
Thanks. The only minor drawback is that I seem to be entering the data 
twice under "Income" just to keep track of IRA distributions on their 
own. But hey, it's one way to make it work.


And, as has been pointed out, since this is not really "income", it 
makes sense that the transaction has no net income. I think I'll adopt 
this method for 2023.


In hindsight, since the Fiduciary Trust that keeps the IRA has to 
report to me on distributions, I haven't felt a need to have an 
account for this and to double-check them.




On Thu, Jan 12, 2023 at 10:56 PM David T.  wrote:

Two separate entries. In my mind, this would best be put in one
transaction, to make the association obvious.

CR - Assets: IRA $1000
DB - Assets: Checking $1000
DB - Income: Deferred Income $1000
CR - Income: IRA Distribution $1000 *

<<< it most certainly COULD be in one entry. A transaction can have more 
than two accounts. It is only when entering via the shortcut "enter 
directly into the ledger" that gnucash allows you to do that is limited 
to two accounts. When entering a "split" in "journal mode" you can have 
more than two. In the old days ALL transactions were entered first in 
the journal and then posted to the ledger. But even in pen and ink days 
we had SOME shortcut possibilities, like "cashbook accounting" << where 
a small subset of the ledger allowed direct entry skipping the journal.>>


BUT -- I would not have "deferred income" under income, because it is 
more like a standing account. The money that you put into the 401k/IRA 
did not get counted in your income in those years. The money contributed 
by your employer (401k) did not get counted as income back then, nor the 
annual increases in fund value as you perhaps marked to market at year 
end (the investment income of the fund).


When you take distributions later is when it becomes income << you are 
undeferring that amount >>


This is accounting, not gnucash

Michael D Novack




* Income: IRA Distribution is used to document the distribution
for tax purposes.

David T.
On Jan 13, 2023, at 7:21 AM, R Losey  wrote:

Thanks for all of the information... however, getting back to the 
original
question, I'm not sure how to record IRA taxable distributions. I 
thought I
was doing it, but I am apparently not.

Let me write through a couple of cases.  In the first one, I'm selling
$1000 worth (10 shares) of security A and having it go directly to my
checking account with no income tax withholding. (some of these may be
USA-centric terms; I apologize for that).



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Re: [GNC] Recommended Method of Entry for IRA Distributions

[R Losey]

I suppose a way to handle the "Income but not really income" would be ao
follows (see what people think about this):

CR - Assets: IRA $1000
DB - Income: IRA Distribution $1000
CR - Income: IRA Distribution $1000
DB - Assets: Checking $1000

This way, the income change is zero, but I can still track the "Income" for
tax purposes by looking at the debits for the year.

What do ye readers think of that?

Richard

On Thu, Jan 12, 2023 at 11:14 PM Stan Brown 
wrote:

>
> On 2023-01-12 20:55, David T. via gnucash-user wrote:
> > Two separate entries. In my mind, this would best be put in one
> transaction, to make the association obvious.
> >
> > CR - Assets: IRA $1000
> > DB - Assets: Checking $1000
> > DB - Income: Deferred Income $1000
> > CR - Income: IRA Distribution $1000 *
> >
> > * Income: IRA Distribution is used to document the distribution for tax
> purposes.
>
> My only problem with that is that a distribution from an IRS is not
> income, any more that the currency you receive when you cash a check is
> income.
>
> It's simply moving a portion of your assets from one bucket to another.
> And it seems very strange to me that the one event should be recorded in
> a four-split transaction.
>
> Stan Brown
> Tehachapi, CA, USA
> https://BrownMath.com
> ___
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-- 
_
Richard Losey
rlo...@gmail.com
Micah 6:8
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[R Losey]

Sorry about "category" versus "account" -- I still, after 7 years, have
Quicken habits... but I would argue that many people see an "account" as
something that has both debits and credits (like a bank account), as
opposed to "categories", which, for the most part, only have credits or
debits (like "Groceries" or "Salary"). I do know that they are actually
accounts, and I like that.

While this may not be "Income" in the accounting sense, it is income in the
practical sense... but of course you are correct that the net worth isn't
changing; it's just a transfer of assets, like paying off a credit card or
making a house payment.


On Thu, Jan 12, 2023 at 11:09 PM Stan Brown 
wrote:

> On 2023-01-12 20:19, R Losey wrote:
> > Let me write through a couple of cases.  In the first one, I'm selling
> > $1000 worth (10 shares) of security A and having it go directly to my
> > checking account with no income tax withholding. (some of these may be
> > USA-centric terms; I apologize for that).
> >
> > If I can create a "Sell" transaction that sells 10 shares at $1000; the
> > other entry would be to increase my taxable distribution category by
> $1000.
> > But what next? My checking account doesn't have the $1000 increase, but
> > then what is the "other" category to use for that transaction??
>
> Please forget the notion of "category". Some accounting packages have
> that, but it seems to be basically a confusing synonym for "expense-type
> account" and maybe "income-type account).
>
> GnuCash has _accounts_. You have an asset-type account for your checking
> account, and another asset0type account for your security(ies).
>
> When you sell shares for cash, you increase the balance in your checking
> account and decrease the balance in your security account, like this:
>
> Debit (left-hand number column) to Assets:Checking Account
> Credit (right-hand column) to Assets:Security(ies).
>
> Taxable distribution is not an account, and the distribution is _not_
> _income_. Your net worth is the same after the sale and distribution as
> it was before the sale.
>
> Yes,I know that the amount of an IRA distribution must be reported as
> taxable income on your form 1040, but in an accounting sense it is not
> income.
>
> And speaking of distributions, did you miss the note I posted at 11:33
> this morning (Pacific time)? I really don't know why you have no choice
> about having withholding taken from an IRA distribution. You can
> _choose_ to do it, or you can file estimated taxes, or maybe your income
> is low enough that you don't even need to do that. But -- unless the
> money is going outside the United States -- you have a _choice_ about
> whether to have withholding. I gave citations and quotes from the IRS
> website.
>
> Stan Brown
> Tehachapi, CA, USA
> https://BrownMath.com
> ___
> gnucash-user mailing list
> gnucash-user@gnucash.org
> To update your subscription preferences or to unsubscribe:
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
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>


-- 
_
Richard Losey
rlo...@gmail.com
Micah 6:8
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[R Losey]

Thanks. The only minor drawback is that I seem to be entering the data
twice under "Income" just to keep track of IRA distributions on their own.
But hey, it's one way to make it work.

