I recently asked my online broker, Schwab, to pay dividends in cash, rather than reinvest them, to provide some funds for some living expenses now that I am ER'ed. The Schwab rep I had on the phone arranged this, and asked whether I wanted capital gain distributions paid in cash also. I said no. He replied that for my mutual funds, that could be done, but that for my ETFs, I had to elect to get paid in cash on neither, or both, dividends and cap gains. I sheepishly said "Okay, pay both in cash then, rather than reinvest them."
Question 1: Can anyone explain why ETFs don't allow you to make separate payment elections on dividends and cap gains? Or is this some Schwab quirk?
Question 2: Is it folly to have cap gains paid out in cash along with dividends, or wiser to reinvest the cap gains instead?
Question 1: Can anyone explain why ETFs don't allow you to make separate payment elections on dividends and cap gains? Or is this some Schwab quirk?
Question 2: Is it folly to have cap gains paid out in cash along with dividends, or wiser to reinvest the cap gains instead?
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