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[updated 10/29/2020; 2/3/2021 (Microsoft appears to have removed all of the download files related to Microsoft Money from their servers on 2/1/2021)]


Microsoft discontinued sales of the software on June 30, 2009 and removed access to online services for existing Money installations in January 2011.  If you agree with me that Microsoft Money is still the BEST personal (and small business) financial management software ever, then you’ve come to the right place for improving Money’s OFFLINE capabilities.

  • Even though Microsoft has elected to divorce the program from the MSN Money servers as of January 31st, 2011 (which did much more than just grab statement downloads, including independent stock and fund quotes for ALL of your investments, passing through third-party web-scrapes of your data, supporting Online banking, investment news, tax and exchange rates, LiveID password authentication, etc.), they have made available a **FREE**  legal copy (the SUNSET edition) of the latest updated  OFFLINE  version of  Microsoft Money Plus Deluxe that you can download, even if you’ve never used Money before!  On its own, it will only update via OFX statement files that you download through the websites of your financial institutions.
  • Now by installing the latest version of Python 2.7 (not 3) and Bobby’s PocketSense script package that runs on Python, you will be able to essentially mimic many of the online functions that Microsoft is no longer providing.
  • Another new program, written by a former Microsoft programmer, that will update all of your investment quotes in a very similar fashion to Money’s original online updater through MSN, is available for a nominal one-time fee.  It is called MSMoneyQuotes and you’ll find links to it in this blog post.
  • For those that only need to update quotes (no Account Statement updates) and don’t wish to install Python scripting, Hung Le had written a Java app a year ago that has been recently updated and the link in the original Blog page has been updated with this new version.
  • I have developed Ameridan’s addon package to PocketSense that allows you to run these scripts (and review your Online investment data) from within your Money program.
All of the known working PocketSense sites.dat settings that I am aware of are listed (and continuously kept updated) in this
>>>>> blog page <<<<<
♦♦♦♦
Also, make sure you check out the
Look Up Your OFX Settings
portal page, with links to all of the other sources of OFX settings
that I am currently aware of

IMPORTANT!! 

1. If any Money Plus, 2007, or 2006 users use a Live ID (email address plus password), they should remove that with File-> Password Manager. This can only be done if they can get into the Money file. They should then use a local “Money password” only (if they want a password at all). Money 2005 users don’t have this ability, and must continue to log in offline.

2. Do not attempt to reset your Live ID ,as the program may suggest. Any attempt to do so will be ineffective. Only the credentials in effect at the time that you last successfully got in to your Money file will work.

3. You should use Windows Firewall to cut Money off from the internet, so that it doesn’t work so hard trying to access servers that no longer exist. This is a speed and convenience issue.  See my article “Eliminating the “online updating”delays and errors when opening Money” for details.

4. Customize your Money’s Home Page such that the only two modules are Reminders and Favorite Accounts.  Other modules like Bills & Deposits and Investment Performance can consume some time and prevent you from working with your file right away (and have even been known to occasionally cause the program to exit).

5. There is a small bug in the Home & Business version, whereby the income category assigned to your products/services may become disassociated.  It is discussed further in my article.

(a good portion of the following, is courtesy of Cal Learner)


Download links

Additional details and patches are available at http://moneymvps.org/

Self-contained installation files for use (including if the original disk requires activation).   No direct online access works with the Sunset versions, which have been revised to be OFFLINE (access to MSN servers has been deactivated).

Notes for North America:

1. US and Canadian Money 2005 and Essentials users — as well as other US and usually Canadian users — can use Money Plus Deluxe Sunset if they have to reinstall at some point.
2. Some US users of older versions of Money (Money 98 through Money 2003)  may have to use an additional step, by first installing a version of US Money 2004 (see “Trial edition of Money 2004” link below) or 2005 to perform a file conversion before installing Money Plus Sunset.

US Money Plus Deluxe Sunset (works with US and Canadian Files only)
>> download here (only click on the download button showing the file’s size)

US Money Plus Home and Business Sunset (works with US and Canadian Files only)
>> download here (only click on the download button showing the file’s size)

Money 2005 UK – QFE2
Self-contained UK Money 2005 file including all available patches. Replaces all MS Money UK 2005 installation discs. Usually solves “Money cannot locate the file because it’s a read only file or you do not have permission to change it” error message.
>> download from http://moneymvps.org/downloads/files/2005/Money2005-UK-QFE2.exe

Money 2005 International English QFE2
Self-contained Money 2005 International English installation file from Microsoft, including all updates (For Australia, New Zealand, Hong Kong and all other English versions other than for US, Canada, UK).
>> download from http://moneymvps.org/downloads/files/2005/Money2005-IntlEngl-QFE2.exe

Money 2005 French – QFE3
Self-contained French Money 2005 file including all available patches. Replaces all MS Money French 2005 installation disks.
>> download from http://moneymvps.org/downloads/files/2005/Money2005-FR-QFE3.exe


Notes for all versions…

It is suggested that all Money users keep a good copy of the installation file, even if the need is not immediate. It will be needed if you reinstall Money in the future. Those links can change, so do a search if you don’t find the file you need. Since we don’t know how long these files will be available, it is best to keep a copy of your appropriate installation file in a safe place.

Patch needed for newer versions of Money running on Windows 10 & 11

Because of a bug in the file mnyob99.dll, there are issues with Windows 10 & 11.  It is recommended that a patched version of this file be used to resolve these issues and insure compatibility.  Read more (and find a link to the patch)here.

Regional versions

Money data files are in a different format for each region. The correct regional version of Money must be used or the data file will not open.

It is possible to convert from one region to another only by exporting data as loose qif and importing to the new regional version of Money.

Old Money versions will run only under 32-bit Windows

Old versions (Money 2000 and earlier) include 16-bit code so they can only run under 32-bit Windows (XP, Vista, 7 and 8).

To be able to use data files from these older versions on a 64-bit PC with Sunset Money:

  • Download m12usweb.exe (Trial edition of Money 2004) to the new computer.
    (MD5 is 1c62413858e2184eb39862f1b2afba44)
  • Put the latest *.mny and *.mbf files into the Documents folder of the new computer
  • Temporarily uninstall Sunset if you had already installed on new computer
  • Disconnect from the Internet (may not be needed, but recommended)
  • Set the computer date to 2004/1/1 (or there about)
  • Install trial Money 2004 by running  m12usweb.exe
  • Let that convert your *.mny file. Check that it seems to work. Save the converted file. Maybe change the name so that you can distinguish the converted file. Close Money 2004
  • Set the date right. Install/reinstall Money Plus Sunset. Let it uninstall Money 2004.
  •        Install the patch mentioned in red  above.
  • Let Sunset convert the Money 2004 *.mbf file to Sunset
  • Make extra copies of Sunset install, patch and data files onto other media

64-bit Windows

The U.S. Sunset versions of Money, downloadable above, run great in Win32 mode of Windows 8, 10 & 11.  It is not a 64-bit program though, so hopefully,  Win32 remains supported within Windows for many years yet.

