Michael, Because of your experience and knowledge, I was really hoping you’d weigh in with insight on the question of how to report a disbursement from one of these common retirement vehicles as income, rather than a transfer between assets. How would you recommend tracking money that is earned in 2017, but which is counted as taxable income only in 2035?
Cheers, David > On Jan 5, 2018, at 7:42 PM, Mike or Penny Novack > <stepbystepf...@dialup4less.com> wrote: > > On 1/5/2018 1:05 AM, David T. via gnucash-user wrote: >> David— >> >> I see where you are coming from on this. >> >> For reference, I accept your 5 assumptions; I believe they are accurate for >> many US retirement accounts as well. >> >> ......... >> I guess, from a philosophical perspective, the question really is: when do >> these funds become income? Is it when you get paid, or is it when the money >> actually gets disbursed? It seems to me that most of us are looking at it >> from the first perspective, but that the taxing agencies are looking at it >> from the second. So, for example, I have paycheck transactions that document >> my retirement contributions, transferring to the retirement asset accounts >> from a special (retirement) income account >> David > There are ADDITIONAL questions if a US 401k. For example, are company > contributions vested immediately or only over time? Here is a typical case > (yours might be different) > 1) Company contributions are vested 10% per year. > 2) Any still unvested contributions become fully vested upon retirement at > normal age (possibly also separation earlier but after age 55) or upon death > if earlier. > > In other words, the company contributions are conditional on staying with the > company. They are in the account and earning but there is a diminishing > liability (you have to pay back the unvested portion if you leave) > > The 401k account MAY also have after tax contributions made to it, but that > only affects how distributions will be taxed. > > Another benefit that some companies offer is "split dollar" insurance. Very > complicated to figure its affect on net worth. With split dollar, the company > still owns the policy but you get to select the beneficiary << the rights > associated with ownership of an insurance policy can be separated >> Called > "split" because the employee is taxed for the premium of the same amount term > policy. Often to prevent that complication, the employee is billed that > amount. At termination the employee has the right to: > 1) Surrender the policy paying the company back for the premiums from the > accumulated policy values keeping the remainder. > 2) Pay the company that amount and keep the policy. > Note that there is a hard to calculate value associated with that choice << > what is your health status at this time in the future when you have to make > that decision. > > Note that this is simply a special case of things that might affect > "effective" net worth or income but are difficult to carry on the (main) > books. For example, a job might provide in addition to salary, housing, use > of a vehicle, etc. << and this could even be tax free "income" depending on > the circumstances >> > > Michael D Novack > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
