debit

[Andrew Sackville-West]

On Wed, 08 Feb 2006 13:05:07 -0500
Adam Rosi-Kessel <adam at rosi-kessel.org> wrote:

> I have a 401(k) with a 50% contribution employer match that vests over four
> years. So far, I just haven't been accounting for it at all. I didn't see
> anything in the Wiki FAQ about 401(k)'s.  Any suggestions of how best to
> handle that?

well, handling the vesting is probably pretty complicated, but I think you could handle it by having a seperate account for the vested and unvested portions of the employers contribution. Over time, as the vesting changes, you can move shares/money/whatever from one account to the other until you're 100% vested. after that its fairly straightforward. 

You need an income account (call it whatever you like, but something like "tax-free contributions" would make sense) that is used soley for those employer contributions. With each paycheck, include a split for income from that account that moves money from income to your 401k. simple. 

say you do this in your checking account for each paycheck:
			debit		credit
Income:wages				1000.00
Income:tax-free				50.00
401:my contrib		100.00	
401:nonvest empl.	50.00	
Checking		900.00

Then in 4 years when you're vested:

401:nonvest empl.			50.00
401:vested empl.		50.00	<- could also just use 401:my contrib here

A

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