Internet Explorer

According to DominicP, Money Sunset and QFE2 versions do not actually need IE to be installed. The programs actually include their own, limited capability IE browser which serves as the GUI, yet apparently, the programs still contain residual code which, on installation, checks the registry for the presence of IE and its build number.

I am concerned that if Microsoft ever removes the legacy Trident (also known as MSHTML) proprietary browser engine (mshtml.dll) and associated IE registry entries, installation / reinstallation of Money may cease to function, which is the primary reason why I have turned off Windows 10 automatic (and manual) updates, although I do intend to periodically catch-up with stable versions that remain Money-friendly.

Multiple Monitors

Money does not play well with multiple monitors, especially if one is disconnected at a later time, as might be the case with a laptop attached to other display(s) at work.  If you find Money not behaving properly (ie not appearing after engaging program, customize reports dialogue box disappearing, etc.), open sample.mny while the multiple monitors are hooked up, and insure that Money is closed in full-screen mode – and only on the primary (default) monitor.

Another alternative method that should also work:

Windows logo key img_59b0b16974940 + Tab Task View, allowing you to select hidden program and make it active.
Windows logo key img_59b0b16974940 + Shift + Left arrow or Right arrow Moves the active app on the desktop from one monitor to another.

Hi-Def Monitors

Money also may not display text/data properly on Hi-Def monitors, until the High DPI scaling behavior” is altered (thank you TWG for sharing):

  1. Open Start menu, right click on the Money Plus icon ➜ more  left click “file location“.
  2. In the newly opened “ProgramData>Microsoft>Windows>Programs>Microsoft Money Plus” folder right click the Money shortcut ➜ then left click “Properties“.
  3. Left click on the “Compatibility” tab.
  4. Three quarters down the page is a “Change high DPI settings” button. Left click it.
  5. Near the bottom of the page is the “High DPI scaling override” section. Select the “High DPI scaling behavior” check box.
  6. Select “System Enhanced” from the option menu below the check box.
  7. Click on OK twice as you back out of the menus.
  8. Open Money, to see if the changes improve Money’s display, if not, unwind the changes.

Money version downloads

Up until 2/1/2021, Microsoft made available (for free), the latest Sunset versions of Microsoft Money, but without support.  Once those links were no longer valid, I uploaded my saved copies, and updated the links for my readers.

Whichever version you settle on,  I encourage you to keep a secure copy of your downloaded installation file, since your data will be inaccessible should your Money program ever become corrupted (or if you procure a new PC), and you find yourself  unable to reinstall the same version of Money that corresponds with your data file.

Determining what version of Money you have installed

If you are able to run Money, select Help, and then select About Money.  An alternative method…

C:\Program Files (x86)\Microsoft Money Plus\MNYCoreFiles\msmoney.exe

Right-click on the file    and select Properties.   Product name and version will be revealed after you select the Details tab…

money ver

Backup file strategy

money backup

* The reason for having Money prompt you, is so that you don’t create a back up file each time you exit (which also overwrites the oldest backup file).   If I went into Money 10 times in a day, I would not want to back up 10 times, nor would I want to delete every known good backup file from previous days.   You will be given the choice to Back-Up Now or to Postpone.

Backup file versions

(from my C:\Program Files (x86)\Microsoft Money Plus\MNYCoreFiles\Setup\mny.inf file)

; File Associations
FILE_TYPE_MNY = “Microsoft Money file”
FILE_TYPE_MNE = “Microsoft Money Essentials file”
FILE_TYPE_MBF = “Microsoft Money backup file”
FILE_TYPE_EV16 = “Microsoft Money Essentials backup.”
FILE_TYPE_V17 = “Microsoft Money Plus backup.”   .m17
FILE_TYPE_V16 = “Microsoft Money 2007 backup.”   .m16
FILE_TYPE_V15 = “Microsoft Money 2006 backup.”   .m15
FILE_TYPE_V14 = “Microsoft Money 2005 backup.”   .m14
FILE_TYPE_V12 = “Microsoft Money 2004 backup.”   .m12
FILE_TYPE_V11 = “Microsoft Money 2003 backup.”   .m11
FILE_TYPE_V10 = “Microsoft Money 2002 backup.”   .m10
FILE_TYPE_V9 = “Microsoft Money 2001 backup.”     .mn9
FILE_TYPE_V8 = “Microsoft Money 2000 backup.”     .mn8
FILE_TYPE_V7 = “Microsoft Money ’99 backup.”        .mn7
FILE_TYPE_V6 = “Microsoft Money ’98 backup.”        .mn6
FILE_TYPE_V5 = “Microsoft Money ’97 backup.”        .mn5
FILE_TYPE_V4 = “Microsoft Money ’95 backup.”        .mn4
FILE_TYPE_V3 = “Microsoft Money v3 backup.”        .mn3
FILE_TYPE_V2 = “Microsoft Money v2 backup.”        .mn2
FILE_TYPE_V1 = “Microsoft Money v1 backup.”        .mn1

PocketSense AppID and AppVER:

Product Version APPID APPVER
Money Plus (aka Money 2008)
& Money Plus – “Sunset” (aka Money 2009)
Money Plus 1700
Money 2007 Money 1600
Money 2006 Money 1500
Money 2005 Money 1400
Money 2004 Money 1200
Money 2003 Money 1100*
Money 2002 Money 1000*
Money 2001 Money 900*
Money 2000 Money 800*
Money 99 Money 700*
Money 98 Money 600*
Money 97 Money 500*

* PocketSense scripts are not compatible with these versions (and possibly Money 2004)

Release History (source):

Marketed version Release Date Actual version Notes
Microsoft Money October 2, 1991 1.0 Initial release for Windows 3.0.
Microsoft Money 2.0 September 9, 1992 2.0  
Microsoft Money 3.0 January 6, 1994 3.0 Final Win16 version.
Microsoft Money 95 August 24, 1995 4.0, 4.0a First Win32 version.
Microsoft Money 97 November 19, 1996 5.0 Added ability to close accounts, provided online banking capabilities including online stock quotes (supported until February, 2004), and contained minor UI improvements. Last version to support Windows NT 3.51.
Microsoft Money 98 October 30, 1997 6.0 First version to require Internet Explorer as part of the interface.
Microsoft Money 99 August 14, 1998 7.0 Last localized release for Germany and Brazil.
Microsoft Money 2000 July 30, 1999 8.0 First edition for Windows Mobile platforms. Last localized release for Italy and in German Language for Switzerland and Austria.
Microsoft Money 2001 September 7, 2000 9.0  
Microsoft Money 2002 August 16, 2001 10.0 Last version to support Windows 95 and Windows NT 4.0 SP5.
Microsoft Money 2003 October 24, 2002 11.0  
Microsoft Money 2004 August 29, 2003 12.0 Last version to support original version of Windows 98 (“First Edition”).
Microsoft Money 2005 October 21, 2004 14.0 Last localized release for the U.K., French, and the International edition.
Microsoft Money 2006 September 27, 2005 15.0 Last localized release for Canada. Last version for Windows 98 SE/ME, and Windows 2000 SP3. Also the last version for Windows Mobile platforms.
Microsoft Money 2007 August 19, 2006 16.0 First version to require product activation for copies installed from downloaded installation files.
Microsoft Money Plus December 6, 2007 17.0.150.1415 (Home & Business) 

17.0.120.1415 (Deluxe)

17.0.80.1415 (Essentials)

Final retail release. First and only version to require product activation on those copies installed from CD.
Microsoft Money Plus Sunset March 18, 2010 17.0.150.3817 (Home & Business) 

17.0.120.3817 (Deluxe)

Removed the activation requirement and most of the online update features.

