How to categorize or incorporate IRA withdrawal in Tiller Budget

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I’ll give you example approaches, “simple” and “thorough”, knowing you’ll likely go somewhere in between. :slightly_smiling_face:

Simple Method:

  • Federal and State Tax Withholding (Lines 1 & 2): Categorize these as “Transfer” (Transfer category type, which is hidden), and add an RMD tag for tracking.
  • Net Distribution (Line 3out Pre-Tax Acct): Categorize as “Transfer” and a description of “RMD Net”.
  • Post-Tax Account (Line 3tin): Categorize as “Investment Income” (Income category type) and a description of “RMD Net”. Add an RMD tag so you can distinguish this as RMD income.

For the other miscellaneous transactions that you described, you can categorize “Transfer” to hide them, and I would not use a tag.

Thorough Method:

Categorize Transactions:

  • Federal and State Tax Withholding (Lines 1 & 2): Categorize these as “Federal Tax” and “State Tax” (Expense category type). This will let you track how much tax was withheld from your RMDs over time.
  • Net Distribution (Line 3out Pre-Tax Acct): Categorize as “Transfer Out” (Transfer category type) and a description of “RMD Net”.
  • Post-Tax Account (Line 3tin): Categorize as “Transfer In” (Transfer category type) and a description of “RMD Net”.
  • Gross Distribution (Post-Tax Account): Enter a Manual Transaction with a description of “RMD Gross” and a category of “RMD Income” (Income category type). We need this total distribution amount before taxes to offset the tax expenses: gross distribution - deductions = net income from your RMD.

Track RMDs Over Time:

• Use the “Tags” feature to tag RMD-related transactions (e.g., federal withholding, state withholding, the 3 transfers in pre and post-tax accounts, but not the miscellaneous transactions you mentioned in the pre-tax account). Then, you can run a “Tags Report” or “Transaction Tracker” in Tiller to see all RMD activity for a specific period.

  1. Monitor Account Balances:

• Use Tiller’s Net Worth sheet to track how the balance of your pre-tax and post-tax accounts fluctuate over time. You won’t be able to distinguish only impacts from RMDs, but you’ll get a general idea of balance shifts from retirement and bank accounts.

  1. Other miscellaneous transactions:

• If the internal movements in the pre-tax account don’t seem to balance perfectly, it’s likely due to timing or operational rules of the financial institution. As long as the final amounts (RMD net distributions and taxes) reconcile with your statements, I think you can ignore these intermediate transactions.

Hopefully this helps give you some ideas for tracking RMDs to whatever level of detail fits your needs. And please reach out to the Community if you need help!

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