And, as has been pointed out, since this is not really "income", it makes
sense that the transaction has no net income. I think I'll adopt this
method for 2023.

In hindsight, since the Fiduciary Trust that keeps the IRA has to report to
me on distributions, I haven't felt a need to have an account for this and
to double-check them.



On Thu, Jan 12, 2023 at 10:56 PM David T.  wrote:

> Two separate entries. In my mind, this would best be put in one
> transaction, to make the association obvious.
>
> CR - Assets: IRA $1000
> DB - Assets: Checking $1000
> DB - Income: Deferred Income $1000
> CR - Income: IRA Distribution $1000 *
>
> * Income: IRA Distribution is used to document the distribution for tax
> purposes.
>
> David T.
> On Jan 13, 2023, at 7:21 AM, R Losey  wrote:
>>
>> Thanks for all of the information... however, getting back to the original
>> question, I'm not sure how to record IRA taxable distributions. I thought I
>> was doing it, but I am apparently not.
>>
>> Let me write through a couple of cases.  In the first one, I'm selling
>> $1000 worth (10 shares) of security A and having it go directly to my
>> checking account with no income tax withholding. (some of these may be
>> USA-centric terms; I apologize for that).
>>
>> If I can create a "Sell" transaction that sells 10 shares at $1000; the
>> other entry would be to increase my taxable distribution category by $1000.
>> But what next? My checking account doesn't have the $1000 increase, but
>> then what is the "other" category to use for that transaction??
>>
>> I looked at my data, and what I've been doing is that the other side of the
>> Sell transaction is a deposit to my bank account, but this fails because
>> there is no record of a taxable distribution.
>>
>>
>> On Thu, Jan 12, 2023 at 2:42 PM Michael or Penny Novack <
>> stepbystepf...@comcast.net> wrote:
>>
>>  On 1/12/2023 12:41 PM, R Losey wrote:
>>>
  Thanks; I know the information is out there, but intuitively, it doesn't
  make sense to me that depositing funds to my bank account is a "debit"
  transaction to the bank. It comes from the concept of credit being "added
  to" and debit being "substracted from", I suppose.

  Is the "Debit on the left" and "Credit on the right" true in general
  accounting, or just GnuCash?

>>>
>>>  a) Double entry bookkeeping goes back a long way, long enough that Latin
>>>  still in use for communications among the educated in Europe. Think of
>>>  "debit" and "credit" not in terms of plus and minus (before European
>>>  math had negative numbers) but as "he owes"(me) and "he trusts" (me). In
>>>  other words  he owes me that amount and he trusts me for that amount (I
>>>  owe him)
>>>
>>>  Now look again at the bank account.In YOUR books a debit (the bank
>>>  owes you this money) and in the bank's book a credit (the bank owes you
>>>  this money)
>>>
>>>  b) Debit on the left and credit on the right. In the old days ledger
>>>  pages had two sides, one side for the debits and the other for the
>>>  credits (and no balance column). Perhaps within my lifetime it became
>>>  more common to use three column paper with debit and credit transactions
>>>  with one date, check number, description, and journal reference column
>>>  then a left for debit, a right (middle) for credit, and a balance. o a
>>>  running balance was kept << finding the balance was a process in the old
>>>  days before that >>
>>>
>>>  NOTICE -- so far pen and ink on paper, and gnucash is simply modelling that
>>>
>>>  Michael D Novack
>>>
>>> --
>>>
>>>  gnucash-user mailing list
>>>  gnucash-user@gnucash.org
>>>  To update your subscription preferences or to unsubscribe:
>>>  https://lists.gnucash.org/mailman/listinfo/gnucash-user
>>>  -
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>>>  You can do this by using Reply-To-List or Reply-All.
>>
>>
>>
>>

-- 
_
Richard Losey
rlo...@gmail.com
Micah 6:8
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Mark Penner via gnucash-user]

Jan 11, 2023 18:07:03 R Losey :

I apologize for not using "debit" and "credit" terms, but I'm not sure 
I'd

get them right.


I also have to think a bit sometimes to get them right. As someone(s) 
said, debits are always on the left, credits on the right. I just 
remember that money flows from right to left, from the credited accounts 
to the debited accounts. I find that easier to remember than which types 
of accounts increase with debits, etc.


HTH
Mark
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Stan Brown (using GC 2.6.19)]

On 2023-01-12 21:08, Stan Brown wrote:
> And speaking of distributions, did you miss the note I posted at 11:33
> this morning (Pacific time)? I really don't know why you have no choice
> about having withholding taken from an IRA distribution. You can
> _choose_ to do it, or you can file estimated taxes, or maybe your income
> is low enough that you don't even need to do that. But -- unless the
> money is going outside the United States -- you have a _choice_ about
> whether to have withholding. I gave citations and quotes from the IRS
> website.

Sorry -- I got confused about who said what, and this part should have
been directed to Milton Stern rather than R Losey. And Milton Stern
actually did acknowledge -- I saw the email come in after I had sent this.

Stan Brown
Tehachapi, CA, USA
https://BrownMath.com
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Stan Brown]

On 2023-01-12 20:55, David T. via gnucash-user wrote:
> Two separate entries. In my mind, this would best be put in one transaction, 
> to make the association obvious. 
> 
> CR - Assets: IRA $1000
> DB - Assets: Checking $1000
> DB - Income: Deferred Income $1000
> CR - Income: IRA Distribution $1000 *
> 
> * Income: IRA Distribution is used to document the distribution for tax 
> purposes.

My only problem with that is that a distribution from an IRS is not
income, any more that the currency you receive when you cash a check is
income.

It's simply moving a portion of your assets from one bucket to another.
And it seems very strange to me that the one event should be recorded in
a four-split transaction.
 ​
Stan Brown
Tehachapi, CA, USA
https://BrownMath.com
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Stan Brown]

On 2023-01-12 20:19, R Losey wrote:
> Let me write through a couple of cases.  In the first one, I'm selling
> $1000 worth (10 shares) of security A and having it go directly to my
> checking account with no income tax withholding. (some of these may be
> USA-centric terms; I apologize for that).
> 
> If I can create a "Sell" transaction that sells 10 shares at $1000; the
> other entry would be to increase my taxable distribution category by $1000.
> But what next? My checking account doesn't have the $1000 increase, but
> then what is the "other" category to use for that transaction??

