How to record: ⚫ RMD annuity withdrawals from your Traditional IRA account ⚫ Social Security annuity payments

I’m not quite 70 yet, but I’ve been experimenting with accommodating my first RMD annuity withdrawal (yes, your RMDs are a “forced annuity” normally distributed annually, although you could request monthly payments) from my traditional IRA account for when the time comes.  That was supposed to be @ age 70½ (2024 for me), then @ age 72, and now I think Uncle Sam has settled on @ age 73 (2026 for me).   The delay allows more time for your Roth IRA conversions, to hopefully result in those RMD distributions being taxed in a lower tier for the rest of your life (see my earlier article if you’d like to see how I’m recording Roth conversion distributions).   In case it might be helpful to others, I thought I would share how I’m going to record my transactions.

See my article for an in-depth look at my creation of more specific categories that you’ll see referenced below.  Also, another article that might be helpful, regarding retirement income.

Although a split transaction would work fine, I really like the clean presentation that the Paycheck option offers.  I haven’t had any luck getting all of the amounts to align properly (+/-) using a Deposit transaction , so instead, I initiated this successfully as (eventually, a recurring) Withdrawal transaction, for proper reporting of all of the other data within, note the negative (▬) dollar amounts…

Creating a new withdrawal from your Trad IRA Cash Account:

Payee: IRA DISTRIBUTION → Dan

Transaction Amount:  ✚ $ Gross amount of RMD getting deducted from the traditional IRA Cash account

Category: Paycheck (near the bottom of the selection list)

“Wages” tab: Retirement Income : trad IRA Distributions + RMD Annuity (Dan)
►  ▬ $ Gross amount of RMD getting deducted from trad IRA Cash account [OR could instead be xxx shares of yyy investment @ $### transferred to my taxable investment account, rather than cash (XFR recorded from Investment side separately)]
→ →
“Taxes” tab: Taxes : trad IRA Federal Income Tax (Dan)
►  ▬ $ amount deducted

“Taxes” tab: Taxes : trad IRA State Income Tax (Dan)
►  ▬ $ amount deducted

“Deductions After taxes” tab: Transfer :  my Checking Acct
►  ▬ $ Net amount  transferred, if a Cash transaction

Net Pay ► $0.00

Unassigned ►  ✚ Gross Amount of RMD getting deducted from Cash account  (Leave Unassigned amount alone)

Paycheck Total ►  ✚ Gross Amount of RMD getting deducted from Cash account

→
Memo: Dan’s @ age 73 ➤ Once Roth conversions are done, add Fed + State tax withholding to tradIRA account brokerage settings  ✔ taxes withheld from RMDs, are treated as evenly paid throughout the year

▓ REMINDER: can convert/xfer (portion of) investments out to a taxable account w/o selling, even for RMDs.

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Social Security

Social Security annuity payments are much more straight forward, plus I’ve been entering them as recurring Deposit transactions…

Creating new deposit for the incoming Bank Account:

Payee:  Social Security → Dan

Transaction Amount:  ✚ $ Net amount getting deposited into my Checking account

Category: Paycheck (near the bottom of the selection list)

“Wages” tab: Retirement Income : Social Security annuity (Dan)
► ✚ $ Gross amount of Social Security check

“Taxes” tab: Taxes : Social Security – Federal Income Tax withheld (Dan)
►  ✚ $ amount deducted
 
“Deductions After Taxes” tab : Insurance : Medicare Part B
►  ✚ $ amount deducted  Family member:  Dan

“Deductions After taxes” tab: Insurance : Medicare Part D
►  ✚ $ amount  deducted  Family member:  Dan

Paycheck Total ►  ✚ Net amount of Social Security check being deposited into my Checking account

-ameridan