How to find % of qualified dividends for a Fidelity fund?

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walletless
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How to find % of qualified dividends for a Fidelity fund?

Post by walletless » Tue Jan 07, 2020 5:04 pm

In my Fidelity HSA, I am trying to figure out the most efficient fund I can buy for U.S. Total Stock Market, since in California state (where I reside), we are taxed on HSA income.

Vanguard publishes a report each year on what percentage of their dividend distribution for a fund was qualified vs. ordinary dividends. For example, for VTI (Vanguard Total Stock Market ETF), 95% of their dividends in 2020 was qualified (source).

Does Fidelity publish similar metrics for their funds? Specifically, I am trying to get the same data for FSKAX, their equivalent of VTI fund.

rkhusky
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Re: How to find % of qualified dividends for a Fidelity fund?

Post by rkhusky » Tue Jan 07, 2020 5:21 pm

Just call them up and ask. They are supposed to have great customer service. Although having it on the web would be better customer service.

The referenced Vanguard is actually for 2019. But, using it for 2020 is likely to be a reasonable choice as well.

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by walletless » Wed Jan 08, 2020 3:48 pm

rkhusky wrote:
Tue Jan 07, 2020 5:21 pm
Just call them up and ask. They are supposed to have great customer service. Although having it on the web would be better customer service.
Yeah I was kinda hoping its online somewhere and I am just searching using the wrong keywords.
rkhusky wrote:
Tue Jan 07, 2020 5:21 pm
The referenced Vanguard is actually for 2019. But, using it for 2020 is likely to be a reasonable choice as well.
From my experience there is only few percentage points differences year over year, so using the previous years distribution gives a fairly decent approximation.

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walletless
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Re: How to find % of qualified dividends for a Fidelity fund?

Post by walletless » Mon Jan 13, 2020 5:39 pm

Just an update: I have not been successful finding this information from Fidelity. I went to the local branch and they directed me to call the trading desk. I called the trading desk and they said they will not have this information until Jan-end when the tax forms for previous years are done. I also sent a secure message, and was told that the only way to have this information is to buy the fund and wait for the 1099-DIV.

Anyway, given that FSKAX is a mutual index fund, I suspect it will not be as tax efficient as VTI anyway; so for now I am going to just go with VTI despite the slightly higher ER.

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by grabiner » Mon Jan 13, 2020 9:09 pm

walletless wrote:
Tue Jan 07, 2020 5:04 pm
In my Fidelity HSA, I am trying to figure out the most efficient fund I can buy for U.S. Total Stock Market, since in California state (where I reside), we are taxed on HSA income.
CA doesn't distinguish qualified from non-qualified, so you will pay the same tax on any dividends unless they are exempt from CA state tax. If Treasuries or TIPS fit your investment need, holding those in your HSA will avoid CA tax on the dividends, and most of the CA tax on capital gains because bond funds don't have much in gains. (It's even better in NJ, which doesn't tax capital gains on Treasury funds.)
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Re: How to find % of qualified dividends for a Fidelity fund?

Post by Cash » Mon Jan 13, 2020 9:32 pm

I believe you can find the info in the annual report.

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by SlowMovingInvestor » Mon Jan 13, 2020 9:36 pm

FSKAX is close enough to VTI in holdings that I doubt there would be any material difference in %age of qualified dividends.

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by livesoft » Mon Jan 13, 2020 9:43 pm

SlowMovingInvestor wrote:
Mon Jan 13, 2020 9:36 pm
FSKAX is close enough to VTI in holdings that I doubt there would be any material difference in %age of qualified dividends.
Qualified is not only a function of who paid the dividend, but also a holding period. If FSKAX is doing a different amount of trading or loaning of securities, then the percentage of Qualified can be different.

The OP has a link to "Estimated" percentages and they do not need to match what comes on a 1099-DIV later.

Vanguard, Fidelity, SPDR, et al publish the final numbers for their funds and ETFs eventually. Google is pretty good at finding them.

Here is a partial answer for 2018: https://www.fidelity.com/bin-public/060 ... vidual.pdf
Last edited by livesoft on Mon Jan 13, 2020 9:50 pm, edited 1 time in total.
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Re: How to find % of qualified dividends for a Fidelity fund?

Post by Geologist » Mon Jan 13, 2020 9:49 pm

Cash wrote:
Mon Jan 13, 2020 9:32 pm
I believe you can find the info in the annual report.
Perhaps you can point where it can be found in Fidelity's annual report. For Vanguard in the 2018 annual report for the Total Stock Fund, it doesn't seem to be there in any easy-to-use manner. The annual report gives the total dollar amount of qualified dividends, but then you would have to sum the investment income for each share class and calculate the percentage yourself. Of course, the 2019 annual report will not appear for at least six weeks (and no doubt the Fidelity 2019 report will not appear for some weeks).

