Can't turn off dividend reinvestment with Vanguard

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
jeam3131
Posts: 107
Joined: Sun Aug 26, 2018 2:48 pm

Can't turn off dividend reinvestment with Vanguard

Post by jeam3131 »

My Roth IRA at vanguard is 100% VFIAX. Dividend reinvestment is currently set to reinvest.

I want to change this to federal money market within the Roth IRA, but when I attempt this, it says I can't do it because the federal money market has 0 balance.

Is there anyway I can turn off dividend reinvestment for this account?
260chrisb
Posts: 580
Joined: Wed Apr 28, 2010 7:26 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by 260chrisb »

When you direct it to not reinvest don't the dividends then go into your settlement account which would be the prime MM fund?
saintsfan342000
Posts: 162
Joined: Wed Apr 04, 2018 9:46 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by saintsfan342000 »

Is your Roth in one of Vanguard’s legacy mutual fund accounts? I believe they can’t hold cash in sweep accounts.
Already impartial now
BigJohn
Posts: 1895
Joined: Wed Apr 02, 2014 11:27 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by BigJohn »

Is this the old style mutual fund account? If so, I suspect you need to already hold Fed MM in order to redirect dividends there. A newer brokerage account should already contain Fed MM with a zero balance as the settlement fund. If you’re getting this message with a brokerage account something seems off and I’d call VG to discuss.
Topic Author
jeam3131
Posts: 107
Joined: Sun Aug 26, 2018 2:48 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by jeam3131 »

Yes, its a legacy roth account, therefore "transfer to settlement account" is not even an option.

Is there a way to upgrade this to the new brokerage style account? Or is that not recommended?
Last edited by jeam3131 on Fri Apr 24, 2020 10:20 am, edited 1 time in total.
retired@50
Posts: 3465
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Can't turn off dividend reinvestment with Vanguard

Post by retired@50 »

jeam3131 wrote: Fri Apr 24, 2020 10:15 am Yes, its a legacy roth account. is there a way to upgrade this to the new brokerage style account? Or is that not recommended?
You should see a "Upgrade" link near the account header/title. If so, you can click it and start the conversion process. It takes a few days, so you won't be able to trade during the conversion process. If you don't see a link, just call Vanguard and ask to upgrade to the brokerage platform.

Regards,
This is one person's opinion. Nothing more.
Topic Author
jeam3131
Posts: 107
Joined: Sun Aug 26, 2018 2:48 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by jeam3131 »

retired@50 wrote: Fri Apr 24, 2020 10:19 am
jeam3131 wrote: Fri Apr 24, 2020 10:15 am Yes, its a legacy roth account. is there a way to upgrade this to the new brokerage style account? Or is that not recommended?
You should see a "Upgrade" link near the account header/title. If so, you can click it and start the conversion process. It takes a few days, so you won't be able to trade during the conversion process. If you don't see a link, just call Vanguard and ask to upgrade to the brokerage platform.

Regards,
Thanks! appreciate it
sport
Posts: 9532
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Can't turn off dividend reinvestment with Vanguard

Post by sport »

You could open a Fed MM fund in your IRA by transferring $3000 into it. Then you could direct your dividends there. You would not need to keep 3K there after it is opened. Alternatively, you could have the dividends sent to a linked bank account if you have that set up. However, that would be a withdrawal from your IRA. Similarly, they will also send you a paper check.
Topic Author
jeam3131
Posts: 107
Joined: Sun Aug 26, 2018 2:48 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by jeam3131 »

sport wrote: Fri Apr 24, 2020 10:25 am You could open a Fed MM fund in your IRA by transferring $3000 into it. Then you could direct your dividends there. You would not need to keep 3K there after it is opened. Alternatively, you could have the dividends sent to a linked bank account if you have that set up. However, that would be a withdrawal from your IRA. Similarly, they will also send you a paper check.
Ya I thought about that, but I don't want to exit the market and definitely don't want to remove money from my Roth
User avatar
CABob
Posts: 4946
Joined: Sun Feb 25, 2007 8:55 pm
Location: Southern California

Re: Can't turn off dividend reinvestment with Vanguard

Post by CABob »

Since the account only has one fund in it why do you not want dividends reinvested?
Bob
Topic Author
jeam3131
Posts: 107
Joined: Sun Aug 26, 2018 2:48 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by jeam3131 »