Please forget the notion of "category". Some accounting packages have
that, but it seems to be basically a confusing synonym for "expense-type
account" and maybe "income-type account).

GnuCash has _accounts_. You have an asset-type account for your checking
account, and another asset0type account for your security(ies).

When you sell shares for cash, you increase the balance in your checking
account and decrease the balance in your security account, like this:

Debit (left-hand number column) to Assets:Checking Account
Credit (right-hand column) to Assets:Security(ies).

Taxable distribution is not an account, and the distribution is _not_
_income_. Your net worth is the same after the sale and distribution as
it was before the sale.

Yes,I know that the amount of an IRA distribution must be reported as
taxable income on your form 1040, but in an accounting sense it is not
income.

And speaking of distributions, did you miss the note I posted at 11:33
this morning (Pacific time)? I really don't know why you have no choice
about having withholding taken from an IRA distribution. You can
_choose_ to do it, or you can file estimated taxes, or maybe your income
is low enough that you don't even need to do that. But -- unless the
money is going outside the United States -- you have a _choice_ about
whether to have withholding. I gave citations and quotes from the IRS
website.

Stan Brown
Tehachapi, CA, USA
https://BrownMath.com
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[David T. via gnucash-user]

Two separate entries. In my mind, this would best be put in one transaction, to 
make the association obvious. 

CR - Assets: IRA $1000
DB - Assets: Checking $1000
DB - Income: Deferred Income $1000
CR - Income: IRA Distribution $1000 *

* Income: IRA Distribution is used to document the distribution for tax 
purposes.

⁣David T. ​

On Jan 13, 2023, 7:21 AM, at 7:21 AM, R Losey  wrote:
>Thanks for all of the information... however, getting back to the
>original
>question, I'm not sure how to record IRA taxable distributions. I
>thought I
>was doing it, but I am apparently not.
>
>Let me write through a couple of cases.  In the first one, I'm selling
>$1000 worth (10 shares) of security A and having it go directly to my
>checking account with no income tax withholding. (some of these may be
>USA-centric terms; I apologize for that).
>
>If I can create a "Sell" transaction that sells 10 shares at $1000; the
>other entry would be to increase my taxable distribution category by
>$1000.
>But what next? My checking account doesn't have the $1000 increase, but
>then what is the "other" category to use for that transaction??
>
>I looked at my data, and what I've been doing is that the other side of
>the
>Sell transaction is a deposit to my bank account, but this fails
>because
>there is no record of a taxable distribution.
>
>
>On Thu, Jan 12, 2023 at 2:42 PM Michael or Penny Novack <
>stepbystepf...@comcast.net> wrote:
>
>> On 1/12/2023 12:41 PM, R Losey wrote:
>> > Thanks; I know the information is out there, but intuitively, it
>doesn't
>> > make sense to me that depositing funds to my bank account is a
>"debit"
>> > transaction to the bank. It comes from the concept of credit being
>"added
>> > to" and debit being "substracted from", I suppose.
>> >
>> > Is the "Debit on the left" and "Credit on the right" true in
>general
>> > accounting, or just GnuCash?
>>
>> a) Double entry bookkeeping goes back a long way, long enough that
>Latin
>> still in use for communications among the educated in Europe. Think
>of
>> "debit" and "credit" not in terms of plus and minus (before European
>> math had negative numbers) but as "he owes"(me) and "he trusts" (me).
>In
>> other words  he owes me that amount and he trusts me for that amount
>(I
>> owe him)
>>
>> Now look again at the bank account.In YOUR books a debit (the
>bank
>> owes you this money) and in the bank's book a credit (the bank owes
>you
>> this money)
>>
>> b) Debit on the left and credit on the right. In the old days ledger
>> pages had two sides, one side for the debits and the other for the
>> credits (and no balance column). Perhaps within my lifetime it became
>> more common to use three column paper with debit and credit
>transactions
>> with one date, check number, description, and journal reference
>column
>> then a left for debit, a right (middle) for credit, and a balance. o
>a
>> running balance was kept << finding the balance was a process in the
>old
>> days before that >>
>>
>> NOTICE -- so far pen and ink on paper, and gnucash is simply
>modelling that
>>
>> Michael D Novack
>>
>> ___
>> gnucash-user mailing list
>> gnucash-user@gnucash.org
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>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
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>
>
>-- 
>_
>Richard Losey
>rlo...@gmail.com
>Micah 6:8
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Milton Stern]

Hi Everybody,

I must thank you (David T., Michael D Novack, Stan Brown, Richard Losey, if
I missed someone it was unintentional)  for your excellent insights!

I believe that I have my answer of how to enter the transaction and what
account structure I require if I want the transactions to show up in my
income reports.

Concerning the mention of the required withholding. My statement was nor
entirely accurate (complete) for the sake of brevity.

I am under the impression that you now have to submit form W-4R to lower
(or raise) the withholding tax, instead of just stating whatever
withholding that you wish (0%-100%) at the time of distribution request.

Prior to 2023, you could just state, when you make the distribution request
from the financial institution, that you did not want withholding taken.
Now, I believe you have to submit a form (W-4R), based on your income
(estimated tax bracket).
Without this form submission, the default would be 10% for IRAs (I think
20% for 401K / 403b).
With the submission, the withholding would be based on your expected income
/ tax bracket, so that the appropriate withholding will be taken per
distribution, instead requesting whatever withholding you want, and making
up the difference in quarterly estimates.

I hope I am interpreting the info from my brokerage email incorrectly?