– ameridan

✰ U.S. GOVT Series I Savings Bond transactions (also Series EE)

Go directly to: ✰ U.S. GOVT Series EE Savings Bonds

✰ U.S. GOVT Series I Savings Bonds

maribond10k

[UPDATED 4/28/2022; Inspired to consider Savings Bonds by Harry Sit (The Finance Buff blog); review his great presentation here)]

Our economy is expected to eventually mimic Japan’s (negative returns), and with the rate of inflation expected to increase soon, an investment where your earnings are guaranteed and adjusted to match the rate of inflation, not lose to it, sounds most favorable.  The current annual rate of 9.62% accompanies an investment in I bonds!

I observed today, that by entering the purchase of Savings Bonds by the conventional method, using Money’s dedicated investment type “CD or U.S. Savings Bond”, the bonds don’t show up as investments in the Portfolio Manager screens, nor is there a means of updating the value to reflect the monthly reinvested interest during the years prior to redemption.

What might be a better way to record the purchase of Series I Savings Bonds (Ι Bonds), in Microsoft Money?

Unlike other investments where the interest is posted regularly to your account as interest, I Bond interest isn’t paid to the owner until maturity.  It is also U.S. Government interest, which shouldn’t show up on your State and Local Tax returns, like regular interest.

Therefore, I have decided to assign the investment type as Bond >> Treasury Bond instead, so that not only will the bonds show up as investments, but I can manually update the value regularly, to account for the credited reinvested interest that  compounds semi-annually.  Otherwise your unredeemed $10,000 bond could still show up 20 years later, as still being worth only $10,000, when in fact it could be worth nearly twice that amount.

So, here is how I handled this special case:

BUY

Recording the purchase of I Bonds is pretty straight forward, and they’ll be designated as bonds, just as I do CDs, with a normal par of 100.  In my case, I’ve set up a TreasuryDirect  investment account to hold all of my transactions with Treasury Direct.gov, but unlike most brokerage investment accounts, the Cash (transfer) portion will be the bank account that I’ve linked up, rather than the in-house brokerage Checking account*.

Example: (new) “BUY” of 10,000  “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 1/1/2021”,  @ 100 = $10,000, defining the investment details as:

          • “Bond: Treasury Bond”, rather than “CD or U.S. Savings Bond”
          • Interest Paid: At Maturity (it is actually at redemption though)
          • Maturity Date: 1/1/2051
          • leave Coupon Rate and CUSIP blank 
          • Memo: variable interest, reinvested and compounded monthly (contrary to what TreasuryDirect states), paid at redemption (anytime after 1 year up to 30 years; will lose 3 months interest if redeemed within the first 5 years) 

Now the bonds appear as investments in my Portfolio Manager screens!

MARKET VALUE UPDATES

Say the value at the end of the first year is 1.68% more, or $10,168.  Instead of recording the “reinvested interest” posted to your bonds semiannually in your TreasuryDirect account (stated value will always be lagging behind by 3 months during the first 5 years), by manually updating the price instead (Common tasks > Update prices > Update prices manually…), the market value will be realistically reflected without any tax implications.

Calculate the price >> Price=(Value/Cost) 🆇 100 

Example: Price on 1/1/2022 = 101.68, results in the value of this bond going into 2022 @ $10,168 – reflecting the 1.68% gain that the Treasury has posted.

SELL

The interest is usually recorded separately as either Investment Interest or as Reinvested Interest.  However, I instead created a unique Investment Income sub-category “Treasury Interest”, which I assigned to:

          • Tax form “Schedule B”
          • Form Line “U.S. government interest”

, so that the Tax transactions for both T-bills and Savings Bonds are treated as State & local non-taxable income correctly.

Then, as an example, on the day of redemption 10 or 15 years from now, when the $10,000 bond value is @ 185 ($18,500), two transactions will be needed:

1.  Record the interest as a separate investment activity, selecting “Other Income” as the activity.  I discovered that this allows you to then specify a category (otherwise not possible), which in this case will be “Investment Income : Treasury Interest” (rather than the generic taxable Interest, although there is a possibility that Money would have handled this properly for the intended investment type).

Example: (new) “OTHER INCOME” of 10,000  “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 1/1/2021” of $8,500, assigned to Category “Treasury Interest”.

2.  Then in the actual redemption transaction, record the actual sale properly @ par.  I recently discovered a flaw in the “Tax Software” report if “Redeem CD/Bond” is selected, rather than “Sell”, as the entire amount of the bond is reported as interest, so I would stick with “Sell”.

Example: (new) “SELL” of 10,000  “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 1/1/2021” @ 100.


Note: ▓ I-BONDS CAN BE REDEEMED AFTER 1ˢᵗ YEAR (in incremental amounts should you wish to limit the taxable interest in a given year; you will however relinquish 3 months of interest within the 1ˢᵗ 5 years).  If you want to see a thorough video on how the interest is calculated, click here.


I hadn’t even considered purchasing I bonds, until reading an informative  article written by Harry Sit a few days ago, for his blog The Finance Buff, entitled “Overpay Your Taxes to Buy I Bonds for a Better Yield Than TIPS”, which describes in detail, how a married couple can purchase $25,000 worth of I bonds annually.  Here is an excerpt:

The U.S. government sells savings bonds directly to individual investors in small denominations. Series I Savings Bonds (“I Bonds”) are like a variable-rate flexible term CD. The interest rate goes up and down with inflation, but you’re guaranteed to match the rate of inflation, not lose to it. You can choose to hold I Bonds between one year and 30 years. Matching inflation with a flexible term is a much better deal than losing to inflation after committing to 10 years.

TreasuryDirect

Such a good deal is reserved only for small investors. The government doesn’t let you buy as much as you want. Each person is allowed to buy $10,000 per calendar year. You can only buy it directly on a government website called TreasuryDirect, not through a broker such as Vanguard or Fidelity. That means you can’t buy it with money in an IRA or a retirement plan account.

The TreasuryDirect website isn’t the easiest to use, because the government doesn’t have much incentive to make it easier when it’s already offering a much better deal than what institutional investors are willing to pay. However, if you persevere, you’ll make it work in the end.

