Roth Contributions

[William Bean]

Does anyone have a specific way they track Roth contributions in Beancount, so you know how much you can withdraw penalty free before age 59.5? I was thinking of just a simple asset account with fake currency, but wasn't sure if there was a more elegant way to do this? 

[Martin Blais]

I treat this as a regular account. 

Why would you track this? The whole point is to keep the account around for old age.

On Sat, Apr 24, 2021 at 5:32 PM William Bean <wbe...@gmail.com> wrote:

Does anyone have a specific way they track Roth contributions in Beancount, so you know how much you can withdraw penalty free before age 59.5? I was thinking of just a simple asset account with fake currency, but wasn't sure if there was a more elegant way to do this? 

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[William Bean]

Agreed. The actual investments and everything would be tracked as a regular account. The contribution tracking would be something separate, which is why I'm contemplating just an account with fake currency for this. I intend to use it to track how much money I have available as an emergency fund (in addition to other assets). It probably makes sense to just be an asset with fake currency (or maybe just track the cash contributions via metadata), but wasn't sure if anyone had come up with a better solution, so figured I'd ask.

[Martin Blais]

I still fail to understand. This would make sense for an After-Tax 401k, but for a Roth account, it's 100% non-taxable.

The penalty is a constraint based on your age IIRC, there's nothing to track.

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[William Bean]

You can withdraw contributions at any time, tax free and penalty free, regardless of age. However, if you withdraw more than your contributions when younger than 59.5, then the gains portion would incur a penalty. Thus, knowing your contribution amount is important if there is an intent to withdraw any amounts prior to 59.5, which could occur in an emergency situation or in early retirement.

[Martin Blais]

Oh I see. That makes sense. (And it's probably pro-rata as well, e.g. if you have 100k in contribs on an account worth 120k and you take out $1200, $200 would be taxable? That's what I'd expect the govt would do)

I'd probably write a script to compute the contribution amount instead of tracking it explicitly

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[cha...@gmail.com]

I just have a "Assets:Investments:Retirement:Roth:Cash" account that I deposit all my contributions into before investment. If I wanted to track my contributions, I would just query for transactions into this account greater than a certain dollar figure. Since I do contributions all at once, looking for $5,000+ contribution would cover it for me. If I sell a position I put the proceeds into another position on the same day.

[redst...@gmail.com]

Oh I see. That makes sense. (And it's probably pro-rata as well, e.g. if you have 100k in contribs on an account worth 120k and you take out $1200, $200 would be taxable? That's what I'd expect the govt would do)

I'd probably write a script to compute the contribution amount instead of tracking it explicitly

In this particular case, the contributions are seen as "yours always to withdraw any time" and therefore,  is not subject to a pro-rata rule. One can withdraw contribs clear and free, any time.

OP: I simply run this query:

select year,account,sum(number) where account~"Assets:Investments:Tax-Free:.*Roth.*" AND joinstr(other_accounts) ~ 'Assets:Z' GROUP BY year,account

Replace "Assets:Z" with whatever regexp describes accounts from which you likely make contribs from (eg: 'Assets:Bank:.*'). This also helps me verify my contributions for the year.

[William Bean]

That's a good query, red. That seems about right. I was concerned with dividends throwing things off since I would have them go to the cash account, but ensuring the transaction comes from a specific asset (via regex) seems perfect. I'll likely use this approach. Thanks for all the suggestions everyone! 

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[Ben Blount]

I looked into the calculations by checking the underlying IRS forms a few years ago. It is not prorated, withdrawal of basis dollars is totally tax free until withdrawal exceeds basis. 

*I am not a tax expert, may be wrong

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