Thanks again everyone,

Moshe


On Thu, Jan 12, 2023 at 12:46 PM R Losey  wrote:

> I'll try interspersing... using RL>>>
>
>
>
> On Wed, Jan 11, 2023 at 9:52 PM Milton Stern  wrote:
>
>> Hi,
>>
>> Please see below 
>>
>> Moshe
>>
>> On Wed, Jan 11, 2023 at 7:06 PM R Losey  wrote:
>>
>>> Hello.
>>>
>>> Assuming you take out $5,000 and they withhold 10% ($500), I would use a
>>> split transaction... sell $5000 worth of the mutual fund, add $4500 to your
>>> bank account, and $500 to federal income tax paid.
>>>
>>
>>> I apologize for not using "debit" and "credit" terms, but I'm not sure
>>> I'd get them right.
>>>
>>
>>  Agreed. The component that I am having trouble with is the
>> Pre-Tax IRA Distribution component. Because it is a Pre-Tax IRA, the
>> distribution is taxable as income.
>> The direct "sell $5000 worth of the mutual fund, add $4500 to
>> your bank account" direct transaction will not show up in Income Reports.
>>
>
> RL>>> In my brokerage account, I actually "sell" the stock and put it in
> the parent account, using the "IRA income category", and then I do a second
> transfer from the brokerage account to my bank.  Example:
>
> Brokerage account (the parent holding account)
>   Sweep Fund
>   Holding 1
>   Holding 2
>
>
>
>
>>
>>
>>>
>>> You can track them however you wish, but the above is how I would do
>>> them... well, except, I never have the mutual fund withhold taxes; I pay my
>>> own taxes quarterly.
>>>
>>
>> ** New for 2023. IRS requires the brokerage to withhold taxes from
>> IRA Distributions. Last year you could specify 0% withholding.
>> ** They don't make it so easy this year. It is sort of a double hit.
>> Even if you get it back as a tax refund, you can't put it back (Rollover)
>> into the IRA to earn tax free.
>>
> RL>>> That's TERRIBLE!  Gr. I wonder what the minimum one can withhold
> is?
>
>
>
>>
>>
>>>
>>>
>>> On Wed, Jan 11, 2023 at 4:35 PM Milton Stern  wrote:
>>>
 Hi,

 What would be the recommended method of Entry for an IRA Distribution?

 The Distribution is for a personal IRA (not Roth).
 The IRA is of Mutual Funds.

 The Mutual Fund is in Assets > Investments - Retirement > Brokerage >
 etc.
 > etc.

 Since this is taxable income, I need to track withholding (Federal) +
 Net
 Distribution to a Checking Account (Assets > Current Assets).
 No Commission fees are applicable, but it would be nice to know
 where/how
 they would be tracked.

 Thank you in advance,

 Moshe
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>>>
>>>
>>> --
>>> _
>>> Richard Losey
>>> rlo...@gmail.com
>>> Micah 6:8
>>>
>>
>
> --
> _
> Richard Losey
> rlo...@gmail.com
> Micah 6:8
>
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[R Losey]

Thanks for all of the information... however, getting back to the original
question, I'm not sure how to record IRA taxable distributions. I thought I
was doing it, but I am apparently not.

Let me write through a couple of cases.  In the first one, I'm selling
$1000 worth (10 shares) of security A and having it go directly to my
checking account with no income tax withholding. (some of these may be
USA-centric terms; I apologize for that).

If I can create a "Sell" transaction that sells 10 shares at $1000; the
other entry would be to increase my taxable distribution category by $1000.
But what next? My checking account doesn't have the $1000 increase, but
then what is the "other" category to use for that transaction??

I looked at my data, and what I've been doing is that the other side of the
Sell transaction is a deposit to my bank account, but this fails because
there is no record of a taxable distribution.


On Thu, Jan 12, 2023 at 2:42 PM Michael or Penny Novack <
stepbystepf...@comcast.net> wrote:

> On 1/12/2023 12:41 PM, R Losey wrote:
> > Thanks; I know the information is out there, but intuitively, it doesn't
> > make sense to me that depositing funds to my bank account is a "debit"
> > transaction to the bank. It comes from the concept of credit being "added
> > to" and debit being "substracted from", I suppose.
> >
> > Is the "Debit on the left" and "Credit on the right" true in general
> > accounting, or just GnuCash?
>
> a) Double entry bookkeeping goes back a long way, long enough that Latin
> still in use for communications among the educated in Europe. Think of
> "debit" and "credit" not in terms of plus and minus (before European
> math had negative numbers) but as "he owes"(me) and "he trusts" (me). In
> other words  he owes me that amount and he trusts me for that amount (I
> owe him)
>
> Now look again at the bank account.In YOUR books a debit (the bank
> owes you this money) and in the bank's book a credit (the bank owes you
> this money)
>
> b) Debit on the left and credit on the right. In the old days ledger
> pages had two sides, one side for the debits and the other for the
> credits (and no balance column). Perhaps within my lifetime it became
> more common to use three column paper with debit and credit transactions
> with one date, check number, description, and journal reference column
> then a left for debit, a right (middle) for credit, and a balance. o a
> running balance was kept << finding the balance was a process in the old
> days before that >>
>
> NOTICE -- so far pen and ink on paper, and gnucash is simply modelling that
>
> Michael D Novack
>
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-- 
_
Richard Losey
rlo...@gmail.com
Micah 6:8
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Adrien Monteleone]

Careful folks.

This is now way beyond 'how to do this in GnuCash' and very much knee 
deep in realms that require (several) special pieces of framed paper 
hanging on walls.


Regards,
Adrien

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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Adrien Monteleone]

Thanks for the trip down Memory Lane, Michael. I had long forgotten the 
'Owes/Trusts' origin of the system. I think many things are much easier 
to understand when you find out 'why they are'. Learning the basics of 
the 'old days' helped me to grok Debits & Credits many moons ago.


Regards,
Adrien

On 1/12/23 2:42 PM, Michael or Penny Novack wrote:
a) Double entry bookkeeping goes back a long way, long enough that Latin 
still in use for communications among the educated in Europe. Think of 
"debit" and "credit" not in terms of plus and minus (before European 
math had negative numbers) but as "he owes"(me) and "he trusts" (me). In 
other words  he owes me that amount and he trusts me for that amount (I 
owe him)


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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Michael or Penny Novack]

On 1/12/2023 12:41 PM, R Losey wrote:

Thanks; I know the information is out there, but intuitively, it doesn't
make sense to me that depositing funds to my bank account is a "debit"
transaction to the bank. It comes from the concept of credit being "added
to" and debit being "substracted from", I suppose.