If you’re married, the two of you have to open an account with TreasuryDirect separately. TreasuryDirect doesn’t have the concept of a joint account, although you can choose to put a co-owner on the I Bonds you buy. The two accounts can link to the same bank account. The government will debit purchases from your bank account and credit redemptions to your bank account. You pay federal income tax on the accumulated interest only when you sell. The interest is exempt from state income tax.

IRS Direct Pay

After you max out the $10,000 per person per year at TreasuryDirect, you can buy another $5,000 per year indirectly, but only if you’re due at least that much in tax refund and you tell the IRS to use part of your tax refund to buy I Bonds. You can’t send a check with your tax return and ask them to buy I Bonds for you. If you normally don’t have a tax refund that large, you can increase your tax refund by overpaying ahead of time. Because I’m self-employed and I pay quarterly estimated taxes, I just pay extra for the fourth quarter.

If you don’t pay quarterly estimated taxes, you can make a one-time payment through IRS Direct Pay. After a year is over, you can still pay toward the previous year’s taxes with an automatic extension. When you say your payment is for an extension, the payment automatically files the extension. You don’t need to fill out another form. After you file an extension you get extra time but you don’t have to use it. You can still file your tax return on time before April 15.

The “I” stands for “inflation.” Series I bonds have an interest rate that’s indexed to the inflation rate. This means that your I bond is designed to keep pace with—or beat—inflation.

The composite rate is the annualized sum of:

      • a fixed interest rate, that lasts the life of the bond (currently zilch)
      • plus a semiannual inflation rate (determined each May and again in November) on top of that

To see a table showing the current composite rates, click on this TreasuryDirect link.


✰ U.S. GOVT Series EE Savings Bonds

[UPDATED 2/13/2021]
marpbond10k

U.S. Gov’t Series EE Savings Bonds are not indexed to inflation, and currently are at a dismal fixed rate of 0.10%, but since they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of  3.527%  per year!!! , that is probably the ideal length of time to own these bonds (rather than the full 30-year term).

You are allowed to purchase up to $10,000 of I Bonds and $10,000 of EE Bonds per year, but if you aren’t willing/able to commit to 20 years, EE bonds currently aren’t a good investment.

BUY

Recording the purchase of EE Bonds is pretty straight forward, and they’ll be designated as bonds, just as I do CDs and I Bonds, with a normal par of 100.  In my case, I’ve set up a TreasuryDirect  investment account to hold all of my transactions with Treasury Direct.gov, but unlike most brokerage investment accounts, the Cash (transfer) portion will be the bank account that I’ve linked up, rather than the in-house brokerage Checking account*.

Example: (new) “BUY” of 10,000  “✰ U.S. GOVT SERIES EE SAVINGS BOND (20 YR) ISSUE 2/1/2021”,  @ 100 = $10,000, defining the investment details as:

          • “Bond: Treasury Bond”, rather than “CD or U.S. Savings Bond”
          • Interest Paid: At Maturity (it is actually at redemption though)
          • Maturity Date: 2/1/2041 (record as 20-years, even though actual maturity is in 30-years)
          • leave Coupon Rate and CUSIP blank 
          • Memo: 3.527% APY, but ONLY if held at least 20 years (unique guarantee that value doubles); otherwise only 0.10% APY paid @ redemption ▓ REDEEM AFTER March 2041

Now the bonds appear as investments in my Portfolio Manager screens! and I (or my heirs) are reminded not to cash-in early.

MARKET VALUE UPDATES

The dismal returns of 0.10% each year will add up very slowly, and the value at the end of the first year will be $10,010.  Instead of recording the “reinvested interest” posted to your bonds semiannually in your TreasuryDirect account (stated value will always be lagging behind by 3 months during the first 5 years), by manually updating the price instead (Common tasks > Update prices > Update prices manually…), the market value will be realistically reflected without any tax implications.

Calculate the price >> Price=(Value/Cost) 🆇 100 

Example: Price on 2/1/2022 = 100.10, results in the value of this bond going into 2022 @ $10,010 – reflecting the 0.10% gain that the Treasury has posted.

SELL

The interest is usually recorded separately as either Investment Interest or as Reinvested Interest.  However, I instead created a unique Investment Income sub-category “Treasury Interest”, which I assigned to:

          • Tax form “Schedule B”
          • Form Line “U.S. government interest”

, so that the Tax transactions for both T-bills and Savings Bonds are treated as State & local non-taxable income correctly.

Then, on the day of redemption 2 decades from now when the Treasury makes a one-time adjustment to fulfill the “doubles in 20 years” guarantee, the $10,000 bond value is @ 200 ($20,000), two transactions will be needed:

1.  Record the interest as a separate investment activity, selecting “Other Income” as the activity.  I discovered that this allows you to then specify a category (otherwise not possible), which in this case will be “Investment Income : Treasury Interest” (rather than the generic taxable Interest, although there is a possibility that Money would have handled this properly for the intended investment type).

Example: (new) “OTHER INCOME” of 10,000  “✰ U.S. GOVT SERIES EE SAVINGS BOND (20 YR) ISSUE 2/1/2021” of $10,000, assigned to Category “Treasury Interest”.

2.  Then in the actual redemption transaction, record the actual sale properly @ par.  I recently discovered a flaw in the “Tax Software” report if “Redeem CD/Bond” is selected, rather than “Sell”, as the entire amount of the bond is reported as interest, so I would stick with “Sell”.

Example: (new) “SELL” of 10,000  “✰ U.S. GOVT SERIES EE SAVINGS BOND (20 YR) ISSUE 2/1/2021” @ 100.


*   Note that if you are reinvesting within the TreasuryDirect account, simply enable “Track Cash transactions” in Settings, so that those bond redemptions and re-purchases are transferred to/from the virtual TreasuryDirect Cash account, rather than the linked Bank account, to avoid confusion and reflect reality.

-ameridan

Open letter to Schwab (Portfolio management software requires access to our financial data in ofx or qfx format)


Mr. Walt Bettinger
President & CEO at Charles Schwab

I am appealing to you, and hoping that you might be able direct remedial action within your organization, to discourage losing Schwab clients like myself, that don’t know who else to appeal to, as a result of a corporate decision to shutdown access to your ofx server(s) to everyone except Envestnet Yodlee, Intuit, and eMoney Advisor, as of COB on October 16th.  As far as I know, all of your competitors make their financial data available in ofx or qfx format for their clients.

Perhaps unknown to yourself, many of your clients chose to use portfolio management software, that requires access to our financial data in ofx or qfx format, unless input manually.  Although you provide this format for those using Quicken, many of us use other software, including Microsoft Money, a Windows program which we feel is superior (even though Microsoft no longer supports it), and doesn’t require a subscription.  In the interest of client data security, I can understand your choice to stop 3rd-party access to our data, but by doing so, you’ve also cut off your client’s “1st-party” access to OUR data.  On Schwab’s web portal, you used to offer an export option of our transactions in ofx format, and although less convenient than the automated downloads we’ve obtained on a daily basis for the past 20 years from your ofx server, re-enabling that option would at least solve our dilemma.  Currently, you only offer exporting our financial data in CSV format, which is pretty useless except for importing into spreadsheets.

