Re: [GNC] Retirement funds accounting rule

Hi Adam,

If I'm following you correctly, the approach described in the early 
thread should work.  Any withholding can be included in the transaction.

See: https://lists.gnucash.org/pipermail/gnucash-user/2026-June/120857.html

Regards,

Sherlock


On 6/11/26 1:01 AM, Adam H. Kerman wrote:
> Since this came up in the other thread, I've got an accounting question with
> regard to treatment of retirement funds.
> 
> For tax purposes, retirement funds that receive pre-tax contributions are
> treated like tax-exempt entities, a separate taxpayer from the beneficiary,
> so that interest and realized capital gains are tax exempt. There are
> literally 990s to file, although the funds manager files them and not the
> beneficiary (unless self-directed).
> 
> If I set up books in gnucash according to tax law, if I'm accounting for an
> IRA, when RMD is known, I enter it as a liability which gets reduced with
> each distribution. I have to show both the asset transfer between the IRA
> account and checking account AND ordinary income from the distribution. If
> there is witholding from the distribution, then that reduces the tax
> liability and is not shown as an asset transfer.
> 
> Here's a situation I just encountered. Say the borrower is trying to qualify
> for a loan. Qualification rules require showing an adequate amount of
> income, regardless of assets.
> 
> If the borrower has pre-tax retirement funds, for accounting purposes, can
> can distributions be considered ordinary income, like tax law compliance?
> 
> If not, then the only income from the fund are interest within the fund
> regardless of distribution.
> 
> Is there are argument to be made that the accounting rule is the same as the
> rule for tax law compliance?



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