Is the "Debit on the left" and "Credit on the right" true in general
accounting, or just GnuCash?


a) Double entry bookkeeping goes back a long way, long enough that Latin 
still in use for communications among the educated in Europe. Think of 
"debit" and "credit" not in terms of plus and minus (before European 
math had negative numbers) but as "he owes"(me) and "he trusts" (me). In 
other words  he owes me that amount and he trusts me for that amount (I 
owe him)


   Now look again at the bank account.In YOUR books a debit (the bank 
owes you this money) and in the bank's book a credit (the bank owes you 
this money)


b) Debit on the left and credit on the right. In the old days ledger 
pages had two sides, one side for the debits and the other for the 
credits (and no balance column). Perhaps within my lifetime it became 
more common to use three column paper with debit and credit transactions 
with one date, check number, description, and journal reference column 
then a left for debit, a right (middle) for credit, and a balance. o a 
running balance was kept << finding the balance was a process in the old 
days before that >>


NOTICE -- so far pen and ink on paper, and gnucash is simply modelling that

Michael D Novack

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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Stan Brown]

On 2023-01-11 19:52, Milton Stern wrote:

> ** New for 2023. IRS requires the brokerage to withhold taxes from IRA
> Distributions. Last year you could specify 0% withholding.
> ** They don't make it so easy this year. It is sort of a double hit.
> Even if you get it back as a tax refund, you can't put it back (Rollover)
> into the IRA to earn tax free.

Are you having this distribution delivered outside the US? If not, where
did you get your information?

In these matters it's usually best to go back to the source. First, see

Quoting from the second paragraph,
"Generally, payees ... can choose not to have withholding apply to their
pensions or annuities (however, refer to Mandatory Withholding on
Payments to be Delivered Outside the United States below). The election
remains in effect until the payee revokes it. The payer must notify the
payee that this election is available."

If your broker is telling you that withholding is mandatory, they are
telling you an untruth--again, assuming you are a citizen or a resident
alien, and the money is not being delivered to a foreign country.

The first sentence of the fourth paragraph: "Payees of periodic payments
can give payers a Form W-4P in order to make or change a withholding
election, or elect not to have withholding apply, for their periodic
payments."

Form W-4P for 2023 is at 
A quote from the instructions on page 2:

"Choosing not to have income tax withheld. You can choose
not to have federal income tax withheld from your payments by
writing “No Withholding” on Form W-4P in the space below
Step 4(c). ... Generally, if you are a U.S. citizen or a resident alien,
you are not permitted to elect not to have federal income tax withheld
on payments to be delivered outside the United States and its territories."

Stan Brown
Tehachapi, CA, USA
https://BrownMath.com
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Stan Brown]

On 2023-01-12 09:41, R Losey wrote:
> Thanks; I know the information is out there, but intuitively, it doesn't
> make sense to me that depositing funds to my bank account is a "debit"
> transaction to the bank. It comes from the concept of credit being "added
> to" and debit being "substracted from", I suppose.

That principle is correct as far as it goes, but you are trying to
stretch it too far.

For liabilities, equity, and income, credits do indeed increase the
balance and and debits decrease it.

But it is exactly the opposite for assets and expenses: credits _reduce_
them and debits increase them.

Here's how to remember it: if somebody gives you $50, you have income,
which we all agree is a credit to your income account. But you have also
increased your cash account by $50. But ... debits and credits in a
transaction must balance, so that increase to cash must be a debit to
balance the credit to your income account.

> Is the "Debit on the left" and "Credit on the right" true in general
> accounting, or just GnuCash?

That's general. When Ernst & Ernst (as it then was) gave me a crash
course in accounting, the instructor said that "debit" and "credit" are
best thought of as meaning, respectively, simply "left" and "right".

Stan Brown
Tehachapi, CA, USA
https://BrownMath.com
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Adrien Monteleone]

It is intuitive, but your issue is one of perspective:

From *your* perspective, your bank account is your asset.

You increase it *in your books* by a Debit.

But from the *bank's* perspective, your account with them is their 
liability, and is increased by a Credit.


That is why when you put money in your account, or they refund or 
correct in your favor, they Credit your account. Because their liability 
to YOU is increasing.


But YOU would enter a Debit in your books.

Perfectly intuitive, just opposite sides of the equation.

The left-right/debit-credit is for all of accounting, not just GnuCash.

Regards,
Adrien

On 1/12/23 11:41 AM, R Losey wrote:

Thanks; I know the information is out there, but intuitively, it doesn't
make sense to me that depositing funds to my bank account is a "debit"
transaction to the bank. It comes from the concept of credit being "added
to" and debit being "substracted from", I suppose.

Is the "Debit on the left" and "Credit on the right" true in general
accounting, or just GnuCash?

I've played with the toggling, but I like the informal names; it is much
more intuitive, and I don't see a need to potentially confuse myself.


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Re: [GNC] Recommended Method of Entry for IRA Distributions

[R Losey]

I'll try interspersing... using RL>>>



On Wed, Jan 11, 2023 at 9:52 PM Milton Stern  wrote:

> Hi,
>
> Please see below 
>
> Moshe
>
> On Wed, Jan 11, 2023 at 7:06 PM R Losey  wrote:
>
>> Hello.
>>
>> Assuming you take out $5,000 and they withhold 10% ($500), I would use a
>> split transaction... sell $5000 worth of the mutual fund, add $4500 to your
>> bank account, and $500 to federal income tax paid.
>>
>
>> I apologize for not using "debit" and "credit" terms, but I'm not sure
>> I'd get them right.
>>
>
>  Agreed. The component that I am having trouble with is the
> Pre-Tax IRA Distribution component. Because it is a Pre-Tax IRA, the
> distribution is taxable as income.
> The direct "sell $5000 worth of the mutual fund, add $4500 to your
> bank account" direct transaction will not show up in Income Reports.
>

RL>>> In my brokerage account, I actually "sell" the stock and put it in
the parent account, using the "IRA income category", and then I do a second
transfer from the brokerage account to my bank.  Example:

Brokerage account (the parent holding account)
  Sweep Fund
  Holding 1
  Holding 2




>
>
>>
>> You can track them however you wish, but the above is how I would do
>> them... well, except, I never have the mutual fund withhold taxes; I pay my
>> own taxes quarterly.
>>
>
> ** New for 2023. IRS requires the brokerage to withhold taxes from IRA
> Distributions. Last year you could specify 0% withholding.
> ** They don't make it so easy this year. It is sort of a double hit.
> Even if you get it back as a tax refund, you can't put it back (Rollover)
> into the IRA to earn tax free.
>
RL>>> That's TERRIBLE!  Gr. I wonder what the minimum one can withhold
is?



