IRA Tax Withholding

[AIM]

Hi Mark,
When distributions are taken from an IRA there is usually an additional amount withheld for Federal and State Taxes. How should this tax withholding be recorded in the register? Currently, FM is recording these as Type 'Reinvestment' in the IRA's cash account, while the distribution is recorded as Type 'Redemption'. (I'm importing from Scottrade Inst.) Wouldn't both be a Redemption?

Thanks.

[Mark]

Hi AIM,

Either method will keep the share balance correct. The question is whether you want the taxes withheld to affect performance or not. When recorded as a negative reinvested distribution this does have a negative impact on performance. If you record it just as a redemption it would not impact performance. We have actually recently changed this for the upcoming 12.1 release, so as to record it as a sell instead of a reinvestment, so as to not count taxes withheld against performance.

[AIM]

Mark,
Tax withheld is just a different use for the money, it is essentially just another withdrawal, so it shouldn't affect performance. I deleted the 'Reinvestment' entries and added corresponding 'Redemption' entries. Performance looks a bit better now
Thanks.

[Mark]

Hi AIM,

I would agree that makes better sense. I expect 12.1 to be released this month. If you still have issues with this update, please let me know.