On 3/16/2022 8:49 PM, D. wrote:
Michael,
I think I get what you're saying. In my own case, I've taken to
separating the pretax streams into their own income accounts, which
seemingly addresses some of your points.
But one of the big selling points of IRA/401Ks is that they earn money
tax deferred (which I've also isolated into their own income
accounts). How does Joe allocate the distributions-- or does it even
matter? Each distribution is going to include a portion of deferred
income and a portion of untaxed dividends (at least how I've captured
the txns thus far). Is there a different way to manage those dividends?
If the contributions are all "pre-tax" then they are "deferred income" .
The "deferred income" account would have been used when you entered the
transaction for a contribution.
What the account has earned is also all "deferred income". If you were
entering transactions to record the increase in value of your 401K, that
would have been the other side of the transaction. Note that it is
"deferred ordinary income and not "deferred capital gains"
If the 401k existed before you began with gnucash, the probable cause
was entering the starting balance using the "tool" (so other side
"starting equity"). It should have been "deferred income" << you could
still use the tool -- when you created "deferred income" (probably under
equity) with the same starting value that would have taken it out of
"starting equity". Understand? Yes "deferred income" is part of your
equity but it is different than your other equity because it has an
attached tax liability.
Michael D Novack
PS --- Bears repeating, but a "manual" is not a "user guide". We really
should not be advising users about things like this. In other words, the
question isn't "how do I enter transactions related to a 401k" but "what
accounts, what transactions, would I be using when accounting for a
401k". That's for a tax accountant to tell you, or you look it up. I am
not legally qualified to answer "tax accountant" sorts of questions.
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