>
>
>>
>>
>> On Wed, Jan 11, 2023 at 4:35 PM Milton Stern  wrote:
>>
>>> Hi,
>>>
>>> What would be the recommended method of Entry for an IRA Distribution?
>>>
>>> The Distribution is for a personal IRA (not Roth).
>>> The IRA is of Mutual Funds.
>>>
>>> The Mutual Fund is in Assets > Investments - Retirement > Brokerage >
>>> etc.
>>> > etc.
>>>
>>> Since this is taxable income, I need to track withholding (Federal) + Net
>>> Distribution to a Checking Account (Assets > Current Assets).
>>> No Commission fees are applicable, but it would be nice to know where/how
>>> they would be tracked.
>>>
>>> Thank you in advance,
>>>
>>> Moshe
>>> ___
>>> gnucash-user mailing list
>>> gnucash-user@gnucash.org
>>> To update your subscription preferences or to unsubscribe:
>>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>>> -
>>> Please remember to CC this list on all your replies.
>>> You can do this by using Reply-To-List or Reply-All.
>>>
>>
>>
>> --
>> _
>> Richard Losey
>> rlo...@gmail.com
>> Micah 6:8
>>
>

-- 
_
Richard Losey
rlo...@gmail.com
Micah 6:8
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[R Losey]

Thanks; I know the information is out there, but intuitively, it doesn't
make sense to me that depositing funds to my bank account is a "debit"
transaction to the bank. It comes from the concept of credit being "added
to" and debit being "substracted from", I suppose.

Is the "Debit on the left" and "Credit on the right" true in general
accounting, or just GnuCash?

I've played with the toggling, but I like the informal names; it is much
more intuitive, and I don't see a need to potentially confuse myself.


On Wed, Jan 11, 2023 at 6:34 PM Adrien Monteleone <
adrien.montele...@lusfiber.net> wrote:

> For completeness and posterity, that would be:
>
> Dr. Assets:Bank
> Dr. Expenses:Tax
>Cr. Assets:Fund
>
> If you're ever unsure as to what the 'formal' column labels would be,
> you can always toggle Preferences > Accounts > Labels > Use formal
> accounting labels while viewing a register in question. They toggle in
> the view as you toggle the preference. (you don't need to commit the
> preference first.)
>
> Another easy to remember tip:
>
> Debit is ALWAYS on the left
> Credit is ALWAYS on the right
>
> This coincides with the Accounting Equation:
>
> Assets = Liabilities + Equity
>
> and the expanded version:
>
> Assets + Expenses = Liabilities + Retained Earnings + Income
>
> Assets & Expenses (on the left of the '=') are increased via Debits
> (left column)
>
> Liabilities, Retained Earnings (Equity), & Income (on the right of the
> '=') are increased via Credits (right column)
>
> Because:
>
> Debits = Credits
>
> Hope that helps!
>
> Regards,
> Adrien
>
> On 1/11/23 6:05 PM, R Losey wrote:
> > I apologize for not using "debit" and "credit" terms, but I'm not sure
> I'd
> > get them right.
>
> ___
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> https://lists.gnucash.org/mailman/listinfo/gnucash-user
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-- 
_
Richard Losey
rlo...@gmail.com
Micah 6:8
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Michael or Penny Novack]

Not being qualified as a CPA, I am loathe to advise on accounting 
matters (as opposed to how to do it using gnucash rather than pen and 
ink on paper)


But THIS previous response should go a long way toward setting you on 
the right track because it discusses the EXACT reverse problem (when the 
contribution was made) and once you consider that, how to handle the 
distribution should make sense. Personally I am not keeping our 401k ON 
the books, but if I had chosen that option (for 401k/IRA accounts) this 
is what I would have done.


I would remember that accounts of type income are really temporary 
accounts of type equity. I would use that, putting an account for 
"deferred income" under equity. It would be this I would use as the 
credit side when making a contribution. I will ignore the added 
complexity of payroll deduction and assume you are putting money in form 
the bank account. So the obvious part is debit IRA and credit bank 
account but ALSO debit income and credit "deferred income". And if I am 
marking a 401k/IRA account to market each year, debit IRA and credit 
"deferred income" << note that such increase is not an unrealized 
capital gain when in an income deferral account >>


Then later when taking a distribution, debit cash and credit the IRA for 
that amount but ALSO debit deferred income and credit income (you have 
undeferred that much)


But that's just how I would do it, not advice.

Michael D Novack

PS --- If you had an existing IRA account when you started with gnucash 
and used the wizard to enter with a balance (the credit going to the 
opening balance in equity) and yo decide to use a "deferred income" 
account as described above, you can fix that by creating the account and 
transferring from starting balance.




On 1/12/2023 1:25 AM, David T. via gnucash-user wrote:

Moshe,

This issue has come up many times over the years, for the very reason you 
raised: a direct transfer from the IRA asset account to your Checking at 
account won't show as income in reports.

The best way I've seen for how to handle this requires that your initial pay records 
isolate the income you diverted to the IRA account. Technically, the income you sent to 
the IRA is separate, and should be categorized as "deferred income."

In my books, that's meant that my paycheck entries have separate lines for the 
income that was sent to the IRA. So if I have a paycheck for $1,000, and send 
$50 to the IRA, the entry was:

Income:W2 $950 -> Checking
Income:IRA   $50 -> IRA Asset

(Note that this will match your W-2 at the time)

When you take the distribution, you create one transaction for the transfer 
from the IRA to Checking, but then you create an extra transaction (or extra 
splits, if you prefer), which transfers the distribution amount from Income:IRA 
to Income:Retirement Distributions. This second account should be assigned as a 
taxable account. Then it will appear on the TXf report. You can also select 
just that account on income statements.