Sincerely,
Daniel Adkins


The following was not included with my emailed letter on 10/21/2020, and in conjunction with the comments below, I’m adding after the fact, for consideration and discussion purposes (Schwab’s Client Advocacy Team was sent a link to this blog post).

I don’t think Schwab has a clear idea regarding the full range of “customers” serviced by their OFX servers (or perhaps Intuit has lobbied for exclusive access?). It isn’t all 3rd party data aggregators; Schwab’s CLIENTS depend on this data too!

The PC financial software that I use in the U.S., is “Microsoft Money Plus Home & Business – Sunset Edition“, but there are other versions of Money in use around the world, as well as other programs (some running on MacOS or Linux platforms), all designed to work with our financial data in ofx (or qfx) format. Money is now totally offline, and no longer uses MSN as a data aggregator – instead PocketSense mimics a data aggregator, by combining all of the ofx files accessed directly from that session’s scripted ofx server downloads.

I, among thousands of others, plan on using this excellent program (hopefully in conjunction with PocketSense 😉 ) for the rest of our lives, unless Windows no longer functions on our PCs someday, or an alternative comes about that outshines Money (that sure isn’t Quicken!).

♦♦♦♦

"If you do the right thing by your clients, they're going to choose to do more business with you".
-Walt Bettinger

In my opinion, the corporate decision to cut off the data feed for all of your clients using personal finance software, is not “doing the right thing by your clients”. And isn’t it hypocritically strange, how Schwab is counting on nearly every other financial institution (they claim over 15,000) allowing 3rd-party access, so that Schwab can offer their “aggregation service” on their web portal home page, and yet they want nobody (not even their own clients!!) to be able to gain access to account data at their brokerage?

Unless you are using Quicken?

I’ve confirmed from other readers, that both Vanguard and Fidelity offer access to their OFX servers, so even though Schwab reportedly has the most user-friendly website, we do have a backup plan should Schwab choose to not support those using non-Quicken portfolio management software any longer. I’ve tried JPMorgan’s YouInvest this past summer, and they also ‘sorta’ support ofx downloads, but selecting investments on their brokerage website is not so user-friendly (in my opinion anyways).

↑ I know they aren’t #1 in Online Financial Planning software, but they very well could have been “#1 in Portfolio Management Software Satisfaction” — until October 16, 2020, that is. (I don’t do mobile apps)
Let’s hope Schwab remediates the decision to alienate clients that manage their money via financial software!

Since our login credentials are stored locally (encrypted) on our PC running our Money program, I consider our PocketSense connections “Direct Connect”, so how is client data security at risk????

Looking at page 14 (shown below) of Your Bank’s Digital Side Door, it appears that our secure, local PocketSense program scripts are considered “Direct Connect” (no middle-man), and I would think that Schwab would consider this preferable to access by 3rd-parties, which might retain our logon credentials on their computers. Same goes for the Direct Connect scripts within other portfolio management programs, like Moneydance and GnuCash.

Since our PocketSense scripts communicate with ofx servers as a “Quicken for Windows (version 2800) client”, over a fully secure (SSL) connection directly with each institution and transfers data over the encrypted link (at the full strength provided by the bank server), I don’t see why we aren’t allowed access!


Moneydance users are going through the same grief:

https://infinitekind.tenderapp.com/discussions/problems/63978-moneydance-stopped-downloading-transactions-from-charles-schwab

Under Schwab’s current strategy, if programs like GnuCash and Moneydance were to go through a HTTP tunnel proxy server certification process with Schwab (like Quicken has), then their users would be granted ofx server access. However, in our case with Microsoft Money, I can’t think of a HTTP tunnel proxy server that we would [certify to] go through, since (1) Microsoft no longer supports the program, and (2) the program doesn’t communicate with ofx servers anyways – it’s a set of python scripts (PocketSense) on our PC that gather the data directly, which Money then imports.

Perhaps, all of the other programs (besides Quicken). are currently just using scripts in the background to gather ofx data, as well, and really don’t know what they’d be “certifying”.

[UPDATE 2/14/2021]
Comments regarding issues (and solutions) with USAA’s ofx server have also developed in the conversation, subsequent to writing this article, and I’m mentioning here, in hopes that Google search engines can assist others hoping to find a solution.

Continue reading “Open letter to Schwab (Portfolio management software requires access to our financial data in ofx or qfx format)”

Fixing Sunset Offline Issues & Customizing Tax Categories

[UPDATED 4/26/2021, 11/3/2021]
The offline “Sunset” version must have been patched rather quickly (and on a limited budget), because it still has many remnants of “online” coding, but fortunately they are all just minor annoyances.  For instance:

✅  rather than creating a Watch account directly (which results in an error, as shown below), just create an investment account, and then afterwards, in account settings – activate the Watch account option.

screenshot202021-04-0920145552
click to enlarge

✅  all of the online options like “Customize Updates”, “Update Online Information”, “Read Summary Messages”, “MSN Alerts” and others, still exist within the program – just ignore them.

✅  you also want to avoid the Windows Live ID password option!  If you want password protection for your file, it should be a “local” offline version only.  I don’t know why this wasn’t cleaned up, as it can be very confusing.  The only thing I can think of is that for those that had the Live ID option enabled prior to the Sunset edition, a mechanism to remove it, needed to be retained.

live id
click to enlarge

urlmap.xml

Another issue is that many of the Program tabs (BUDGET, INVESTING, PLANNING and TAXES) no longer function.  For instance, clicking on the INVESTING tab takes you to a MSN page, rather than the intended  Investing portal page within Money.  sc489 offered a great solution:

This behavior can be rectified by renaming urlmap.xml (admin privileges required; found in
%ProgramFiles(x86)%\Microsoft Money Plus\MNYCoreFiles\WebCache
for 64-bit Windows, OR
%ProgramFiles%\Microsoft Money Plus\MNYCoreFiles\WebCache
for 32-bit Windows)
to urlmap.xml_disabled.

It’s been 10 years, since my BUDGET, INVESTING, PLANNING and TAXES tabs worked properly!

taxnames.tbl

aha4aiconSo, while looking around in that folder, I discovered U.S. and Canadian tables that define tax categories, both within Money, and for our tax reports.  For instance, in the Tax software report with my Money Plus Home & Business Sunset, “Pension state tax withholding” has always been misspelled (Pension statel tax withholding), and I was able to fix this by changing the friendly name for item 530 in taxnames.tbl (towards the bottom of the file).