Also, as livesoft has just pointed out, the value for Vanguard's VTI for 2019 is an estimate, not the actual 2019 value, which has not yet been determined.

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by Cash » Tue Jan 14, 2020 6:34 am

Geologist wrote:
Mon Jan 13, 2020 9:49 pm
Cash wrote:
Mon Jan 13, 2020 9:32 pm
I believe you can find the info in the annual report.
Perhaps you can point where it can be found in Fidelity's annual report.
Page 122.

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by neurosphere » Tue Jan 14, 2020 10:12 am

grabiner wrote:
Mon Jan 13, 2020 9:09 pm
walletless wrote:
Tue Jan 07, 2020 5:04 pm
In my Fidelity HSA, I am trying to figure out the most efficient fund I can buy for U.S. Total Stock Market, since in California state (where I reside), we are taxed on HSA income.
CA doesn't distinguish qualified from non-qualified, so you will pay the same tax on any dividends unless they are exempt from CA state tax. If Treasuries or TIPS fit your investment need, holding those in your HSA will avoid CA tax on the dividends, and most of the CA tax on capital gains because bond funds don't have much in gains. (It's even better in NJ, which doesn't tax capital gains on Treasury funds.)
I think those in CA have good incentive to consider a diversified portfolio of stocks and Treasuries and/or TIPS for an HSA. Personally, I like holding some bonds in my HSA and Roth. I know people often advise to hold assets most likely to appreciate in HSAs/Roth (most Roth, but by analogy one can include the HSA), but I feel Roth and HSA dollars are so valuable, they deserve more "protection". E.g. I would much rather have a more stable upward progression by including bonds, and give up possible future gains, because it means I'm less likely to have my Roth/HSA dollars wiped out by an ill-timed large or protracted stock market decline. Thus, my allocation in my Roth and HSA essentially mirrors my overall allocation.

Summary: HSAs in california have additional incentive to hold bonds (in the form of treasuries/tips) than perhaps otherwise. :D
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Re: How to find % of qualified dividends for a Fidelity fund?

Post by mervinj7 » Tue Jan 14, 2020 2:09 pm

walletless wrote:
Tue Jan 07, 2020 5:04 pm
In my Fidelity HSA, I am trying to figure out the most efficient fund I can buy for U.S. Total Stock Market, since in California state (where I reside), we are taxed on HSA income.
As others have mentioned, the most efficient (from a tax perspective) asset to hold in a CA HSA is US treasuries. At Fidelity, you can buy them at auction for free and setup auto-roll. Effectively, you create your own Treasury fund with 0 ER but you can fine-tune the holdings and duration to whatever you want. I keep excess cash-equivalent funds in FDLXX (between $1k-$1.5k). Despite the high ER, it's still a Treasury Only Money Market, so it also creates no taxable events. If you are interested, see my previous post on setting up a Treasury bond ladder.

viewtopic.php?p=4221492#p4221492

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by walletless » Tue Jan 14, 2020 2:40 pm

mervinj7 wrote:
Tue Jan 14, 2020 2:09 pm
walletless wrote:
Tue Jan 07, 2020 5:04 pm
In my Fidelity HSA, I am trying to figure out the most efficient fund I can buy for U.S. Total Stock Market, since in California state (where I reside), we are taxed on HSA income.
As others have mentioned, the most efficient (from a tax perspective) asset to hold in a CA HSA is US treasuries. At Fidelity, you can buy them at auction for free and setup auto-roll. Effectively, you create your own Treasury fund with 0 ER but you can fine-tune the holdings and duration to whatever you want. I keep excess cash-equivalent funds in FDLXX (between $1k-$1.5k). Despite the high ER, it's still a Treasury Only Money Market, so it also creates no taxable events. If you are interested, see my previous post on setting up a Treasury bond ladder.

viewtopic.php?p=4221492#p4221492
Thanks, this makes a lot of sense for many people. However my AA doesn't call for it. For me, this would be a classic case of the tax tail wagging the investment dog. Given the general efficiency of U.S. total stock market and fit in my AA, I was trying to figure out the right total U.S. ETF/index MF to hold without compromising on my overall AA.

After some research, I've settled on using either SCHB or ITOT. They are both close enough in efficiency to VTI, and by buying them in HSA I don't have to worry about potential wash sales happening as I sell VTI/VTSAX in my taxable accounts.

