[GNC] IRA/401K income detection

[Michael or Penny Novack]

On 3/16/2022 8:49 PM, D. wrote:
> Michael,
>
> I think I get what you're saying. In my own case, I've taken to 
> separating the pretax streams into their own income accounts, which 
> seemingly addresses some of your points.
>
> But one of the big selling points of IRA/401Ks is that they earn money 
> tax deferred (which I've also isolated into their own income 
> accounts). How does Joe allocate the distributions-- or does it even 
> matter? Each distribution is going to include a portion of deferred 
> income and a portion of untaxed dividends (at least how I've captured 
> the txns thus far). Is there a different way to manage those dividends?


If the contributions are all "pre-tax" then they are "deferred income" . 
The "deferred income" account would have been used when you entered the 
transaction for a contribution.

What the account has earned is also all "deferred income". If you were 
entering transactions to record the increase in value of your 401K, that 
would have been the other side of the transaction. Note that it is 
"deferred ordinary income  and not "deferred capital gains"

If the 401k existed before you began with gnucash, the probable cause 
was entering the starting balance using the "tool" (so other side 
"starting equity"). It should have been "deferred income" << you could 
still use the tool -- when you created "deferred income" (probably under 
equity) with the same starting value that would have taken it out of 
"starting equity". Understand? Yes "deferred income" is part of your 
equity but it is different than your other equity because it has an 
attached tax liability.

Michael D Novack

PS  --- Bears repeating, but a "manual" is not a "user guide". We really 
should not be advising users about things like this. In other words, the 
question isn't "how do I enter transactions related to a 401k" but "what 
accounts, what transactions, would I be using when accounting for a 
401k". That's for a tax accountant to tell you, or you look it up. I am 
not legally qualified to answer "tax accountant" sorts of questions.