IRA Distribution

[Gary T.]

Mark,
I want to take a distribution from my IRA in stock, and deposit it in a non-IRA account. What would be the best way to handle this. I am thinking use the Transfer Out data type in the IRA account, and a Transfer In to the other account, with the cost basis of the stock as it's value on the date of transfer.
Would this be correct?
Thanks,
Gary T.

[Mark]

Hi Gary T.,

Yes, this would be the recommended way to do this. Using transfers prevents any money from going into cash, and there are no capital gain entries created.

[Gary T.]

Mark,
I finally got around to finishing posting of my IRA Distribution, as suggested, as a "Transfer Out". This Transfer Out of the IRA Account to a Non-IRA Account, consisted of stock. I transferred 26 shares of stock at it's value as of the close of trading. All seems to be correct in "value", however the IRA Account does not reflect the fact that the stock was transferred at a loss, which in turn changes the stock's and portfolio's gain and %gain. I am now confused as how to handle this type of transaction.
Thanks,
Gary T.

[Mark]

Hi Gary T.,

If you look at the Transfer Out transaction, is the market value recorded correctly? When recording a Transfer Out, the "OOP" cost basis is calculated automatically, and is transferred out, along with those shares. The ROI yields will factor in the market value that the shares were transferred out.

[Gary T.]

Mark,
You are correct as stated, however what I see as a difference is the Gain and %Gain as calculated on the portfolio performance report. Using the "Transfer Out" data type the Gain/Loss is Zero as well as the %Gain/Loss. If I use the Redemption data type the actual loss is displayed and calculated in both columns and the portfolio totals. Still confused as to what is an accurate account in the performance report.
Thanks, Gary T.

[Mark]

Hi Gary T.,

When you record a Transfer Out, the shares are removed and the OOP cost basis used for the removal is the same as you paid. For ROI yield performance calculations, the market value is used from the transfer out. For OOP based calculations, like %Gain, Gain/Loss, the OOP cost is used. Basically, when using a transfer, the OOP gain/loss is also transferred to the new, target investment. You would want to enter the same OOP cost in the transfer in, as is being used in the transfer out.

If you also want the OOP cost to be "realized" in the original investment, you could use buy/sell transactions instead, or sell, and transfer in. Basically, the only difference between buy/sell and transfers is that transfers don't generate a default cash account entry, or a capital gains entry, and you can also specify a different tax and OOP cost from the actual purchase amount.

[Gary T.]

Mark,
Thanks. I understand now.
Gary T.