Other equivalent options I considered and rejected:
1) Buying FSKAX or Fidelity Zero funds: non-VG mutual funds are unlikely to be as efficient as ETFs, despite the lower ER.
2) Buying VTI: this made the most sense, but I was worried about accidental wash sales.
3) Buying VOO/VXF (S&P500 & extended) in 82:18 ratio: closely approximated VTI, but higher ER than ITOT/SCHB offsets any tax efficiency. Didn't warrant the slightly more complexity of buying 2 funds for no real gains.
4) Buying just VOO (S&P 500): given the relatively small balance in HSA compared to my overall assets, this would've been ok if more diversified alternative like ITOT/SCHB were unavailable.
5) Buying treasury funds: didn't meet my investment objectives

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by UpperNwGuy » Tue Jan 14, 2020 3:34 pm

walletless wrote:
Tue Jan 14, 2020 2:40 pm
mervinj7 wrote:
Tue Jan 14, 2020 2:09 pm
walletless wrote:
Tue Jan 07, 2020 5:04 pm
In my Fidelity HSA, I am trying to figure out the most efficient fund I can buy for U.S. Total Stock Market, since in California state (where I reside), we are taxed on HSA income.
As others have mentioned, the most efficient (from a tax perspective) asset to hold in a CA HSA is US treasuries. At Fidelity, you can buy them at auction for free and setup auto-roll. Effectively, you create your own Treasury fund with 0 ER but you can fine-tune the holdings and duration to whatever you want. I keep excess cash-equivalent funds in FDLXX (between $1k-$1.5k). Despite the high ER, it's still a Treasury Only Money Market, so it also creates no taxable events. If you are interested, see my previous post on setting up a Treasury bond ladder.

viewtopic.php?p=4221492#p4221492
Thanks, this makes a lot of sense for many people. However my AA doesn't call for it. For me, this would be a classic case of the tax tail wagging the investment dog. Given the general efficiency of U.S. total stock market and fit in my AA, I was trying to figure out the right total U.S. ETF/index MF to hold without compromising on my overall AA.

After some research, I've settled on using either SCHB or ITOT. They are both close enough in efficiency to VTI, and by buying them in HSA I don't have to worry about potential wash sales happening as I sell VTI/VTSAX in my taxable accounts.

Other equivalent options I considered and rejected:
1) Buying FSKAX or Fidelity Zero funds: non-VG mutual funds are unlikely to be as efficient as ETFs, despite the lower ER.
2) Buying VTI: this made the most sense, but I was worried about accidental wash sales.
3) Buying VOO/VXF (S&P500 & extended) in 82:18 ratio: closely approximated VTI, but higher ER than ITOT/SCHB offsets any tax efficiency. Didn't warrant the slightly more complexity of buying 2 funds for no real gains.
4) Buying just VOO (S&P 500): given the relatively small balance in HSA compared to my overall assets, this would've been ok if more diversified alternative like ITOT/SCHB were unavailable.
5) Buying treasury funds: didn't meet my investment objectives
I think you're over-optimizing. If it were me, I would just go ahead and buy FSKAX. The amount of money that might be lost through tax-inefficiency is small if it's only in an HSA.

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by mervinj7 » Tue Jan 14, 2020 4:11 pm

walletless wrote:
Tue Jan 14, 2020 2:40 pm
mervinj7 wrote:
Tue Jan 14, 2020 2:09 pm
walletless wrote:
Tue Jan 07, 2020 5:04 pm
In my Fidelity HSA, I am trying to figure out the most efficient fund I can buy for U.S. Total Stock Market, since in California state (where I reside), we are taxed on HSA income.
As others have mentioned, the most efficient (from a tax perspective) asset to hold in a CA HSA is US treasuries. At Fidelity, you can buy them at auction for free and setup auto-roll. Effectively, you create your own Treasury fund with 0 ER but you can fine-tune the holdings and duration to whatever you want. I keep excess cash-equivalent funds in FDLXX (between $1k-$1.5k). Despite the high ER, it's still a Treasury Only Money Market, so it also creates no taxable events. If you are interested, see my previous post on setting up a Treasury bond ladder.

viewtopic.php?p=4221492#p4221492
Thanks, this makes a lot of sense for many people. However my AA doesn't call for it. For me, this would be a classic case of the tax tail wagging the investment dog. Given the general efficiency of U.S. total stock market and fit in my AA, I was trying to figure out the right total U.S. ETF/index MF to hold without compromising on my overall AA.
Just to clarify, I'm not trying to optimize from a tax efficiency perspective in terms of cost or future growth. I'm optimizing my time and effort. In this case, the effort it takes to adjust for a HSA every year on my CA state tax return (currently that's zero). In my AA, the HSA is a very small percentage of my current portfolio (1.5%) and incoming funds are relatively small ($3.5k/$92k=3.8%) compared to annual savings. However, if your AA calls for equities in your HSA, then ITOT should be a great option. Do you use it as a TLH partner to VTI?

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Re: How to find % of qualified dividends for a Fidelity fund?

Post by walletless » Tue Jan 14, 2020 4:24 pm

mervinj7 wrote:
Tue Jan 14, 2020 4:11 pm
if your AA calls for equities in your HSA, then ITOT should be a great option. Do you use it as a TLH partner to VTI?
No, I'm using index funds at Vanguard, so I'm in VTSAX today. I use VLCAX as the tlh partner.

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