CABob wrote: Fri Apr 24, 2020 10:55 am Since the account only has one fund in it why do you not want dividends reinvested?
It can mess up tax loss harvesting with my taxable account
UpperNwGuy
Posts: 4105
Joined: Sun Oct 08, 2017 7:16 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by UpperNwGuy »

jeam3131 wrote: Fri Apr 24, 2020 11:18 am
CABob wrote: Fri Apr 24, 2020 10:55 am Since the account only has one fund in it why do you not want dividends reinvested?
It can mess up tax loss harvesting with my taxable account
For future planning, try not to hold the exact same funds in both taxable and tax-advantaged.
Topic Author
jeam3131
Posts: 107
Joined: Sun Aug 26, 2018 2:48 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by jeam3131 »

UpperNwGuy wrote: Fri Apr 24, 2020 11:33 am
jeam3131 wrote: Fri Apr 24, 2020 11:18 am
CABob wrote: Fri Apr 24, 2020 10:55 am Since the account only has one fund in it why do you not want dividends reinvested?
It can mess up tax loss harvesting with my taxable account
For future planning, try not to hold the exact same funds in both taxable and tax-advantaged.
Correct. I do not. I'm in the middle of a TLH. Exchanged VTSAX for VFIAX in my taxable 1 month ago. Was already holding VFIAX in my Roth. But now the market has jumped up so Im going to keep holding VFIAX in my taxable.
HeelaMonster
Posts: 172
Joined: Sat Aug 10, 2019 11:46 am

Re: Can't turn off dividend reinvestment with Vanguard

Post by HeelaMonster »

retired@50 wrote: Fri Apr 24, 2020 10:19 am
jeam3131 wrote: Fri Apr 24, 2020 10:15 am Yes, its a legacy roth account. is there a way to upgrade this to the new brokerage style account? Or is that not recommended?
You should see a "Upgrade" link near the account header/title. If so, you can click it and start the conversion process. It takes a few days, so you won't be able to trade during the conversion process. If you don't see a link, just call Vanguard and ask to upgrade to the brokerage platform.
As long as this is on the table, can I ask what current thinking is on the "Upgrade" option? I remember some comments from awhile back, suggesting there were problems with the conversion, downsides to the new format, people were planning to resist/avoid as long as possible, etc. Is this something that *IS* going to happen to all VG accounts, so might as well do now? Or is there reason to hold out, until forced?
Faith20879
Posts: 762
Joined: Fri Mar 02, 2007 10:16 am

Re: Can't turn off dividend reinvestment with Vanguard

Post by Faith20879 »

HeelaMonster wrote: Fri Apr 24, 2020 12:43 pm ... I remember some comments from awhile back, suggesting there were problems with the conversion, downsides to the new format, people were planning to resist/avoid as long as possible, etc.
Yes I screamed, kicked, and complained loudly when we switched. But now I don't notice any different.

viewtopic.php?t=234018&start=50
viewtopic.php?t=198365
UpperNwGuy
Posts: 4105
Joined: Sun Oct 08, 2017 7:16 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by UpperNwGuy »

jeam3131 wrote: Fri Apr 24, 2020 12:39 pm
UpperNwGuy wrote: Fri Apr 24, 2020 11:33 am
jeam3131 wrote: Fri Apr 24, 2020 11:18 am
CABob wrote: Fri Apr 24, 2020 10:55 am Since the account only has one fund in it why do you not want dividends reinvested?
It can mess up tax loss harvesting with my taxable account
For future planning, try not to hold the exact same funds in both taxable and tax-advantaged.
Correct. I do not. I'm in the middle of a TLH. Exchanged VTSAX for VFIAX in my taxable 1 month ago. Was already holding VFIAX in my Roth. But now the market has jumped up so Im going to keep holding VFIAX in my taxable.
Wait. If you exchanged VTSAX for VFIAX in taxable while already holding VFIAX in your Roth, than you actually do hold the same funds in both accounts.
rkhusky
Posts: 10185
Joined: Thu Aug 18, 2011 8:09 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by rkhusky »

I have both types and prefer the old style accounts. I don’t own stocks or ETF’s, so see no advantage to the brokerage accounts.

If I had to switch, it wouldn’t be terrible, just a little aggravating. I like to send dividends to Prime MM, but you can’t do that with the brokerage account. I like to get a full end of year report, but it’s not available with the brokerage account. The brokerage processing of transactions through the sweep account is annoying (eg every dividend reinvestment or purchase or sale is actually two transactions).

