abuss368 wrote:If the funds are held directly with Vanguard - Vanguard keeps track of all cost basis information and provides reports at year end.
Yes. The funds are directly held with Vanguard. So that means, I should be fine if I reinvest the divident for these funds in Taxable?
Apart from Tax complications (which should be taken care by Vanguard), there is no disadvantage in reinvesting the dividends..right?
There is no right or wrong answer.
My personal preference in taxable space is to have all the distributions roll into my money market fund. Once the new year arrives and I have paid my taxes and I have set aside money for IRA contributions or I Bond purchases or whatever, I then invest the remaining money in shares of whatever fund(s) get me closer to the asset allocation in my IPS. This results in fewer lots to be tracked to compute capital gains/losses when selling sometime in the future.
In tax advantaged space I set up all distributions to automatically reinvest.
I do it this way because *to me* it feels like less work and less transactions to manage and so forth. Also those funds sitting in the money market account serve as some extra padding to my emergency reserves, just in case I suddenly need to buy a car or a furnace or whatever.
Happy new year!