Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

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dcop
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Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by dcop »

I did the Brokerage Upgrade on a IRA rollover account to the new platform that is required to be done by mid-July. It all went well. However I received a small divided for my VWEAX and VWETX (high yield bonds) during the upgrade. Would anyone familiar with the upgrade have any idea why? I'll call if I need to but but wanted to run it by here incase it's an obvious reason. TIA
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celia
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by celia »

Both of those funds get monthly dividends near the end of the month. Were they just normal dividends or were the amounts drastically different than usual?
livesoft
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by livesoft »

I'll guess you got an accrued dividend. And dividend accrued since the account change and month-end will be the rest of the monthly dividend when it happens.

In the past, Vanguard clients got a 1099-DIV for the before account and a 1099-DiV for the after account, so next March be prepared for sets of 1099s from the accounts before rushing to file your 2021 income tax return.
Last edited by livesoft on Wed Jun 16, 2021 6:05 pm, edited 1 time in total.
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Topic Author
dcop
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by dcop »

Drastically different, much lower like 75%+. Also the divs for them only pays out on the last day of the month. I also have them in another roll over IRA account that didn't need to be upgraded and they didn't pay anything.
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dcop
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by dcop »

livesoft wrote: Wed Jun 16, 2021 6:04 pm I'll guess you got an accrued dividend. And dividend accrued since the account change and month-end will be the rest of the monthly dividend when it happens.

In the past, Vanguard clients got a 1099-DIV for the before account and a 1099-DiV for the after account, so next March be prepared for sets of 1099s from the accounts before rushing to file your 2021 income tax return.
I was thinking something like that. Weird way to do it for just upgrading their platform.
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by ruud »

dcop wrote: Wed Jun 16, 2021 6:07 pm
livesoft wrote: Wed Jun 16, 2021 6:04 pm I'll guess you got an accrued dividend. And dividend accrued since the account change and month-end will be the rest of the monthly dividend when it happens.

In the past, Vanguard clients got a 1099-DIV for the before account and a 1099-DiV for the after account, so next March be prepared for sets of 1099s from the accounts before rushing to file your 2021 income tax return.
I was thinking something like that. Weird way to do it for just upgrading their platform.
Yes, this is what happened to us too. For any bond funds that have daily accrual dividends (most of them, except some of the newer ones) they distribute the dividends that were accrued in the old account (as if it was a sale) as of the transition date, and at the end of the month you'll get a dividend payment that only covers the time you held the funds in the brokerage account. From that point forward, things are back to normal.
.
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dcop
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by dcop »

Thanx all.
sycamore
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by sycamore »

dcop wrote: Wed Jun 16, 2021 5:57 pm I did the Brokerage Upgrade on a IRA rollover account to the new platform that is required to be done by mid-July...
Just curious, is there a reason why it's required? Who/what said it was required? What would happen if you didn't upgrade?
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dcop
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by dcop »

sycamore wrote: Wed Jun 16, 2021 7:28 pm
dcop wrote: Wed Jun 16, 2021 5:57 pm I did the Brokerage Upgrade on a IRA rollover account to the new platform that is required to be done by mid-July...
Just curious, is there a reason why it's required? Who/what said it was required? What would happen if you didn't upgrade?
Vanguard says. If you dont they will do it on Mid-July but you will need to re-establish some preferences and choose a settlement fund.
Makefile
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by Makefile »

sycamore wrote: Wed Jun 16, 2021 7:28 pm
dcop wrote: Wed Jun 16, 2021 5:57 pm I did the Brokerage Upgrade on a IRA rollover account to the new platform that is required to be done by mid-July...
Just curious, is there a reason why it's required? Who/what said it was required? What would happen if you didn't upgrade?
There was talk on the forum a few days ago about something called a "legacy brokerage account" - not a "mutual fund only account"

viewtopic.php?t=351090
sycamore
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by sycamore »

Makefile wrote: Wed Jun 16, 2021 7:33 pm
sycamore wrote: Wed Jun 16, 2021 7:28 pm
dcop wrote: Wed Jun 16, 2021 5:57 pm I did the Brokerage Upgrade on a IRA rollover account to the new platform that is required to be done by mid-July...
Just curious, is there a reason why it's required? Who/what said it was required? What would happen if you didn't upgrade?
There was talk on the forum a few days ago about something called a "legacy brokerage account" - not a "mutual fund only account"

viewtopic.php?t=351090
Ok, good to know. Thanks!
dcop wrote: Wed Jun 16, 2021 7:32 pm Vanguard says. If you dont they will do it on Mid-July but you will need to re-establish some preferences and choose a settlement fund.
dcop, can you confirm you did upgrade from a legacy brokerage platform to the new brokerage platform?
(as opposed to upgrading from the legacy mutual fund only platform to the new brokerage platform)
Topic Author
dcop
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by dcop »

dcop wrote: Wed Jun 16, 2021 7:32 pm Vanguard says. If you dont they will do it on Mid-July but you will need to re-establish some preferences and choose a settlement fund.
dcop, can you confirm you did upgrade from a legacy brokerage platform to the new brokerage platform?
(as opposed to upgrading from the legacy mutual fund only platform to the new brokerage platform)
Yes for that account. However my Traditional and Roth accounts were mutual fund accounts only and those were/are required to be upgraded too.
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celia
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by celia »

dcop wrote: Wed Jun 16, 2021 6:07 pm
livesoft wrote: Wed Jun 16, 2021 6:04 pm I'll guess you got an accrued dividend. And dividend accrued since the account change and month-end will be the rest of the monthly dividend when it happens.

In the past, Vanguard clients got a 1099-DIV for the before account and a 1099-DiV for the after account, so next March be prepared for sets of 1099s from the accounts before rushing to file your 2021 income tax return.
I was thinking something like that. Weird way to do it for just upgrading their platform.
No, it's not weird if you consider that each account has a different account number. Do you think one of your accounts shouldn't be reported to the IRS?

This is the same thing as if you had changed custodians. Each custodian would give you a new account number that was different than what Vanguard used.
Topic Author
dcop
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by dcop »

dcop wrote: Wed Jun 16, 2021 6:07 pm
I was thinking something like that. Weird way to do it for just upgrading their platform.
No, it's not weird if you consider that each account has a different account number. Do you think one of your accounts shouldn't be reported to the IRS?
This is the same thing as if you had changed custodians. Each custodian would give you a new account number that was different than what Vanguard used.
Nope, account number stayed the same. All transaction history and the like remained static. Nor did I even come remotely close to suggesting it shouldn't be reported to the IRS. No idea why you make that accusation.
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celia
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Re: Recieved Unusual Dividend When Upgrading to new Vanguard Brokerage

Post by celia »

Sorry, I wasn't accusing you of anything. I interpreted the earlier text as you thinking that:
livesoft wrote: In the past, Vanguard clients got a 1099-DIV for the before account and a 1099-DiV for the after account, so next March be prepared for sets of 1099s from the accounts before rushing to file your 2021 income tax return.
was weird. I was saying this quote is not weird and both accounts need to be reported. That's all.

Sorry for the confusion. I guess I wasn't the only one thinking a new account was being created for you.
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