does anyone own a money market fund at Wells Fargo Advisors? (SOLVED)

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ginahoy
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does anyone own a money market fund at Wells Fargo Advisors? (SOLVED)

Post by ginahoy »

I opened an account with Wells Fargo Advsiors earlier this year in order to purchase $300k of WMPXX (an Allspring mm fund). I noticed that WFA posts the dividends on the 1st busi day of month ("as-of" end of month).

I'm in an unusually low tax bracket this year so I'm converting some pre-tax 401k funds to ROTH to max out my income in the low bracket and, at the same time, reduce future 401k RMA's subject to a higher bracket. I ran a pro-forma return to determine how much to convert and realized I don't know whether WFA will report December dividends in '24 or '25. I imagine the IRS cares when a dividend is posted, not the ex-dividend date. But I'm not sure.

I contacted WFA and Allspring and neither could provide a definitive answer. The Allspring rep speculated that first-of-month div posting is simply a quirk of WFA's back-end processes since Allspring posts dividends for their retail clients on last business day. This makes me think WFA may post dividends on first of month for all money market funds (I've only purchased WMPXX on the WFA platform).

If anyone here holds a money market fund with Wells Fargo Advisors or WellsTrade, I would be grateful for a confirmation of how they handle dividend payments for December on the 1099.
Last edited by ginahoy on Fri Jan 31, 2025 10:53 am, edited 3 times in total.
HighLonesome
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by HighLonesome »

Hi. You didnt ask but I would recommend that you move your money one of the discount brokerages, Vanguard, Fidelity or Schwab. WF has bad juju.
Topic Author
ginahoy
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by ginahoy »

Yeah, I'm not overly fond of the WFA platform (I'm on WellsTrade, actually), but I have 3 very good reasons for opening the account that I won't bore you with. I have most of my assets at Schwab, going back 30+ years.
increment
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by increment »

I believe that a fund dividend is taxable this year if it is declared in December but paid in January. See viewtopic.php?p=7607456#p7607456 from last year.
Topic Author
ginahoy
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by ginahoy »

Thanks... the last paragraph in the linked post includes a link to the IRC section that addresses mutual funds, making it clear that a December dividend posted in January should be reported for the current year. Still, I've seen examples where one brokerage reports certain investment income different from another brokerage (re: epic taxation of bonds thread). That's why I specifically asked for responses from anyone who owns a money market fund at WFA. I'll base my ROTH conversion) on what I anticipate the 1099 will say, and file my tax return accordingly.
bogling
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by bogling »

VUSXX posted 12/2. BTW don't know your situation but if in a taxable account and have state tax may want to check out MM Optimizer that compares for instance if VUSXX has higher after tax yield than WMPXX due to portion of investment that can have state tax exemption.

viewtopic.php?t=401821
Topic Author
ginahoy
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by ginahoy »

bogling wrote: Sat Dec 07, 2024 12:46 pmVUSXX posted 12/2.
Thanks. Do you hold this fund at WFA? If so, my question is whether the Dec'23 dividend was paid on Dec 31 or Jan 2, and if Jan 2, was it included on your 2023 1099? If you didn't own VUSXX or some other mm fund at WFA in Dec'23, hopefully someone else will respond.

Also thanks for the referral. My state tax rate is only 2.5% but I'll compare the returns and see if it makes sense to switch.
bogling
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by bogling »

ginahoy wrote: Sat Dec 07, 2024 1:15 pm
bogling wrote: Sat Dec 07, 2024 12:46 pmVUSXX posted 12/2.
Thanks. Do you hold this fund at WFA? If so, my question is whether the Dec'23 dividend was paid on Dec 31 or Jan 2, and if Jan 2, was it included on your 2023 1099? If you didn't own VUSXX or some other mm fund at WFA in Dec'23, hopefully someone else will respond.

Also thanks for the referral. My state tax rate is only 2.5% but I'll compare the returns and see if it makes sense to switch.
Yes can confirm VUSXX payment at WF, but only mot recent div on 12/2, as not enough history back for a statement in January 2024 or a 2023 1099.

