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Those who've been here long enough to recall Fund Alarm will recall this turn of a phrase. Some of my own funds are paying today. PRWCX and PRDSX are among them: PRWCX $1.82/share PRDSX $1.635/share. (You gonna eat that bear claw?)
I make my annual (taxable) PRWCX contribution on Monday, when it trades ex-div. This year will be twice as big b/c I just don't see other tempting opportunites out there so why not stick with what works and a manager you trust.
A further look: TRVLX (TRP Value, because the money I watch for a colleague includes that fund.) TRVLX paid $0.64 cents, but it was (strangely?) all INCOME, no cap gains. I wonder why?
@rforno, something I've heard you or others do before, but why does it matter waiting to buy until after distributions were distributed. Isn't it just a balancing act for the fund? I don't see the positive effect buying before or after distributions, or am I missing something?
@Crash: From Bee. What You Need to Know About Capital Gains Distributions
...Yes. I'm aware. I still have not taken a penny from my Trad. IRA in TRP. So, no tax due, yet. All my TRP stuff is Rollover (Trad, not Roth) IRA. Thanks.
MikeM: I don't want to 'buy the distribution' and incur a further tax cost .. a lot of people rush to buy OEFs at the end of the year as they rebalance (I don't rebalance) and then get surprised when the fund which they just bought sends them a 1099 with potentially large gains in February. So by waiting until it pays out, I am avoiding increasing my tax costs this year. The ex-day is easy: as estimates on my funds are announced, I mark my calendar and put my buy orders in that day.
@rforno, something I've heard you or others do before, but why does it matter waiting to buy until after distributions were distributed. Isn't it just a balancing act for the fund? I don't see the positive effect buying before or after distributions, or am I missing something?
Yes, OEFs are different. And also rather confusing. When purchased through a brokerage they tend to settle one day after trade (not T+2, and not same day). But when purchased directly from a fund company, they seem to settle "immediately" (end of day).
Then there are the oddball funds that take more than a day to settle at brokerages. And some other funds that may have same day settlement at a brokerage, but only if you sell them early in the day. (I'm currently dumping a MMF at Merrill that settles same day if I place the order before 1:45PM.)
What seems to be the case is that regardless of when the settlement date is for an OEF, the ex-date is generally the first trading day after the record date.
TRP was great about updating PRWCX to reflect true value (Saturday morning). Still waiting for laggard Invesco to do the same for one that donutted there Friday. Not that it makes one iota of difference to me - and perhaps most of us.
It may, of course, have some impact on your year-end balance and therefore some effect on your RMD for 2020.
When realized gains in a fund exceed its realized losses, they must eventually be distributed to the fund’s shareholders — typically at year-end. Should you own such shares in a taxable account (and only in a taxable account), you must pay taxes on some combination of short- and long-term capital gains, and on qualified and non-qualified dividends. These estimated gains will be distributed this coming December.
To reiterate, fund distributions are a non-event when held in tax-deferred accounts such as an IRA or 401(k).
Moreover, you can never make money from “buying” a distribution because the fund’s NAV declines by the same amount as the distribution itself.
in a taxable account However, if in the next few weeks you’re looking to buy a fund that’s going ex-dividend, you should probably wait until after the payout.
Our rule of thumb on the timing is one week for each percentage point of the estimate.
Comments
I make my annual (taxable) PRWCX contribution on Monday, when it trades ex-div. This year will be twice as big b/c I just don't see other tempting opportunites out there so why not stick with what works and a manager you trust.
Group B: record date Dec 12 (yesterday), ex-div Dec 13.
Yeah I know, I wasn't able to get my order in today -- the usual end of semester chaos.
It’s not hard to spot the pastry after-the-fact. When a fund falls 5-6% in one day, that’s a good clue.
https://stockcharts.com/h-sc/ui?s=PRWAX&p=D&b=5&g=0&id=p74874272899
What You Need to Know About Capital Gains Distributions
MikeM: I don't want to 'buy the distribution' and incur a further tax cost .. a lot of people rush to buy OEFs at the end of the year as they rebalance (I don't rebalance) and then get surprised when the fund which they just bought sends them a 1099 with potentially large gains in February. So by waiting until it pays out, I am avoiding increasing my tax costs this year. The ex-day is easy: as estimates on my funds are announced, I mark my calendar and put my buy orders in that day.
Then there are the oddball funds that take more than a day to settle at brokerages. And some other funds that may have same day settlement at a brokerage, but only if you sell them early in the day. (I'm currently dumping a MMF at Merrill that settles same day if I place the order before 1:45PM.)
What seems to be the case is that regardless of when the settlement date is for an OEF, the ex-date is generally the first trading day after the record date.
It may, of course, have some impact on your year-end balance and therefore some effect on your RMD for 2020.
When realized gains in a fund exceed its realized losses, they must eventually be distributed to the fund’s shareholders — typically at year-end. Should you own such shares in a taxable account (and only in a taxable account), you must pay taxes on some combination of short- and long-term capital gains, and on qualified and non-qualified dividends. These estimated gains will be distributed this coming December.
To reiterate, fund distributions are a non-event when held in tax-deferred accounts such as an IRA or 401(k).
Moreover, you can never make money from “buying” a distribution because the fund’s NAV declines by the same amount as the distribution itself.
in a taxable account
However, if in the next few weeks you’re looking to buy a fund that’s going ex-dividend, you should probably wait until after the payout.
Our rule of thumb on the timing is one week for each percentage point of the estimate.