I like to keep Health Insurance expenses separate from “Doctors, dentists, hospitals, medicine and drugs“, and had always assigned them to “Other medicine and Drugs“.  By changing the friendly name for item 273 to “Health Insurance“, the category tracking

      • regular health and dental insurance premiums
      • Medicare B, D & G premiums
      • any IRMAA surcharges

now corresponds for my Tax software reports, and also exports into my H&R Block tax software’s Schedule A more appropriately.

I prefer to track taxable and non-taxable Pension distributions as well, yet the categories were always defined as “Pension taxable distributions” and “Pension gross distributions“.  Rather than calculate the non-taxable portion, I’d rather enter that amount directly into my tax software.  I have always bunched my non-taxable distributions into the gross category, resulting in reports that were somewhat confusing.  By changing the friendly name for item 475 to “Pension non-taxable distribution“, that too is fixed!

Since the MNYCoreFiles folder has Read-only attributes, bring the file to your desktop, make your changes, and paste it back to the folder (need admin privileges) when saved/finished.

tax.tbl

It appears that you are able to refine tax categories, as well the Tax Form line numbers, as the IRS changes them over the years, by supplementing the table with new entries (2020:… rather than 2003:…). as evidenced at the end of the table for earlier tax years.

tax table

[ADDED 11/3/2021]
I experimented a little with this table and it’s effect with Tax Line Manager, so by simply changing one digit, I was able to add a fifth tax line category for Schedule D Capital Gains, in my tax reports.

capital gains

If you wish to add new tax forms, be aware that you should first assign a RNum to any new tax categories, which seem to be cataloged in tables:

  • taxnames .tbl + taxdc.tbl for Personal tax categories
  • taxdesc.tbl for Business tax categories

Recording COVID-19 Small Business EIDL loan grant (and loan)

Note: This article is specific to U.S. Money Plus Home & Business Sunset

eidl
click to enlarge


I was asked by a blog reader, how an Economic Injury Disaster Loan (EIDL) grant (the forgivable advance on the CARES act loan, that was supposed to be $10,000) would be properly recorded, such that it doesn’t show up as income.  I’ve since learned that loans are not income, and Money Home & Business has a special provision for business loans which handles this specific situation quite nicely, including the proper handling for tax reports and Schedule C.

Unless you proceed with taking on the actual EIDL loan approved by the SBA (over and above the initial grant deposited into your business checking account), by inserting the grant amount as your opening balance, your loan liability amount will correctly show as $0.00, as shown above.

-ameridan

Null transactions scrubber issue (Schwab / Pocketsense)

I’ve discovered that the scrubRemoveZeroTrans subroutine sometimes leaves behind some stray data within the INVBANKTRAN tags, causing one of my Schwabxxx.ofx downloads to be rejected by Money (along with that day’s combined.ofx).  It took a little digging on my part, but the gap at line # 160 was a good clue!  I do not know if this is unique to Schwab, but the transaction shown really should have been reported as a SELL to the Cash account (other recently called and matured CDs are reported properly as SELL), rather than a $0.00 credit “memo”.  By changing the setting for SkipZeroTransactions from YES to NO, the Pocketsense downloads are now compatible.

I’m writing this up, so that Robert can perhaps address it, and if not, at least others will be able to resolve by (one of the following), should they encounter this issue:

  • manually removing the troublesome stray line
  • temporarily changing SkipZeroTransactions from YES to NO
  • waiting a day and then temporarily changing the download interval to 1 day, to avoid the troublesome transaction

Schwab issue
click to enlarge

[EDIT 4/13/2020]
thumbs-up-sign_emoji-modifier-fitzpatrick-type-1-2_1f44d-1f3fb_1f3fbI think Robert is going to revise the scrubber in an upcoming version, such that the routine only works on credit card transactions, and not investment transactions.

-ameridan

Fixing Citicard downloads

Sometime in the last week of February, someone programmed the ofx server to redact (substitute with X) the first 12 or 13 digits of your credit card number, resulting in Money not knowing which account the statement belongs to.  Although appropriate for documents, it shouldn’t take place in digital statements that are to be matched up to financial software data.  Thus far, their programming mishaps are more of an inconvenience issue, rather than a fatal error, since you will be prompted to match the statement to the appropriate Citi credit card.

I hesitated to write this article, thinking that someone (Quicken?) would encourage Citi to undo this inappropriate programming change, but it appears that isn’t going to happen.  For anyone wanting to have Pocketsense fix this issue for them as statements are downloaded, Cal Learner has written a scrubber routine that is easy to implement, will inform you which substitution has been made (if any), and will be unobtrusive should Citi return to properly reporting the actual account number.

For normal implementation:

  1. add these 2 lines of code, each in their appropriate sections (you’ll recognize similar code) of  scrubber.py:
    from ps_subs import make_substitutions
    
    if ‘CITI.COM’ in siteURL: ofx = make_substitutions(ofx)

    (or simply download the scrubber.py file I’ve already modified)

  2. and then add his ps_subs.py script into the same Python scripts folder, making sure to customize the redacted and actual account numbers to your situation (one pair of lines for each Citi account).

thumbs-up-sign_emoji-modifier-fitzpatrick-type-1-2_1f44d-1f3fb_1f3fbOf course, the same strategy can be modified to fit other substitutions for other financial institutions, as required.

-ameridan

How to handle accrued interest and Amortized Bond Premium (ABP) adjustments

Go directly to:    Reporting Amortized Bond Premium Adjustments

Accrued interest is interest that has been earned, but not yet paid.  Every day you own a CD or bond, you earn another day’s worth of interest, which accrues to your benefit until you receive your periodic payment, usually every three or six months.

Unless we are purchasing new issue CDs and bonds, or happen to buy on the interest payment date, your purchase will probably include a certain amount of accrued interest that will be added to the purchase price.   This is interest from the last payment date to the day before your purchase, that rightly belongs to the seller, not you.  By paying for the accrued interest in your purchase, you provide the money to pay off the seller’s accrued interest.  On the next payment date, you’ll receive the full interest amount, which makes you whole for the upfront payment of accrued interest.  This accrued interest needs to be accommodated on your tax return (as a subtraction on your Schedule B), because it is taxable to the seller, not you.

Reporting Accrued Interest

Since most of the CDs I invest in are brokerage CDs, I treat all CDs as bonds in Microsoft Money, which works out well with ofx transaction downloads from my brokerage – other than the accrued interest portion.  If the accrued interest is entered within the purchase transaction , Money seems to ignore it in net income and tax reports…

CD purchase
click to enlarge

yet all is fine, if it entered separately.  Upon closer study of the downloaded brokerage transaction reflecting a CD I purchased 2 days ago  , I see that the accrued interest is reported outside of the  <INVBUY>, so if you go along with Money’s handling of the transactions, it works out well.

