How to Categorize and Group Roth IRA Transactions

Hello,

I have an automatic deduction from a checking account that goes into my Vanguard Roth IRA once per month. At that point, the IRA automatically purchases shares from the appropriate fund(s), and the transactions (deduction, transfer to IRA, purchase of new shares) show up in Tiller (for a total of three or more line items).

For the above scenario, please confirm whether the “transfer” group/type should be used for the following activities:

  1. The auto deduction from my checking account (e.g., money transferred from checking to IRA account)

  2. The receipt of the funds by the IRA account

  3. The transactions purchasing additional shares for the IRA with these newly arrived funds (The amount transferred to the IRA might be split up across multiple line items for these purchases, depending on how many funds I’m investing in).

Also, (if it turns out that they should all be transfers) can all three of these transactions be grouped in the same “Roth” category (which is a transfer group/type) despite their different purposes and multiple institutions/accounts being involved?

Thanks

Great questions…here is how I handle a similar situation. (There are others, but this works for me.)

I have my investment accounts connected to Tiller only to maintain a record of their balances and balance history. All of the accounts’ activities are flowing into Tiller sheets by default on update. The asset purchases and trades in each account flow into the Transaction sheet and are auto-categorized with the category called “Investment Transactions.” This category is marked as “Transfer” and “Hidden” on my Category sheet so I don’t have to deal with their reconciliation. (But, I have a record of these, if I need it.)

I am tracking only the net of my paycheck, so my regular investment deposits are not recorded, but if I were to make routine investment account deposits from my checking account (ha! I should be!), I would create a category called, Roth IRA Deposits, the type would be Expense, and I would treat each deposit as a monthly expense, since these would appear as deductions reported by my checking account via downloaded transactions into Tiller. This would allow me to budget for these along the year.

If these Roth IRA deposits would then appear as a transaction in my investment account and then flow into Tiller, I would auto-categorize these using the same category as above, “Investment Transactions.” (I am not tracking these, just recording them.) Their impact over time would appear in the investment account balances.

That’s a lightweight approach to investment management that works for me. There are many other approaches with varying degrees of specificity. This one works for me and my situation.

Does that help?

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Hello Brad,

This is very helpful. I will put these suggestions to immediate use. Thanks so much!

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