With that low of a state tax, it may not matter much on after tax yield. But consider WMPXX is a prime fund and so a different risk really than higher % state TE treasury fund. Looks like could use a treasury fund instead for same ATY and reduce prime risk. Made a quick check in MMO using 2.5% and it looks like VUSXX 1 day ATY is 4.69% vs WMPXX at 4.66%.

Can ACAT VUSXX from Vanguard to Wellstrade but not purchase at WF. However, can purchase FRSXX that is a Fidelity fund that usually takes min $10M investment at Fidelity, but not at WF.

https://www08.wellsfargomedia.com/asset ... -funds.pdf

A benefit of FRSXX is if want to eventually hold MM at F with less than $10M. Have heard can ACAT FRSXX back to F <$10M.

MMO seems to show close after tax yields today at 2.5% state tax on WMPXX (4.66%) , FRSXX (4.67%), and VUSXX (4.69%).
Last edited by bogling on Sat Dec 07, 2024 6:00 pm, edited 1 time in total.
livesoft
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by livesoft »

HighLonesome wrote: Fri Dec 06, 2024 11:25 am Hi. You didnt ask but I would recommend that you move your money one of the discount brokerages, Vanguard, Fidelity or Schwab. WF has bad juju.
WellsTrade is a superb discount brokerage. Just don't use a WellsFargo Advisor. One can own all the normal ETFs without commissions in their WellsTrade account.

I do not use a MMF in my WellsTrade taxable account which is 100% invested in Vanguard ETFs.
Wiki This signature message sponsored by sscritic: Learn to fish.
bogling
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by bogling »

livesoft wrote: Sat Dec 07, 2024 3:11 pm
HighLonesome wrote: Fri Dec 06, 2024 11:25 am Hi. You didnt ask but I would recommend that you move your money one of the discount brokerages, Vanguard, Fidelity or Schwab. WF has bad juju.
WellsTrade is a superb discount brokerage. Just don't use a WellsFargo Advisor. One can own all the normal ETFs without commissions in their WellsTrade account.

I do not use a MMF in my WellsTrade taxable account which is 100% invested in Vanguard ETFs.
Can currently get $2500 bonus for a 90 day investment if open a premiere checking or convert existing checking account and hold asseets in Wellstrade.

https://accountoffers.wellsfargo.com/premierbonus/
RetiredAL
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by RetiredAL »

Wells Trade --

I currently hold VMRXX - VANGUARD MONEY MARKET FUND

I've previously held TOIXX - FEDERATED HERMES TREASURY OBLIGATIONS FUND
HighLonesome
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by HighLonesome »

livesoft wrote: Sat Dec 07, 2024 3:11 pm
HighLonesome wrote: Fri Dec 06, 2024 11:25 am Hi. You didnt ask but I would recommend that you move your money one of the discount brokerages, Vanguard, Fidelity or Schwab. WF has bad juju.
WellsTrade is a superb discount brokerage. Just don't use a WellsFargo Advisor. One can own all the normal ETFs without commissions in their WellsTrade account.

I do not use a MMF in my WellsTrade taxable account which is 100% invested in Vanguard ETFs.
Thanks for that information. The person that related the WF horror story must have used their non-fiduciary advisor.
Geologist
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by Geologist »

The following appears in all Vanguard prospectuses I've seen (similar language is generally in the prospectus for funds from other fund sponsors):

"Distributions declared in December—if paid to you by the end of January—are taxable as if received in December."

This is true for basically all investment companies (it's an IRS rule), so only pay attention to the declaration date and not when the money shows up in your account.
invest411
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by invest411 »

I had WMPXX at WFA (WellsTrade self directed brokerage) in 2023 and 2024 and the December 2023 dividends were paid on January 2, 2024 and hence not included in 2023 1099-DIV. Hope that helps.
Topic Author
ginahoy
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Re: does anyone own a money market fund at Wells Fargo Advisors?

Post by ginahoy »

invest411 wrote: Sun Dec 08, 2024 1:10 pmI had WMPXX at WFA (WellsTrade self directed brokerage) in 2023 and 2024 and the December 2023 dividends were paid on January 2, 2024 and hence not included in 2023 1099-DIV. Hope that helps.
THANK YOU for confirming how WFA/WT handles this!
Geologist wrote: Sun Dec 08, 2024 1:06 pmThe following appears in all Vanguard prospectuses I've seen (similar language is generally in the prospectus for funds from other fund sponsors):
"Distributions declared in December—if paid to you by the end of January—are taxable as if received in December."

