RMD and Tax Withholding

I have a traditional IRA that I am taking Required Minimum Distributions from, but instead of  receiving the money I am transferring it to a taxable investment account. The investment company is withholding federal tax from the RMD.  In YNAB I have tracking accounts for the IRA and another for the taxable account. I manually transfer the RMD from the IRA account to the taxable account. I have not been tracking the federal withholding amounts and think I should, so that the accounts accurately show what is happening.  How should I handle the federal withholdings in YNAB?

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  • If they are tracking accounts it's just a transaction if you want. Otherwise it'd be part of your account balance adjustments when you update account values.  It really doesn't matter because there's not transaction specific reporting for tracking accounts.

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  • Thanks.  In order to keep track of the withholding I have decided to create a tacking asset account for the withholding and transfer the withheld tax amount into that account and at the end of the year adjust to zero to account for the payment to the IRS that the investment house as made.  Do you see any problem with this approach?

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    • Satcpl Does your taxable investment account show the transactions as outflows? The only potential issue I see is reconciling either the investment account or the withholding account. Be ready to make a Balance Adjustment, and you should be all set, I think!

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      • Satcpl
      • Satcpl
      • 11 days ago
      • Reported - view

      Marisa The Traditional tracking account is composed of mutual funds. I am not recording the shares of each fund but I do periodically record the value of each fund.  When a distribution is made I record it as an outflow with the payee the name of the fund.  I then record it as an inflow to the tracking Taxable account. I have not been recording the federal tax withheld. It was accounted for when I made a value adjustment to the Traditional account.  I have now set up a new asset tracking account for the federal withholding.  My plan is to record the federal tax withheld as an outflow in the Traditional account and an inflow to the Withholding account. Then at the end of the year I will make a value adjustment as an outflow in the withholding account to reflect the payment to the IRS.  Do you see any problems or have a better solution?

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    • Satcpl I think that sounds like it should work!

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      • Satcpl
      • Satcpl
      • 10 days ago
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      Marisa Thanks

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