<BUYDEBT>
<INVBUY>
<INVTRAN>
<FITID>xxx
<DTTRADE> 20200205120000
<DTSETTLE> 20200207120000
<MEMO> DISCOVER BANK 3.15% CD FDIC INS DUE 03/20/29
</INVTRAN>
<SECID>
<UNIQUEID> 254673ZG4
<UNIQUEIDTYPE> CUSIP
</SECID>
<UNITS> xxx
<UNITPRICE> 108.425
<TOTAL> —xxx
<SUBACCTSEC> CASH
<SUBACCTFUND> CASH
</INVBUY>
<ACCRDINT> 1208.22
</BUYDEBT>

Similarly, I recommend creating a separate transaction for accrued interest ,

CD purchase1
click to enlarge

and as a reminder come time to do the taxes, you might include a note in the memo portion, like I do:

accrued interest, to be reported on Schedule B – payer: “Nominee Distribution —- Accrued Interest”


thumbs-up-sign_emoji-modifier-fitzpatrick-type-1-2_1f44d-1f3fb_1f3fbWith this method, the accrued interest will properly transfer onto your Schedule B when exporting your tax transactions, to insure that you won’t pay taxes on that interest twice.

Reporting Amortized Bond Premium (ABP) adjustments

If you pay a premium in acquiring older secondary CDs (and bonds) that have a higher coupon rate than current interest rates, you would expect to write off a capital loss once you redeem them (that premium represents part of the cost basis of the bond).

Instead, most brokerages report the amortization of that premium you pay (spreading out that capital loss), as an annual adjustment to the interest earned, which you must remember to reflect in your Schedule B.  Using the CD  shown above, purchased @ 108.425 rather than @ par (100.00), the net yield is 2.128% APY (if kept until maturity in 2029).  I include a note in the Memo portion of my Investment Details (these memos appear only on my Portfolio Manager screens):

▓ 3.15% paid twice/year to Cash Acct  ▓ net yield is 2.128% APY (if kept until maturity) ▓ REMINDER ~ Amortized Bond Premium adjustment (thru 2029) in lieu of Capital Loss @ redeem

Unlike paying accrued interest, which is an actual one-time debit from a cash account, ABP has to be recorded differently, since the calculated difference between the price paid and par, is spread out, until the CD matures.

ABP = [ (price paid – par) * # of shares ] / # of years of reportable interest

So, I record a net-zero split transaction of the annual interest adjustment in a Dummy investment account, dated December 31st, so that my net total shown in my Tax Reports reflects reality (along with any accrued interest adjustments, as discussed above) …

ABP

and I include a note in the memo portion:

Amortized Bond Premium adjustment for xxx CD in xxxx  acct.


thumbs-up-sign_emoji-modifier-fitzpatrick-type-1-2_1f44d-1f3fb_1f3fbWith this method, in addition to any accrued interest you might be subtracting, you will be reminded to subtract the ABP onto your Schedule B when exporting your tax transactions, to insure that your amortized  “capital loss” is also applied to the total interest earned that year.

-ameridan

Fixing Missing Business Transactions (bug in program)

Note: This article is specific to U.S. SUNSET VERSION OF Money Plus Home & Business

[edited 9/30/2021]
For some unknown reason, I recently discovered some Payment for Invoice (a special category unique to the Business version of Money) transactions missing from various Business Income/Expense reports (as well as my Schedule C report), even though the transactions themselves were verified as still existing in the database, and only after some serious digging, was I able to finally resolve the issue.  In case anyone else is ever presented with the same mystery…

  • Under the Business tab, select Products & Services, and for each of the Services, select Details… 
  • Inspect the Category under Select an income category to track sales of this service: to see if it has been either cleared or changed to an incorrect entry.
    bus category
  • If so, restore the Category* choice in the relational database, by once again choosing the proper Business Income category.  A few of us have realized that fixing this isn’t permanent either.
  • As to the root cause as to how/why this occurs however, a theory of mine is that there is an overlooked program bug in the Business version, whereby adding categories throws this off, as the tag is perhaps the position of the assigned category in it’s table, rather than the category itself.

* Before creating an invoice, you may have to verify/correct the income category assigned to the service(s)/product(s) you will be billing, as the assigned category may disassociate itself at some point.

-ameridan

Discussion: Eliminating price data to reduce file size

Untitled

I’ve got daily Price data for Ford stock going back to the late 1980s (the stock, which we still own in a DRIP account, was given to my wife after she quit there), that I really don’t find any value in keeping (along with prices for many other investments, at the risk of my file size getting too large), so I backed up my file and proceeded to go to my Portfolio screen and:

  • Highlighted the Ford stock
  • Selected Update Prices
  • Selected Update Prices manually…
  • Moved down from yesterday’s entry
  • and held down the delete key, watching thousands of prices disappear

The process took me about 6 or 7 minutes, and only once, was I prompted as to whether I really wanted to delete a price, for a stock-split price from 19 years ago, to which I answered NO, since it stated that the stock-split transaction would be reversed.  I observed afterwards that investment transactions were not affected, but my ability to bring up a Price History graph for Ford stock was gone (no big deal).

Most of my entries were pre-2013 “Online” quotes, which I assume:

  • also include historical data such as last, change, open, high, low, 52 week high, 52 week low, PE, market cap and volume
  • this quote data consumes much more memory than post-2013 Pocketsense “Update” quotes from Yahoo, along with brokerage statement “Buy/Sell” prices, which are simply that day’s price
  • is the same larger amount of quote data that are in MS Money Quote “Online” quotes
  • the historical data associated with the deleted quote, is also deleted, when the price is manually deleted?

I then exited the program (US Money Plus Home and Business Sunset), selecting Save on the way out, and discovered that my file size went from 66,041 KB down to 63,360 KB.  2.68 MB reduction, and that’s just for one stock!

Before doing the same for other had-a-long-time investments, I’m going to insure that the missing price data has no other negative consequences.  For instance, the Capital Gains Estimator seems to be unimpaired.  I have brokerage CDs in my portfolio that also have daily price data (they are treated as bonds in my daily statement downloads), all of which I consider meaningless, since they are purchased, and will be redeemed – at par value.  In fact, I’d give up keeping my Price data for most of my other investments, if I can instead reduce my file size, such that I can continue to reliably use my Money data file for quite some time yet.

By deleting some more price data, I think I might be able to reduce my file size to less than 50 MB.  Does anyone see any cons?

I’m also wondering if Hung Le might develop a Sunriise type tool to clean out price data (perhaps it is capable of doing that already?).


[UPDATE 12/11/2019]
Bob Smiley later pointed out that Money has a tool to clean out prices (I didn’t even realize that option existed), but it only addresses securities that you no longer own.

If you go to the Portfolio, click "More..." on the left in "Other Tasks" you will see an option "Clear Historical Quotes". This will do what you want - only keep weekly values.

Thanks Bob. I tried it out, and even though I see evidence that daily price data for securities I haven’t owned for years still exists, my file size was reduced further to 59,492 KB; that resulted in another 3.87 MB reduction!