This is true for basically all investment companies (it's an IRS rule), so only pay attention to the declaration date and not when the money shows up in your account.
I plan to go with what's on the 1099... I'm more likely to get pinged by the IRS if I don't.
bongo
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Re: does anyone own a money market fund at Wells Fargo Advisors? (SOLVED)

Post by bongo »

I've had FTIXX since Apr 2023 and the Jan 2, 2024 payment was included on last year's 1099 (# of payments is 9). Makes sense since a MMF is a mutual fund and that's how spill-over divs are handled. Maybe invest411 should double-check theirs.
Topic Author
ginahoy
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Re: does anyone own a money market fund at Wells Fargo Advisors? (SOLVED)

Post by ginahoy »

bongo wrote: Sun Dec 08, 2024 2:23 pmI've had FTIXX since Apr 2023 and the Jan 2, 2024 payment was included on last year's 1099 (# of payments is 9).
Held at WFA?
bongo
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Re: does anyone own a money market fund at Wells Fargo Advisors? (SOLVED)

Post by bongo »

yeah, although the same is true for VUSXX held at etrade. Etrade's 1099 is a little more clear though and lists each month's div, instead of just the count and total. I think brokers don't have a choice and are required to include anything considered a "spillover dividend" in the prev 1099.
invest411
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Re: does anyone own a money market fund at Wells Fargo Advisors? (SOLVED)

Post by invest411 »

bongo wrote: Sun Dec 08, 2024 2:23 pm I've had FTIXX since Apr 2023 and the Jan 2, 2024 payment was included on last year's 1099 (# of payments is 9). Makes sense since a MMF is a mutual fund and that's how spill-over divs are handled. Maybe invest411 should double-check theirs.
I bought WMPXX in 5/2023 and the 2023 1099 said # of payments 8. So, bongo may be correct in that the dividend paid in January 2024 is included in the 2023 1099. ginahoy - Sorry for overlooking that.
Topic Author
ginahoy
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Re: does anyone own a money market fund at Wells Fargo Advisors? (SOLVED)

Post by ginahoy »

invest411 wrote: Mon Dec 30, 2024 11:08 pmI bought WMPXX in 5/2023 and the 2023 1099 said # of payments 8. So, bongo may be correct in that the dividend paid in January 2024 is included in the 2023 1099. ginahoy - Sorry for overlooking that.
Thanks for clarifying your situation! I'll update this thread once I receive my 1099 in a few weeks, but sounds like we have the answer now.
Topic Author
ginahoy
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Re: does anyone own a money market fund at Wells Fargo Advisors? (SOLVED)

Post by ginahoy »

As expected, the dividends for December were posted to my account on January 2 but were reported on last year's 1099.

It's sad that neither Wells Trade or Allspring could definitively explain this when I called. Note that since December dividends weren't paid until January 2, they were included on my January stmt, yet they're excluded from the Income Summary near the top of the statement. In fact, there's a footnote under that section:
Certain distributions made in the current year are reported as prior year income according to IRS regulations. This may cause a difference between Cash Flow and Income Summary totals.
Had I noticed this on previous statements, it might have tipped me off as to how WT handles this.

One thing that irks me is that by posting dividends on the first business day of the following month (I confirmed this is under WT's control, not the fund itself), I lose up to 4 days interest on the dividend payment. Moreover, I don't believe interest is earned on the reinvest dividend shares on the day of posting. I doubt very many people realize this (the math is tricky to verify). I'm not sure if this is unique to WT but I verified that reinvest shares on Schwab MM funds earn interest on the posting day or next business day if EOM is on a w/e or holiday.

For example, if the end of the month is on a Friday and Monday is a holiday, the reinvest dividend would post at WT on Tuesday but won't earn interest until Wednesday, whereas MM dividends at Schwab would post AND earn interest on Friday. That's FIVE days more than WT in this example!

Granted, interest earned on dividends is small potatoes, and I'm happy to continue holding my cash in WPMXX at WT as it outperforms SWVXX by 20+ basis points. But imagine how much WT reaps from that accounting nuance on the totality of all MM funds it holds!
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