Account setup recommendations for 401(k)/403(b)

[David Reiser]

On Nov 23, 2007, at 8:59 PM, Anthony Messina wrote:

> On Friday 16 November 2007 10:48:25 am Anthony Messina wrote:
>> I was wondering if any of you long-time gnucash users could give me  
>> some
>> advice on how to best set up accounts for employer-sponsored  
>> retirement
>> accounts like a 401(k) or a 403(b) where both me (and spouse) and our
>> respective employers contribute?  I'm considering the following  
>> scenarios:
>>
>> **Scenario A:**
>> The cash payments from myself (or my spouse) and our employers go  
>> into the
>> respective "Assets:Retirement:403(b) Cash (Me)" or
>> "Assets:Retirement:401(k) Cash (Spouse)" accounts.
>>
>> When fund/stock purchases are made, they would come out of the
>> respective "Assets:Retirement:403(b) Cash (Me)" or
>> "Assets:Retirement:401(k) Cash (Spouse)" accounts and into the proper
>> fund/stock.
>>
>> Assets -- Placeholder
>> -Retirement -- Placeholder
>> --403(b) Cash (Me)
>> --401(k) Cash (Spouse)
>>
>> Investments -- Placeholder
>> -Retirement --Placeholder
>> --403(b) (Me) -- Placeholder
>> ---Mutual Fund -- Placeholder
>> ----Fund 1
>> ----Fund 2
>> ---Stocks -- Placeholder
>> ----Stock 1
>> ----Stock 2
>> --401(k) (Spouse) -- Placeholder
>> ---Mutual Fund -- Placeholder
>> ----Fund 1
>> ----Fund 2
>> ---Stocks -- Placeholder
>> ----Stock 1
>> ----Stock 2
>>
>>
>> **Scenario B:**
>> The cash payments from myself (or my spouse) and our employers go  
>> into the
>> respective "Investments:Retirement:403(b) (Me)"
>> or "Investments:Retirement:401(k) (Spouse)" accounts.
>>
>> When fund/stock purchases are made, they would come out of the
>> respective "Investments:Retirement:403(b) (Me)"
>> or "Investments:Retirement:401(k) (Spouse)" accounts and into the  
>> proper
>> fund/stock.
>>
>> Investments -- Placeholder
>> -Retirement --Placeholder
>> --403(b) (Me)
>> ---Mutual Fund -- Placeholder
>> ----Fund 1
>> ----Fund 2
>> ---Stocks -- Placeholder
>> ----Stock 1
>> ----Stock 2
>> --401(k) (Spouse)
>> ---Mutual Fund -- Placeholder
>> ----Fund 1
>> ----Fund 2
>> ---Stocks -- Placeholder
>> ----Stock 1
>> ----Stock 2
>>
>> Currently, I am using Scenario B, simply because I was "getting to  
>> know"
>> gnucash.  However, I am thinking that Scenario A would be a better  
>> way to
>> organize this?
>>
>> Thank you for any guidance you can give.
>
> Any guidance on this?  My wife got a new job, so I'd like to "start  
> off right"
> if possible.  Thanks.

I am soooo not an accountant, so don't take my advice as anything  
authoritative in that regard.

Plan B looks rational to me. If that's what makes sense to you, go for  
it. I would advise you to set up the structure and see if you can  
enter several typical transactions. When I was first setting up  
gnucash, I _really_ didn't understand the investments section. When I  
tried a setup different from the standard example, something didn't  
work right. It was almost certainly something I did. But I went back  
to the standard setup, it worked, and now I'm used to it. So I haven't  
ever figured out what went wrong with my alternate setup. I think it's  
worth setting up your plan B and seeing if you can enter a month or  
two of real or imagined transactions.

Dave

--
David Reiser
dbreiser at earthlink.net