Dividend classification wrong? Fidelity funds

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Theseus
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Joined: Sat Jan 23, 2016 9:40 am

Dividend classification wrong? Fidelity funds

Post by Theseus » Sat Dec 16, 2017 1:16 pm

The dividends just got posted in the account early this morning for following funds that I own.

FUSVX -FIDELITY 500 INDEX PREMIUM CLASS
FSIVX - FIDELITY INTERNATL INDEX PREMIUM CLASS
FSEVX - FIDELITY EXTD MARKET INDEX PREMIUM CLASS

Overall in 2016 my qualified to non qualified ratio was 9 to 1. But 2017 is 1 to 9. That means 90% of the dividends coming from these funds are considered non-qualified in 2017 and will go towards ordinary income.

I am about to call Fidelity, but does anyone know how can I determine if they haven't screwed up the classification?

jebmke
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Re: Dividend classification wrong? Fidelity funds

Post by jebmke » Sat Dec 16, 2017 1:21 pm

Theseus wrote:
Sat Dec 16, 2017 1:16 pm
The dividends just got posted in the account early this morning for following funds that I own.

FUSVX -FIDELITY 500 INDEX PREMIUM CLASS
FSIVX - FIDELITY INTERNATL INDEX PREMIUM CLASS
FSEVX - FIDELITY EXTD MARKET INDEX PREMIUM CLASS

Overall in 2016 my qualified to non qualified ratio was 9 to 1. But 2017 is 1 to 9. That means 90% of the dividends coming from these funds are considered non-qualified in 2017 and will go towards ordinary income.

I am about to call Fidelity, but does anyone know how can I determine if they haven't screwed up the classification?
My experience has been that the classification is done after the end of the year and will be reflected in the 1099-DIV. I don't pay much attention to anything other than overall amounts in the preliminary data.
When you discover that you are riding a dead horse, the best strategy is to dismount.

Spirit Rider
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Re: Dividend classification wrong? Fidelity funds

Post by Spirit Rider » Sat Dec 16, 2017 1:24 pm

The majority of the qualified/non-qualified determination will not be reflected until they actually release the 1099-DIV.

Until then what is reported online should be disregarded.

Theseus
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Joined: Sat Jan 23, 2016 9:40 am

Re: Dividend classification wrong? Fidelity funds

Post by Theseus » Sat Dec 16, 2017 1:32 pm

Spirit Rider wrote:
Sat Dec 16, 2017 1:24 pm
The majority of the qualified/non-qualified determination will not be reflected until they actually release the 1099-DIV.

Until then what is reported online should be disregarded.
Thank you. Unfortunately I can not disregard this. I am transferring some of my appreciated stocks to DAF. And I need to know my ordinary income to determine how much I should transfer to fully itemize without AMT biting into my itemized deductions.

livesoft
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Re: Dividend classification wrong? Fidelity funds

Post by livesoft » Sat Dec 16, 2017 1:38 pm

You will be disappointed then by what Fidelity tells you.

Your best bet is to go by what the ratios were in 2016. I think even Fidelity will tell you that until the real number come out in March.
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jebmke
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Joined: Thu Apr 05, 2007 2:44 pm

Re: Dividend classification wrong? Fidelity funds

Post by jebmke » Sat Dec 16, 2017 1:39 pm

Theseus wrote:
Sat Dec 16, 2017 1:32 pm
Spirit Rider wrote:
Sat Dec 16, 2017 1:24 pm
The majority of the qualified/non-qualified determination will not be reflected until they actually release the 1099-DIV.

Until then what is reported online should be disregarded.
Thank you. Unfortunately I can not disregard this. I am transferring some of my appreciated stocks to DAF. And I need to know my ordinary income to determine how much I should transfer to fully itemize without AMT biting into my itemized deductions.
At this point, the splits from 2016 are your best estimate for 2017. I'd also look at prior years to see if there was a lot of movement. I know that for VG it hasn't moved a lot. Then maybe err on the conservative side.
When you discover that you are riding a dead horse, the best strategy is to dismount.

Theseus
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Re: Dividend classification wrong? Fidelity funds

Post by Theseus » Sat Dec 16, 2017 1:48 pm

OK. Just got off the phone with Fidelity.

You all are right. They classify everything as non-qualified until they do a detailed review in January. The rep said even after that, the companies can reclassify and there is not time limit on that. I.e. they can reclassify 2015 distribution in 2018 requiring Fidelity to issue you tax form (I am guess in 1099? - I didn't ask). That may trigger you into amending your 2015 tax return. He said this is highly unlikely.

That aside, he suggested I look at https://www.fidelity.com/mutual-funds/i ... n/year-end. This has the information that I can use to estimate - rather than just rely on 2016 data. It has specific breakdown of qualified, non-qualified, long term and short term gain for distribution that was made last night. I can apply that to my $ amount and it should give me something close to what I need.

But I will take advice given here. I will try to be conservative.

Thank you guys!

jebmke
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Joined: Thu Apr 05, 2007 2:44 pm

Re: Dividend classification wrong? Fidelity funds

Post by jebmke » Sat Dec 16, 2017 1:52 pm

Theseus wrote:
Sat Dec 16, 2017 1:48 pm
You all are right. They classify everything as non-qualified until they do a detailed review in January. The rep said even after that, the companies can reclassify and there is not time limit on that. I.e. they can reclassify 2015 distribution in 2018 requiring Fidelity to issue you tax form (I am guess in 1099? - I didn't ask). That may trigger you into amending your 2015 tax return. He said this is highly unlikely.
Not uncommon within the year. One of the reasons to wait to file taxes until later. Revised 1099-Div forms in late spring early summer ... been a couple years since I had one but I used to get revised forms in the summer pretty regularly.
When you discover that you are riding a dead horse, the best strategy is to dismount.

Spirit Rider
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Re: Dividend classification wrong? Fidelity funds

Post by Spirit Rider » Sat Dec 16, 2017 2:05 pm

I meant disregard in the sense that the information is not valid. Call Fidelity, but if they had this information freely available I am sure it would be reported.

Every year not just at Fidelity, I use the year end distributions estimates. Just be aware the actual distributions will be slightly different. You should use your actual distribution amounts, but you can use the estimates for the ratios.

Also, if >= 95% of the dividends are qualified the fund can report them as 100% qualified. If you have a fund on the bubble you will need to assume one way or the other, whichever is safer in the particular circumstances.

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