Maybe they are minor issues, but I would be more apt to switch if Vanguard fixed them.
Topic Author
jeam3131
Posts: 107
Joined: Sun Aug 26, 2018 2:48 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by jeam3131 »

UpperNwGuy wrote: Fri Apr 24, 2020 1:51 pm
jeam3131 wrote: Fri Apr 24, 2020 12:39 pm
UpperNwGuy wrote: Fri Apr 24, 2020 11:33 am
jeam3131 wrote: Fri Apr 24, 2020 11:18 am
CABob wrote: Fri Apr 24, 2020 10:55 am Since the account only has one fund in it why do you not want dividends reinvested?
It can mess up tax loss harvesting with my taxable account
For future planning, try not to hold the exact same funds in both taxable and tax-advantaged.
Correct. I do not. I'm in the middle of a TLH. Exchanged VTSAX for VFIAX in my taxable 1 month ago. Was already holding VFIAX in my Roth. But now the market has jumped up so Im going to keep holding VFIAX in my taxable.
Wait. If you exchanged VTSAX for VFIAX in taxable while already holding VFIAX in your Roth, than you actually do hold the same funds in both accounts.
Yes that's correct, I do hold the same fund now. But Im going to ether wait for the market to drop and then switch from vfiax to vtsax in my taxable, or just make the switch in my Roth if the market doesn't look like it's going to drop that far
BigJohn
Posts: 1895
Joined: Wed Apr 02, 2014 11:27 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by BigJohn »

I converted all my accounts to brokerage years ago, primarily driven by desire to be able to do Roth conversions online. There are a few differences that I miss but I’d call them all minor inconveniences, nothing major. It’s just become the new normal.

The upgrades went without a hitch but I’d make two suggestions. First, be sure to save existing cost basis info for taxable accounts just in case. Not an issue for most but some reports of glitches during upgrade. Second, once your done, go through reinvestment options for all accounts and all funds carefully as not all options are carried forward.

As far as whether it’s inevitable, VG is pushing upgrade for good and valid reasons (ie cost to maintain two systems). That said, I don’t think they can legally force you to switch. So my prediction is at some point they will increase the incentive to switch by starting to charge a fee for the old style accounts. Others predictions may be different so YMMV :beer
Longdog
Posts: 1496
Joined: Sun Feb 09, 2014 6:56 pm
Location: Philadelphia

Re: Can't turn off dividend reinvestment with Vanguard

Post by Longdog »

jeam3131 wrote: Fri Apr 24, 2020 12:39 pm
UpperNwGuy wrote: Fri Apr 24, 2020 11:33 am
jeam3131 wrote: Fri Apr 24, 2020 11:18 am
CABob wrote: Fri Apr 24, 2020 10:55 am Since the account only has one fund in it why do you not want dividends reinvested?
It can mess up tax loss harvesting with my taxable account
For future planning, try not to hold the exact same funds in both taxable and tax-advantaged.
Correct. I do not. I'm in the middle of a TLH. Exchanged VTSAX for VFIAX in my taxable 1 month ago. Was already holding VFIAX in my Roth. But now the market has jumped up so Im going to keep holding VFIAX in my taxable.
Here's another solution to the problem. Within your Roth, exchange $3000 from VTSAX to VFIAX. The next day, change your reinvestment options for VTSAX to "transfer to VFIAX." Then, you will never stay out of the market, and you will be able to tax loss harvest from VTSAX in your taxable account without the issue you are trying to avoid. If, in the future, another tax loss harvest opportunity comes about in the reverse direction, then change all reinvestments to VTSAX instead, and tax loss harvest from VFIAX in your taxable account.
Steve
MotoTrojan
Posts: 10658
Joined: Wed Feb 01, 2017 8:39 pm

Re: Can't turn off dividend reinvestment with Vanguard

Post by MotoTrojan »

jeam3131 wrote: Fri Apr 24, 2020 12:39 pm
UpperNwGuy wrote: Fri Apr 24, 2020 11:33 am
jeam3131 wrote: Fri Apr 24, 2020 11:18 am
CABob wrote: Fri Apr 24, 2020 10:55 am Since the account only has one fund in it why do you not want dividends reinvested?
It can mess up tax loss harvesting with my taxable account
For future planning, try not to hold the exact same funds in both taxable and tax-advantaged.
Correct. I do not. I'm in the middle of a TLH. Exchanged VTSAX for VFIAX in my taxable 1 month ago. Was already holding VFIAX in my Roth. But now the market has jumped up so Im going to keep holding VFIAX in my taxable.
VLCAX.
Post Reply