Recording Non-Taxable Dividends

[Richard Ryder]

Anthony wrote:
> By the way, if you do want your retirement asset account to reflect the 
> market value (best to update it at some regular period like the end of 
> each month/quarter/year), something like "unrealized gains - retirement 
> accounts" would go in the equity section of your balance sheet to keep 
> things balanced.  Then you'd move it to income when you take the money out.
> 
> What type of retirement account are we talking about?  Are the 
> contributions deductible?  If so, how are you recording them?
> 
> On Sat, Jan 2, 2010 at 12:29 PM, Anthony <gnucash at inbox.org 
> <mailto:gnucash at inbox.org>> wrote:
> 
>     I'd ignore them.  If you want to mark your retirement accounts to
>     market on a regular basis, they'll show up as "unrealized income" at
>     that point.
> 
>     What do you currently do with your unrealized gains?
> 
> 
>     On Sat, Jan 2, 2010 at 12:15 PM, Richard Ryder
>     <rich.ryder at comcast.net <mailto:rich.ryder at comcast.net>> wrote:
> 
>         Can anyone suggest how I should record stock/mutual fund
>         dividends that are reinvested within (U.S.) tax-deferred
>         retirement accounts? Increases in the number of shares in such
>         investment accounts do not result from present income. The
>         income is only realized when taxable distributions are paid from
>         the accounts. Gnucash may not care about the distinction between
>         taxable and non-taxable income, but I don't want to have the
>         income counted twice, once when the dividend is posted and again
>         when the money is withdrawn (and the IRS wants it reported as
>         "income").
>         -- Richard Ryder
> 
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> 
First I'll answer your questions:
The accounts are various Traditional IRAs, Roth IRAs, and a 403(b).  IRA 
and 403(b) contributions were all tax-deferred, but I'm retired and have 
made no contributions in recent years so that's not an issue I have to 
deal with. I'm ignoring unrealized gains (in my taxable accounts too) 
and hoping that doesn't cause a problem in the future.

Now my planned solution:
Since I just want to track the value of the accounts and because the 
price at which new security shares are added will never matter I'm going 
to start doing the following:
1. Create an income:retirement:tax-deferred account
2. For each retirement security sub-account, record a "buy" transaction 
linked to the tax-deferred income account for the number of shares added 
by the dividend reinvestments but at $0 price and $0 cost.

Coupled with periodic price updates for the underlying securities that 
should keep the values of the retirement accounts current, while the 
income recorded in the tax-deferred account remains at $0.

When a distribution from a retirement account occurs I will transfer the 
proceeds of the securities sale(s) that fund the distribution to a 
taxable income:retirement:name_of_plan(cash) account just as in the sale 
of a taxable security, then split the distribution amount into direct 
deposit and tax witholding portions.

Does that make sense?

-- 
		....Rich
___________________________
Richard Ryder
390 Richard Court
Los Alamos  NM  87544-3566