[UPDATE 12/17/2019]
thumbs-up-sign_emoji-modifier-fitzpatrick-type-1-2_1f44d-1f3fb_1f3fbI’m happy to report that by deleting the prices for 3 more stocks that I’ve owned for quite a while, I’ve reduced my file size down to 56,226 KB, which is now 10 MB smaller than 1 week ago!!  

My main concern for keeping file size down, is so that I can keep using my primary database for as long as Money works, rather than having to start over, or using an archived database.

[UPDATE 11/20/2020]
Almost a year later, since Schwab ofx downloads aren’t currently working, and since I consider the daily price data for CDs to be meaningless (I always redeem them at maturity, at par), my file size has again decreased to 53,246 KB, after eliminating all of the price data for my CDs.

[UPDATE 5/25/2021]
Some readers have reported that eliminating price data didn’t have an effect on file size, but I maintain that it does – IF you also delete/archive transactions that are no longer needed (which also by itself won’t reduce file size, as it seems to instead bookmark the emptied space in the file for future data), as evidenced above.  My theory is that perhaps the deletion of file data (prices) actually releases some of that empty space, resulting in the desired smaller saved file.

-ameridan

How to handle Roth IRA Conversions

1542676879-768x708
“What you should be doing NOW to avoid the stealth tax increases retirees face, but are ignorant of…until it’s too late”

A small plug (even though I have no involvement):

After watching some videos on Josh  Scandlen’s  Heritage Wealth Planning – YouTube channel , I checked out his website  https://heritagewealthplanning.com/, and received a download offer for a FREE digital version of his book  The Tax Bomb In Your Retirement Accounts, in return for my email address.  I am so glad I accepted!

Note: If you exit out of the offer, I’m not sure if it will pop up again, but you can purchase it online.  You can also order the book from Amazon (at a significant discount).

aha4aiconI found it to be very eye-opening, as to how much money married couples can retain for the family by “converting” traditional IRA investments into Roth IRA accounts, rather than letting them remain in “traditional” status.  We’re talking long-term, lifespan (and beyond) income taxes.  Once you become single, many of these advantages evaporate.  

You will be mandated to annually withdraw RMDs starting at age 72 (required minimum distributions ➤ calculated as the Market Value of all of your traditional IRA accounts ➗ 27.4), that get larger every year, in order to eventually deplete your traditional IRA account(s), leading to:  

  • Potentially significantly higher IRMAA surcharges in your later years, on top of your normal Medicare Part B (and Part D, if elected) insurance premiums.
  • Taxation on a much greater portion of your Social Security benefits in your later years, and potentially putting you in a higher tax bracket, as well.
  • Potentially significantly higher surviving spouse taxes (smaller standard deduction, lower tax bracket threshold as an individual single taxpayer).
  • Estate/legacy taxes for IRA account beneficiaries, if you die before the accounts have been depleted, potentially putting them in a higher tax bracket, in addition to having to come up with the funds for the tax bill on the additional income (for non-spouse beneficiaries, new rules also require complete distribution of inherited traditional IRA accounts as ordinary income, within 10 years).
  • Possible surprise of being hit with a new 3.8% Net Investment Income Tax (NIIT) on income exceeding $200,000 (this one wasn’t mentioned in the book, but is perhaps more likely to hit you during the conversion year(s), rather than the RMD years).
  • Taxation on any/all income at much higher tax brackets, expected in the future as Trump’s rate reductions are undone/expire (2025).
  • Potentially significantly higher state income taxes in your later years, as more states could eventually decide to start taxing retirement income, including IRA distributions.

Now I see why Josh states “IRA Distributions [Can Be] A Tax NIGHTMARE!”
I highly recommend reading this book!


Roth conversion background

The money sitting in your traditional IRA is not 100% your money.  The IRS has been waiting for decades to get their piece of it, and converting a portion of one’s IRA results in a tax bill that many people would rather delay, which is probably why ROTH conversions are an under-utilized strategy.

Rather than converting in one fell swoop, if the balance in your Traditional IRA account(s) is sizable, it might be best to spread out the conversions (distributions) over a few years.  Also, it turns out that you do not need to sell your investment securities in your Traditional IRA accounts in order to transfer cash; you can transfer your chosen investments (or even portions thereof) directly.  This wasn’t so obvious to me, until watching Josh’s videos, which explains why I kept putting off the conversion, even in low-income years.

Since you do need to pay income taxes on the distributions, choose a group of investments such that, the sum total won’t put you in a tax bracket you’d like to avoid.  With last year’s Tax Reform, from now through 2025, taxes are essentially on sale.  What does this mean for most of us?  Our overall tax liability is probably lower than it has been over the past 20 years or more, which means more money in our pockets.

Unless you are currently high-income earners, a married couple can convert quite a bit of money, and not exceed the 24% bracket.  By doing the same in following years, you’ll eventually have converted a good portion, if not all, of your traditional accounts, but be aware that the conversion could also trigger the aforementioned surprise of the new 3.8% Net Investment Income Tax, if your conversion income in any single year exceeds $200,000 (single) / $250,000 (married-joint).

Also, if enrolled in Medicare, be aware that Social Security will access your tax returns in arrears, and for each year that your MAGI exceeds $176,000, expect some potentially hefty Medicare Part B and D premium surcharges to be deducted from BOTH OF YOUR benefit checks (two years later), for an entire calendar year.

Untitled
(if married,  ≈$150K (22% bracket) seems to be the sweet spot)

Here is how I’ve accounted for Roth conversions in Money

As an example, here is one of the secondary CDs that I chose to convert this year:

GOLDMAN SACHS BK 3.3% CD DUE 04/16/2024 ➤

STEP ONE

In Money, while in the investment side of my traditional IRA account, I created a new transaction for this CD:

  • Investment: GOLDMAN SACHS BK 3.3% CD DUE 04/16/2024 ➤
  • Activity: choose “Transfer Out”
  • Transfer to: [my Roth IRA account]
  • Memo: “2019 conversion”
  • Quantity: [all]

Even though this process is used quite often with cash, this might be the first time I’ve made use of that option with an investment.

aha4aiconWhile thinking about how I was going to remind myself that part of the transactions history of this investment will remain within the Traditional IRA account, I discovered that I can addend a “flag” ( like or ) onto the investment name (use the Rename option in Investment Details), which easily identifies those assets that have a split transaction history among multiple accounts, while viewing my Portfolio reporting screens.

STEP TWO

Then in my Roth IRA cash account, I added one additional Split/Multiple Category Deposit transaction (with a net-zero total) that summarizes the total of this years’ transferred investments, to serve as my Tax software export transaction:

  • Category: choose “Retirement Income”
  • Subcategory: choose “trad IRA Distributions (Dan)”  {spouse should also have their own subcategory, for proper tax reporting}
  • Tax Form: assigned to “1099R”
  • Form Line: assigned to “IRA Taxable Distribution”
  • Copy: “2” {each 1099R form source should be assigned it’s own copy #}
  • Payee: “IRA ROTH CONVERSION” 

roth conversion

-ameridan