⁣David T. ​

On Jan 12, 2023, 6:53 AM, at 6:53 AM, Milton Stern  wrote:

Hi,

Please see below 

Moshe

On Wed, Jan 11, 2023 at 7:06 PM R Losey  wrote:


Hello.

Assuming you take out $5,000 and they withhold 10% ($500), I would

use a

split transaction... sell $5000 worth of the mutual fund, add $4500

to your

bank account, and $500 to federal income tax paid.

I apologize for not using "debit" and "credit" terms, but I'm not

sure I'd

get them right.


 Agreed. The component that I am having trouble with is the
Pre-Tax
IRA Distribution component. Because it is a Pre-Tax IRA, the
distribution
is taxable as income.
The direct "sell $5000 worth of the mutual fund, add $4500 to
your
bank account" direct transaction will not show up in Income Reports.



You can track them however you wish, but the above is how I would do
them... well, except, I never have the mutual fund withhold taxes; I

pay my

own taxes quarterly.


** New for 2023. IRS requires the brokerage to withhold taxes from
IRA
Distributions. Last year you could specify 0% withholding.
** They don't make it so easy this year. It is sort of a double
hit.
Even if you get it back as a tax refund, you can't put it back
(Rollover)
into the IRA to earn tax free.




On Wed, Jan 11, 2023 at 4:35 PM Milton Stern 

wrote:

Hi,

What would be the recommended method of Entry for an IRA

Distribution?

The Distribution is for a personal IRA (not Roth).
The IRA is of Mutual Funds.

The Mutual Fund is in Assets > Investments - Retirement > Brokerage

etc.

etc.

Since this is taxable income, I need to track withholding (Federal)

+ Net

Distribution to a Checking Account (Assets > Current Assets).
No Commission fees are applicable, but it would be nice to know

where/how

they would be tracked.

Thank you in advance,

Moshe
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[David T. via gnucash-user]

Moshe,

This issue has come up many times over the years, for the very reason you 
raised: a direct transfer from the IRA asset account to your Checking at 
account won't show as income in reports. 

The best way I've seen for how to handle this requires that your initial pay 
records isolate the income you diverted to the IRA account. Technically, the 
income you sent to the IRA is separate, and should be categorized as "deferred 
income." 

In my books, that's meant that my paycheck entries have separate lines for the 
income that was sent to the IRA. So if I have a paycheck for $1,000, and send 
$50 to the IRA, the entry was:

Income:W2 $950 -> Checking
Income:IRA   $50 -> IRA Asset 

(Note that this will match your W-2 at the time) 

When you take the distribution, you create one transaction for the transfer 
from the IRA to Checking, but then you create an extra transaction (or extra 
splits, if you prefer), which transfers the distribution amount from Income:IRA 
to Income:Retirement Distributions. This second account should be assigned as a 
taxable account. Then it will appear on the TXf report. You can also select 
just that account on income statements. 

⁣David T. ​

On Jan 12, 2023, 6:53 AM, at 6:53 AM, Milton Stern  wrote:
>Hi,
>
>Please see below 
>
>Moshe
>
>On Wed, Jan 11, 2023 at 7:06 PM R Losey  wrote:
>
>> Hello.
>>
>> Assuming you take out $5,000 and they withhold 10% ($500), I would
>use a
>> split transaction... sell $5000 worth of the mutual fund, add $4500
>to your
>> bank account, and $500 to federal income tax paid.
>>
>
>> I apologize for not using "debit" and "credit" terms, but I'm not
>sure I'd
>> get them right.
>>
>
> Agreed. The component that I am having trouble with is the
>Pre-Tax
>IRA Distribution component. Because it is a Pre-Tax IRA, the
>distribution
>is taxable as income.
>The direct "sell $5000 worth of the mutual fund, add $4500 to
>your
>bank account" direct transaction will not show up in Income Reports.
>
>
>>
>> You can track them however you wish, but the above is how I would do
>> them... well, except, I never have the mutual fund withhold taxes; I
>pay my
>> own taxes quarterly.
>>
>
>** New for 2023. IRS requires the brokerage to withhold taxes from
>IRA
>Distributions. Last year you could specify 0% withholding.
>** They don't make it so easy this year. It is sort of a double
>hit.
>Even if you get it back as a tax refund, you can't put it back
>(Rollover)
>into the IRA to earn tax free.
>
>
>>
>>
>> On Wed, Jan 11, 2023 at 4:35 PM Milton Stern 
>wrote:
>>
>>> Hi,
>>>
>>> What would be the recommended method of Entry for an IRA
>Distribution?
>>>
>>> The Distribution is for a personal IRA (not Roth).
>>> The IRA is of Mutual Funds.
>>>
>>> The Mutual Fund is in Assets > Investments - Retirement > Brokerage
>> etc.
>>> > etc.
>>>
>>> Since this is taxable income, I need to track withholding (Federal)
>+ Net
>>> Distribution to a Checking Account (Assets > Current Assets).
>>> No Commission fees are applicable, but it would be nice to know
>where/how
>>> they would be tracked.
>>>
>>> Thank you in advance,
>>>
>>> Moshe
>>> ___
>>> gnucash-user mailing list
>>> gnucash-user@gnucash.org
>>> To update your subscription preferences or to unsubscribe:
>>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>>> -
>>> Please remember to CC this list on all your replies.
>>> You can do this by using Reply-To-List or Reply-All.
>>>
>>
>>
>> --
>> _
>> Richard Losey
>> rlo...@gmail.com
>> Micah 6:8
>>
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[David Carlson]

You probably noticed that the answers here lead to multi account splits
that resemble a simplified paycheck transaction.
If it happens that you are also tracking the qualified account details in a
brokerage account, possibly even with variations for traditional accounts
vs Roth accounts you may need to include extra accounts to make it easier
to track tax status, which is not discussed here.

