Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Stop reinvest dividends on taxable?
Old 01-14-2023, 03:00 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Aug 2017
Posts: 1,029
Stop reinvest dividends on taxable?

I am 99% sure I have seen advice here not to reinvest dividends in taxable when no longer working.

I am being laid off and thinking it would give me an perhaps an extra $4K per year income if I took them instead.

Any disadvantages to this?
badatmath is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-14-2023, 03:11 PM   #2
Thinks s/he gets paid by the post
euro's Avatar
 
Join Date: Oct 2015
Posts: 2,127
Quote:
Originally Posted by badatmath View Post
I am 99% sure I have seen advice here not to reinvest dividends in taxable when no longer working.

I am being laid off and thinking it would give me an perhaps an extra $4K per year income if I took them instead.

Any disadvantages to this?
I quit reinvesting at retirement but mainly because I was tired of keeping track of it all. Back in the 90-ies, I had DRIP accounts for about 50 stocks and kept track with Quicken. However, over time, I got disenchanted with Quicken, so when I dropped it, I also quit re-investing dividends.
euro is offline   Reply With Quote
Old 01-14-2023, 03:16 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Aug 2017
Posts: 1,029
Oh well I have exactly 1 account . . .

Just trying to figure out how to live without 401k for awhile.
badatmath is online now   Reply With Quote
Old 01-14-2023, 03:24 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 9,084
I wouldn't do it for the same reason @euro states: Too much complexity. Lots of tiny positions, each with a different cost basis, will be a pain when/if you want to sell part of the position.

Re "extra" $4k income, the debate periodically rages here, but bottom line is it is not really "extra." Good video here: French on Dividends: https://famafrench.dimensional.com/v...dividends.aspx
__________________
Ignoramus et ignorabimus
OldShooter is offline   Reply With Quote
Old 01-14-2023, 03:34 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Aug 2017
Posts: 1,029
Thanks OldShooter. So much for that plan. I may have to go find a job. . . . IDK
badatmath is online now   Reply With Quote
Old 01-14-2023, 06:11 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Jul 2013
Posts: 1,607
I see no point in reinvesting distributions in a taxable account whether working or not.
mrfeh is offline   Reply With Quote
Old 01-14-2023, 06:12 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2013
Posts: 1,607
Quote:
Originally Posted by badatmath View Post
Thanks OldShooter. So much for that plan. I may have to go find a job. . . . IDK
Yes, definitely do not consider it "extra" or "free". Is is simply part of your portfolio's return.
mrfeh is offline   Reply With Quote
Old 01-14-2023, 06:27 PM   #8
Confused about dryer sheets
 
Join Date: Mar 2021
Posts: 6
I had same issue with a lot of small positions that you have to track. Now I have them all go to cash. Much easier to manage.
madman is offline   Reply With Quote
Old 01-14-2023, 06:34 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2016
Posts: 6,312
The record keeping aspect doesn’t make sense to me if you use something like TurboTax. Brokerages like Fidelity let you chose specific lots so you can also be tax efficient as well if you want to sell.

Keep in mind dividends are not truly income, but a taxation event where a portion of your holding is a forced sale so you can be taxed on it. A dividend is already reflected in your account value. So it’s not “extra” income.
COcheesehead is offline   Reply With Quote
Old 01-14-2023, 06:37 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Aug 2017
Posts: 1,029
Truth is I do not really understand this stupid fund and kind of went to get rid of it. But I thought well at least I could stop buying more. And even if I did get rid of it I'm not really bright enough to put it elsewhere.
badatmath is online now   Reply With Quote
Old 01-14-2023, 06:38 PM   #11
Thinks s/he gets paid by the post
PaunchyPirate's Avatar
 
Join Date: Feb 2014
Location: NW Pennsylvania
Posts: 1,326
If you find that you need to pull from your investments to pay your bills, then the first move in that direction might as well be taking the dividends as cash and spending that. It’s the same as doing a withdrawal from that account.

I am not currently withdrawing from my investments. So I automatically reinvest them in my IRA accounts. I do not have them reinvested in my taxable account. Instead, I manually invest them in whatever investment is the most out of line in my desired asset allocation. Sometimes that is back into the investment they came from. Other times it is not.

