401(k) Accounts

OK...I must admit it:

I'm completely baffled by how Money 2004 tracks 401(k) 
accounts.  My setup so far:

* I have a 401(k) account set up with a cash 
(contribution) side and an investment side.

* My paycheck deduction goes into the cash (contribution) 
side.  I have this data accumulated for three years now.

* I've never put in any investment transactions at all.  
I've been told I should be paying attention to cost-basis 
and that I should track share purchases in as much detail 
as possible.

What I fail to comprehend is how money flows from paycheck 
to cash account to investment account to reconciling with 
my quarterly statements.

Could someone provide me with some insight as to how Money 
does this?

Thanks very much in advance!

0
yellow (2)
10/14/2003 1:36:44 AM
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Money has no clue how your contributions get invested if you don't tell it.
For this reason, you need to not only transfer the cash from your paycheck
to the contributions account, but then also to buy investments in the
investment portion of the 401k investment account with the money coming from
the cash ("(contributions)") portion of the 401k investment account. These
are the investment transactions I think you are referring to.

"Eric A." <yellow@inlucem.com> wrote in message
news:0b1e01c391f3$9fcb5810$a301280a@phx.gbl...
> OK...I must admit it:
>
> I'm completely baffled by how Money 2004 tracks 401(k)
> accounts.  My setup so far:
>
> * I have a 401(k) account set up with a cash
> (contribution) side and an investment side.
>
> * My paycheck deduction goes into the cash (contribution)
> side.  I have this data accumulated for three years now.
>
> * I've never put in any investment transactions at all.
> I've been told I should be paying attention to cost-basis
> and that I should track share purchases in as much detail
> as possible.
>
> What I fail to comprehend is how money flows from paycheck
> to cash account to investment account to reconciling with
> my quarterly statements.
>
> Could someone provide me with some insight as to how Money
> does this?


0
10/14/2003 4:15:34 AM
Dick,

Thanks very much for your reply!

I've tried setting up the individual investments and 
inputting detailed transaction data for each "Buy".  If I 
categorize the transaction as a transfer from the cash 
side of the 401(k) account, my cash balance goes into the 
negative after a year of investment transactions - 
despite having three years of contributions in the cash 
account.  I'm assuming I'm doing something wrong here.


>-----Original Message-----
>Money has no clue how your contributions get invested if 
you don't tell it.
>For this reason, you need to not only transfer the cash 
from your paycheck
>to the contributions account, but then also to buy 
investments in the
>investment portion of the 401k investment account with 
the money coming from
>the cash ("(contributions)") portion of the 401k 
investment account. These
>are the investment transactions I think you are 
referring to.
>
>"Eric A." <yellow@inlucem.com> wrote in message
>news:0b1e01c391f3$9fcb5810$a301280a@phx.gbl...
>> OK...I must admit it:
>>
>> I'm completely baffled by how Money 2004 tracks 401(k)
>> accounts.  My setup so far:
>>
>> * I have a 401(k) account set up with a cash
>> (contribution) side and an investment side.
>>
>> * My paycheck deduction goes into the cash 
(contribution)
>> side.  I have this data accumulated for three years 
now.
>>
>> * I've never put in any investment transactions at all.
>> I've been told I should be paying attention to cost-
basis
>> and that I should track share purchases in as much 
detail
>> as possible.
>>
>> What I fail to comprehend is how money flows from 
paycheck
>> to cash account to investment account to reconciling 
with
>> my quarterly statements.
>>
>> Could someone provide me with some insight as to how 
Money
>> does this?
>
>
>.
>
0
yellow (2)
10/14/2003 12:59:34 PM
Well, one more possibility is that you are not including all contributions.
What about any employer contribution component? If you were reflecting all
investment buys but just your component of the contributions, you would be
investing more than the contributions and the result you describe would
occur. I believe the FAQ treats employer 401k contributions.

"Eric A." <yellow@inlucem.com> wrote in message
news:04ee01c39253$040f2c70$a001280a@phx.gbl...
> I've tried setting up the individual investments and
> inputting detailed transaction data for each "Buy".  If I
> categorize the transaction as a transfer from the cash
> side of the 401(k) account, my cash balance goes into the
> negative after a year of investment transactions -
> despite having three years of contributions in the cash
> account.  I'm assuming I'm doing something wrong here.


0
10/14/2003 1:56:13 PM
This is something I've been putting off for too long.. and will
continue to put off until I have time to figure it out. But I'm in the
same boat as you, Eric.


I've looked at the FAQ but haven't found anything yet that really
tells you how to setup for 401k and 403b accounts. FWIW, I don't know
how to do it in Q2004 either.


