Tracking funds in a 401k

[Derek Brader]

Hi,

See below.

Bradford R. Bowman wrote:
> Ok, so you are doing a two step process.  One transfer from the salary
> transaction to the 403b, then a transfer of the two 403b contributions
> into the separate funds?  I guess the advantage of that is that you can
> easily apply the employer contribution cap.  

I enter my 401k contributions as a two step process, but I don't think 
that you should necessarily have to.  I do it because deductions from my 
paycheck are not synchronized with contributions to my 401k.  My 401k 
contributions go to a "holding account" each pay period (weekly), then 
the funds get transferred to my 401k semimonthly.  My (complicated) 
payroll transaction shows funds going to the holding account.  I make a 
separate semimonthly transaction to show money going from the holding 
account into the individual funds within my 401k.  If not for the added 
complication of the holding account (and it sounds like you don't have 
that complication), I might put splits for each fund right in my payroll 
transaction.

A hidden benefit of using the holding account method is that I can 
easily download monthly transaction history from my 401k fund servicer 
(Fidelity).  That saves me from having to enter all the share price data 
every time.  That, combined with using the autocompletion/duplication 
feature for my paychecks, keeps the hand data-entry under control.  So 
you might want to do a 2-step transfer for this type of convenience.

In response to your previous post, I think you're correct to use a 
separate mutual fund-type account for each 401k fund.  Then set the 
commodities properly (with the ticker symbols for each account) and you 
should be able to download current price data with the price editor.

> 
> Is the employer match properly treated as income? I recall reading a
> comment on the list from a recent search where it was suggested that it
> should be treated as coming from an equity type account. It is
> compensation, but not taxable for income tax purposes.
> 

I'm not an accountant, but I don't think there's any reason to use an 
equity account for your employer match.  Taxable or not, it is still 
income.  Whether it is taxable depends on applicable tax laws, not on 
the origin of the money.  Dividend income and capital gains within a 
Roth IRA are not taxable, but I would still consider them income. 
Dividend income and capital gains within your 401k are tax deferred, but 
they are still income.  I think this sort of thing should be handled 
with reports, not with the account structure.  Some expenses are 
deductible and some are not, but you don't use equity accounts to show 
this.  Use reports.

Feel free to disagree here if you think my understanding is confused...

Good luck,
~derek