When I need to pull from my investments again, I will start having the distributions sent to my checking account.
PaunchyPirate is online now   Reply With Quote
Old 01-14-2023, 06:41 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2016
Posts: 6,312
Quote:
Originally Posted by badatmath View Post
Truth is I do not really understand this stupid fund and kind of went to get rid of it. But I thought well at least I could stop buying more. And even if I did get rid of it I'm not really bright enough to put it elsewhere.
What’s the fund?
COcheesehead is offline   Reply With Quote
Old 01-14-2023, 06:46 PM   #13
Recycles dryer sheets
 
Join Date: Dec 2013
Location: Moscow, TX
Posts: 63
My reason for not reinvesting div is having a wash sale occur if I sell all the position. I live and learn.
arbeadub is offline   Reply With Quote
Old 01-14-2023, 06:48 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2016
Posts: 6,312
Quote:
Originally Posted by arbeadub View Post
My reason for not reinvesting div is having a wash sale occur if I sell all the position. I live and learn.
It would just be a wash on the lots that have a loss purchased within the 60 day window, not the whole position. No loss, no wash.
COcheesehead is offline   Reply With Quote
Old 01-14-2023, 06:55 PM   #15
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 3,914
The other thing is you pay taxes on dividends in taxable account, whether you reinvest or not. So might as well just consider the dividends as part of your income stream once you are retired. The dividends already increase your taxable income, so might as well just take them in cash. At least that is my $.02
__________________
I used to have a handle on life, but it broke.
You can't spend yourself to prosperity.

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is online now   Reply With Quote
Old 01-14-2023, 07:00 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2016
Posts: 6,312
Quote:
Originally Posted by 38Chevy454 View Post
The other thing is you pay taxes on dividends in taxable account, whether you reinvest or not. So might as well just consider the dividends as part of your income stream once you are retired. The dividends already increase your taxable income, so might as well just take them in cash. At least that is my $.02
A married, filing jointly couple, can receive up to $83,350 in qualified dividends and have them taxed at the 0% rate.
COcheesehead is offline   Reply With Quote
Old 01-14-2023, 07:09 PM   #17
Thinks s/he gets paid by the post
38Chevy454's Avatar
 
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 3,914
Quote:
Originally Posted by COcheesehead View Post
A married, filing jointly couple, can receive up to $83,350 in qualified dividends and have them taxed at the 0% rate.
Good point, however with Roth conversions and other income, they are taxable to me and I forget about the non tax limits. I do DRIP on my pretax accounts.
__________________
I used to have a handle on life, but it broke.
You can't spend yourself to prosperity.

Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
38Chevy454 is online now   Reply With Quote
Old 01-14-2023, 07:32 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 8,782
Shortly after I retired I started auto transferring dividends into my checking account. Yeah, income is needed.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is offline   Reply With Quote
Old 01-14-2023, 07:37 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Jul 2011
Location: Reading, MA
Posts: 1,050
Quote:
Originally Posted by arbeadub View Post
My reason for not reinvesting div is having a wash sale occur if I sell all the position. I live and learn.
Basically correct, especially recently with a lot of TLH opportunities.
Best not to reinvest dividends in any of your accounts depending on similarity to you taxable account holdings...
TheWizard is offline   Reply With Quote
Old 01-14-2023, 07:38 PM   #20
Recycles dryer sheets
Graybeard's Avatar
 
Join Date: Aug 2018
Posts: 464
This topic confuses me. I always have reinvested dividends and capital gains in taxable, IRA and Roth accounts. I do not need the money for expenses because I almost always have money left over from my pension and SS every month. By reinvesting, it grows my shares. The only reason I would have to not reinvest would be to TLH. I can see taking them as cash if you do withdrawals for monthly living expenses but if you don't need the money and you are not going to TLH (I have about 3 years of losses to work off starting with the 2022 tax year) then why not just reinvest them?
Graybeard is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Reinvest Dividends and Capital Gains? mountainsoft FIRE and Money 13 02-10-2022 09:17 AM
Dividends - Reinvest or transfer to a Savings Account rkser FIRE and Money 41 06-28-2019 05:02 PM
Reinvest Dividends or no? Shabby FIRE and Money 34 02-05-2019 03:57 PM
Do you spend dividends in taxable accounts or reinvest Quantum Sufficit FIRE and Money 100 12-17-2015 06:27 PM
Dividends and CG: Reinvest or Distribute? Looking4Ward FIRE and Money 23 05-18-2014 12:22 PM

» Quick Links

 
All times are GMT -6. The time now is 07:15 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.