[GNC] How to treat IRA distribution as income

[Bob Plantz]

It's a traditional IRA. I also have a 403(b). I'm taking required minimum distributions from both.

I have an asset account and a "dummy" account for each. When I take an RMD, I create an income transaction that shows where the money goes: checking account, federal withholding, and state withholding. Then I create a withdrawal in the asset I'm taking the RMD from and deposit that withdrawal in the corresponding dummy account.

This hack seems to work, but it doesn't feel right to me because it seems to violate the double-entry principle.

________________________________
From: Stan Brown (using GC 4.14) <stan+gc at fastmail.fm>
Sent: Friday, December 27, 2024 8:13 AM
To: Brad Morrison <bradmorrison at sonic.net>; rgplantz at outlook.com <rgplantz at outlook.com>
Cc: gnucash-user at lists.gnucash.org <gnucash-user at lists.gnucash.org>
Subject: Re: [GNC] How to treat IRA distribution as income

On 2024-12-27 00:35, Brad Morrison wrote:
>
> This may seem basic, but is your IRA
> (https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fen.wikipedia.org%2Fwiki%2FIndividual_retirement_account&data=05%7C02%7C%7C68a362b3cb0f4e2f12af08dd26916130%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C638709128013877626%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=%2FhC5VDKIUzCuCUqnOWZ5goI3WTek4GABrgJhLpnljc8%3D&reserved=0<https://en.wikipedia.org/wiki/Individual_retirement_account>)
> traditional or Roth?
>
> IRAs can be taxed at the contribution stage or at the withdrawal stage.

Or both. If you ever made nondeductible contributions to your
traditional IRA, part of each distribution will be taxable and part will
be nontaxable.

If you withdraw too soon from your Roth IRA, part of the withdrawal may
be taxable, and there may be penalties as well.

See Publication 590-B for detailed rules on both of these:
https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.irs.gov%2Fforms-pubs%2Fabout-publication-590-b&data=05%7C02%7C%7C68a362b3cb0f4e2f12af08dd26916130%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C638709128013896351%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=DoXCqvWVE2cRrIJerRNNZd5us%2B7n1gz2q4lGMHb1cCE%3D&reserved=0<https://www.irs.gov/forms-pubs/about-publication-590-b>

Stan Brown
Tehachapi, CA, USA
https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fbrownmath.com%2F&data=05%7C02%7C%7C68a362b3cb0f4e2f12af08dd26916130%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C638709128013910691%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=UvUEJwPyu59MC89EO%2FVSk2W%2B1QnVHFQl4bxja7UN17U%3D&reserved=0<https://brownmath.com/>