[GNC] Recommended Method of Entry for IRA Distributions

[Michael or Penny Novack]

On 1/13/2023 11:48 AM, R Losey wrote:
> Thanks. The only minor drawback is that I seem to be entering the data 
> twice under "Income" just to keep track of IRA distributions on their 
> own. But hey, it's one way to make it work.
>
> And, as has been pointed out, since this is not really "income", it 
> makes sense that the transaction has no net income. I think I'll adopt 
> this method for 2023.
>
> In hindsight, since the Fiduciary Trust that keeps the IRA has to 
> report to me on distributions, I haven't felt a need to have an 
> account for this and to double-check them.
>
>
>
> On Thu, Jan 12, 2023 at 10:56 PM David T. <sunfish62 at yahoo.com> wrote:
>
>     Two separate entries. In my mind, this would best be put in one
>     transaction, to make the association obvious.
>
>     CR - Assets: IRA $1000
>     DB - Assets: Checking $1000
>     DB - Income: Deferred Income $1000
>     CR - Income: IRA Distribution $1000 *
>
<<< it most certainly COULD be in one entry. A transaction can have more 
than two accounts. It is only when entering via the shortcut "enter 
directly into the ledger" that gnucash allows you to do that is limited 
to two accounts. When entering a "split" in "journal mode" you can have 
more than two. In the old days ALL transactions were entered first in 
the journal and then posted to the ledger. But even in pen and ink days 
we had SOME shortcut possibilities, like "cashbook accounting" << where 
a small subset of the ledger allowed direct entry skipping the journal.>>

BUT -- I would not have "deferred income" under income, because it is 
more like a standing account. The money that you put into the 401k/IRA 
did not get counted in your income in those years. The money contributed 
by your employer (401k) did not get counted as income back then, nor the 
annual increases in fund value as you perhaps marked to market at year 
end (the investment income of the fund).

When you take distributions later is when it becomes income << you are 
undeferring that amount >>

This is accounting, not gnucash

Michael D Novack


>
>     * Income: IRA Distribution is used to document the distribution
>     for tax purposes.
>
>     David T.
>     On Jan 13, 2023, at 7:21 AM, R Losey <rlosey at gmail.com> wrote:
>
>         Thanks for all of the information... however, getting back to the original
>         question, I'm not sure how to record IRA taxable distributions. I thought I
>         was doing it, but I am apparently not.
>
>         Let me write through a couple of cases.  In the first one, I'm selling
>         $1000 worth (10 shares) of security A and having it go directly to my
>         checking account with no income tax withholding. (some of these may be
>         USA-centric terms; I apologize for that).
>