How to categorize or incorporate IRA withdrawal in Tiller Budget

We started taking a small monthly withdrawal from one of our IRA’s. How do I record this in Tiller’s monthly budget? It will show as income but not sure of the category to place it?

Welcome to the Tiller community, @hall.thomas.e.

If you’re tracking both the IRA and the banking account in Tiller (i.e. both accounts are linked), I would use the Transfer category because you are just moving money between accounts (i.e. there is no new income). If, on the other hand, the IRA is not linked to Tiller, then I would probably create a category within the Income Type for IRA or retirement account income.

Randy

Thanks Randy, that helps! The IRA account is linked via the “Net Worth Tracker”. Randy, could I still Transfer the funds if it is tied to the New Worth Tracker?? Otherwise, as you suggested I can simply create an income type for IRA/retirement.

Thanks for your time and help!

Hi @hall.thomas.e,

I’ve included our official help guide on using the Transfer category that outlines what @randy means here.

If you have both accounts linked to the same sheet so you see the outflow from the IRA to your checking account then you’d want to count that as a transfer. Does that help?

Heather

@hall.thomas.e, @randy, @heather

Hey, I think we need to slow down here for a second.

Putting aside spreadsheets for a moment, assuming that IRA is a traditional IRA, and I suspect it is, then it most likely is taxable to some degree, maybe close to 100%. The IRA custodian is required to report the taxable portion as income to the IRS and the IRA owner then reports the income on his tax return. If the owner does not, then the IRS will send him a matching notice. Whether this is a RMD or not does not impact the answer.

So, when the IRA money comes into your checking account, a certain piece of it is taxable and should be recorded in your Tiller sheet as such. This is always the answer regardless of which accounts are linked or not linked. What you do with any nontaxable portion is a discussion for another day.

If the IRA is linked to Tiller, I would record the distribution out of the IRA (to the checking account) as a Transfer. This is an example of a instance where there will not be an offsetting Transfer somewhere else in your Tiller sheet.

Here are a few articles from reputable websites summarizing the IRA distribution rules.

Cheers,

Blake

You rock, @Blake! Thanks for your knowledge.