"Eric A." <yellow@inlucem.com> wrote in message news:<04ee01c39253$040f2c70$a001280a@phx.gbl>...
> Dick,
> 
> Thanks very much for your reply!
> 
> I've tried setting up the individual investments and 
> inputting detailed transaction data for each "Buy".  If I 
> categorize the transaction as a transfer from the cash 
> side of the 401(k) account, my cash balance goes into the 
> negative after a year of investment transactions - 
> despite having three years of contributions in the cash 
> account.  I'm assuming I'm doing something wrong here.
0
speedlever (32)
10/16/2003 1:06:02 PM
I suppose there's no general treatment of it in the FAQ because, generally
speaking, it isn't a FAQ. Likewise, there are many personal variants, many
plan variants, and no "one right way". There are three keys to doing this:
1) Understand splits in general and Paychecks in specific, 2) Understand the
rules and mechanics of your plan, and 3) Understand what the plan
investments really are and how the plan accounts for them.

The basic drill is standard Money stuff: Setup retirement Investment
Accounts and associated invetsment Cash Accounts. Setup your paychecks to
transfer your contributions to the 401k cash account. Setup Investments.
Setup some transactions (I do it in my paycheck, but there are dozens of
other ways) to receive income and transfer it to the cash account for your
employer's contributions. Setup transaction(s) to buy investments in the
investment account using the cash that accumulates from the above transfers.

In my case, my employer and I both contribute weekly and I'm paying back a
401k loan weekly as well. This is accommodated in trasactions as follows:
- My contribution, their matching contribution, and my loan payment amount
are all transferred from my Paycheck to the cash account. My contribution is
positive income on the Wages tab as Wages & Salary:Deferred Income and then
transferred on the Before Tax tab. Their contribution is added as Wages &
Salary:401K Match on the after taxes tab then immediately transferred to the
cash account. (The reason for the counter-intuitive placement on the after
tax tab have to do with the way tax estimator works. This issue has been
documented in other threads.) The loan payment is just another split line on
the after taxes tab.
- I have another weekly transaction that is a split "bill" where the splits
are each Buy Investment/CD, one for each investment I'm allocated to
including the reinvestment of the loan payment and the forced investment of
the company contribution into the company stock fund.
- I have another weekly transaction to make a Loan Payment to the loan
account from the cash account.
- In the investment account, I enter a weekly Sell of the loan investment of
the payment principal portion and a separate Interest transaction as well.

In my wife's case, she contributes twice a month and her employer
contributes something discretionary when they get around to it. This is
tracked in transactions as follows:
- Her contribution is transferred from her Paycheck to the cash account as
per above.
- She has another weekly transaction that is a split "bill" where the splits
are each Buy Investment/CD, one for each investment she's allocated.
- When her employer gets around to throwing in their dollop, she uses
another paycheck total $0--that has nothing on any tab but after tax and
those are the offsetting Wages & Salary:401K Contribution and Transfer:401k
cash acct splits. This is followed up by a split bill with Buy Investment/CD
splits for each investment from the cash account to the 401k account.

In both of our plans, the investments are all captive funds that, in some
cases, are similar to but not exactly, publicly traded/sold funds and
stocks. Because the performance doesn't match, I just use $1 shares in all
of these investments and do not enter the mimic symbol. I do have the real
underlying investment--when there is one--in the watch account. (Thus, I
have a Vanguard Windsor (VWNDX) investment in the watch account and a 401k
VWNDX (no symbol) investment in the 401k investment account. They do the
synthetic unit accounting, but it's too ugly to try to follow all of that,
so I just use the $1 share method.

To account for performance, I periodically update (on the account summary
page, I think it's called "quick update" or similar) the shares to equal the
dollars reported. This results in Add Share or Remove Share transactions
being added by the wizard to get the share, hence $, balance to match
between Money and the statement. Whenever I do this, I mark every
transaction up to that point as reconciled in both the cash and investment
accounts.

See, it's simple! (And, as you might guess, the 401k activity is the largest
single transaction contributor to our Money data file.)

"speedlever" <speedlever@yahoo.com> wrote in message
news:965b1a76.0310160506.18110f5@posting.google.com...
> This is something I've been putting off for too long.. and will
> continue to put off until I have time to figure it out. But I'm in the
> same boat as you, Eric.
>
> I've looked at the FAQ but haven't found anything yet that really
> tells you how to setup for 401k and 403b accounts. FWIW, I don't know
> how to do it in Q2004 either.


0
10/16/2003 2:26:26 PM
Dick,

Thanks much for your explanation and example. I've printed it off to
study when I get a chance.

Back later..

"Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in message news:<ekmk8F$kDHA.1948@TK2MSFTNGP12.phx.gbl>...
> I suppose there's no general treatment of it in the FAQ because, generally
> speaking, it isn't a FAQ. Likewise, there are many personal variants, many
> plan variants, and no "one right way". There are three keys to doing this:
0
speedlever (32)
10/17/2003 4:01:42 AM
Reply:

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