On Wed, Jan 11, 2023 at 6:35 PM Adrien Monteleone <
adrien.montele...@lusfiber.net> wrote:

> +1
>
> Regards,
> Adrien
>
> On 1/11/23 6:29 PM, Stan Brown wrote:
> > How would you do it in a pen-and-ink ledger? The answer is the same for
> > GnuCash.
> >
> > So many people seem to be under the impression that GnuCash does
> > accounting ion its own special way. It's much more helpful, in my
> > opinion, to think of GnuCash as an automated version of the pen-and-ink
> > ledger methods that are taught in basic bookkeeping courses (or used to
> be).
>
> ___
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-- 
David Carlson
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Milton Stern]

Hi,

Please see below 

Moshe

On Wed, Jan 11, 2023 at 7:06 PM R Losey  wrote:

> Hello.
>
> Assuming you take out $5,000 and they withhold 10% ($500), I would use a
> split transaction... sell $5000 worth of the mutual fund, add $4500 to your
> bank account, and $500 to federal income tax paid.
>

> I apologize for not using "debit" and "credit" terms, but I'm not sure I'd
> get them right.
>

 Agreed. The component that I am having trouble with is the Pre-Tax
IRA Distribution component. Because it is a Pre-Tax IRA, the distribution
is taxable as income.
The direct "sell $5000 worth of the mutual fund, add $4500 to your
bank account" direct transaction will not show up in Income Reports.


>
> You can track them however you wish, but the above is how I would do
> them... well, except, I never have the mutual fund withhold taxes; I pay my
> own taxes quarterly.
>

** New for 2023. IRS requires the brokerage to withhold taxes from IRA
Distributions. Last year you could specify 0% withholding.
** They don't make it so easy this year. It is sort of a double hit.
Even if you get it back as a tax refund, you can't put it back (Rollover)
into the IRA to earn tax free.


>
>
> On Wed, Jan 11, 2023 at 4:35 PM Milton Stern  wrote:
>
>> Hi,
>>
>> What would be the recommended method of Entry for an IRA Distribution?
>>
>> The Distribution is for a personal IRA (not Roth).
>> The IRA is of Mutual Funds.
>>
>> The Mutual Fund is in Assets > Investments - Retirement > Brokerage > etc.
>> > etc.
>>
>> Since this is taxable income, I need to track withholding (Federal) + Net
>> Distribution to a Checking Account (Assets > Current Assets).
>> No Commission fees are applicable, but it would be nice to know where/how
>> they would be tracked.
>>
>> Thank you in advance,
>>
>> Moshe
>> ___
>> gnucash-user mailing list
>> gnucash-user@gnucash.org
>> To update your subscription preferences or to unsubscribe:
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> -
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
>>
>
>
> --
> _
> Richard Losey
> rlo...@gmail.com
> Micah 6:8
>
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Adrien Monteleone]

+1

Regards,
Adrien

On 1/11/23 6:29 PM, Stan Brown wrote:

How would you do it in a pen-and-ink ledger? The answer is the same for
GnuCash.

So many people seem to be under the impression that GnuCash does
accounting ion its own special way. It's much more helpful, in my
opinion, to think of GnuCash as an automated version of the pen-and-ink
ledger methods that are taught in basic bookkeeping courses (or used to be).


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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Adrien Monteleone]

For completeness and posterity, that would be:

Dr. Assets:Bank
Dr. Expenses:Tax
  Cr. Assets:Fund

If you're ever unsure as to what the 'formal' column labels would be, 
you can always toggle Preferences > Accounts > Labels > Use formal 
accounting labels while viewing a register in question. They toggle in 
the view as you toggle the preference. (you don't need to commit the 
preference first.)


Another easy to remember tip:

Debit is ALWAYS on the left
Credit is ALWAYS on the right

This coincides with the Accounting Equation:

Assets = Liabilities + Equity

and the expanded version:

Assets + Expenses = Liabilities + Retained Earnings + Income

Assets & Expenses (on the left of the '=') are increased via Debits 
(left column)


Liabilities, Retained Earnings (Equity), & Income (on the right of the 
'=') are increased via Credits (right column)


Because:

Debits = Credits

Hope that helps!

Regards,
Adrien

On 1/11/23 6:05 PM, R Losey wrote:

I apologize for not using "debit" and "credit" terms, but I'm not sure I'd
get them right.


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Re: [GNC] Recommended Method of Entry for IRA Distributions

[Stan Brown]

How would you do it in a pen-and-ink ledger? The answer is the same for
GnuCash.

So many people seem to be under the impression that GnuCash does
accounting ion its own special way. It's much more helpful, in my
opinion, to think of GnuCash as an automated version of the pen-and-ink
ledger methods that are taught in basic bookkeeping courses (or used to be).

Stan Brown
Tehachapi, CA, USA
https://BrownMath.com

On 2023-01-11 14:35, Milton Stern wrote:
> Hi,
> 
> What would be the recommended method of Entry for an IRA Distribution?
> 
> The Distribution is for a personal IRA (not Roth).
> The IRA is of Mutual Funds.
> 
> The Mutual Fund is in Assets > Investments - Retirement > Brokerage > etc.
>> etc.
> 
> Since this is taxable income, I need to track withholding (Federal) + Net
> Distribution to a Checking Account (Assets > Current Assets).
> No Commission fees are applicable, but it would be nice to know where/how
> they would be tracked.
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Re: [GNC] Recommended Method of Entry for IRA Distributions

[R Losey]

Hello.

Assuming you take out $5,000 and they withhold 10% ($500), I would use a
split transaction... sell $5000 worth of the mutual fund, add $4500 to your
bank account, and $500 to federal income tax paid.

I apologize for not using "debit" and "credit" terms, but I'm not sure I'd
get them right.

You can track them however you wish, but the above is how I would do
them... well, except, I never have the mutual fund withhold taxes; I pay my
own taxes quarterly.


On Wed, Jan 11, 2023 at 4:35 PM Milton Stern  wrote:

> Hi,
>
> What would be the recommended method of Entry for an IRA Distribution?
>
> The Distribution is for a personal IRA (not Roth).
> The IRA is of Mutual Funds.
>
> The Mutual Fund is in Assets > Investments - Retirement > Brokerage > etc.
> > etc.
>
> Since this is taxable income, I need to track withholding (Federal) + Net
> Distribution to a Checking Account (Assets > Current Assets).
> No Commission fees are applicable, but it would be nice to know where/how
> they would be tracked.
>
> Thank you in advance,
>
> Moshe
> ___
> gnucash-user mailing list
> gnucash-user@gnucash.org
> To update your subscription preferences or to unsubscribe:
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -
> Please remember to CC this list on all your replies.
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>


-- 
_
Richard Losey
rlo...@gmail.com
Micah 6:8
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