Setting up automatic ACH transfers of dividends/interest?

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Topic Author
GettingComfortable
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Setting up automatic ACH transfers of dividends/interest?

Post by GettingComfortable »

I'm inheriting some money and putting it in insured MM accounts at 0.6% or higher. These funds are in addition to my retirement, etc., so, for lack of a better term, these inherited funds are "play money."

I want to invest them in ETFs and mutual funds, and want the dividends and interest earned to be transferred automatically monthly to my spending account. In the past, for new mutual funds, I would have just applied on paper and said to reinvest the capital gains, but give the bank routing and account numbers for the dividends and interest. However, now Vanguard, etc., seem to want to do things electronically only and with a brokerage account (would be necessary for the ETFs), and I'm not reading on their sites how to set up auto-transfers out. They, of course, do give lots of info on making transfers in.

After doing a number of searches here and on the rest of the WWW, this user said he was successful at setting up similar transfers out, via Fidelity:

viewtopic.php?p=4817176#p4817176

Anyone else been able to do so too, setting this up online? (Automatic ~monthly free ACH transfers of variable dividends and interest from ETFs, etc. to your bank account.) Preferably with Vanguard, but if not then with what other low-cost firms? And how?

Thanks in advance.
Last edited by GettingComfortable on Mon Mar 29, 2021 9:09 pm, edited 1 time in total.
PaunchyPirate
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by PaunchyPirate »

In my Vanguard brokerage account, I can only do this with Vanguard mutual funds. It works fine. However, I hold a Vanguard ETF and it will not let me direct those dividends to my bank account. Likewise, it won’t let me for non- Vanguard ETFs or for individual stocks that I hold. I have to direct those dividends to my settlement account and then periodically move them to my checking account myself by requesting a transfer.
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Artsdoctor
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by Artsdoctor »

PaunchyPirate wrote: Mon Mar 29, 2021 7:47 pm In my Vanguard brokerage account, I can only do this with Vanguard mutual funds. It works fine. However, I hold a Vanguard ETF and it will not let me direct those dividends to my bank account. Likewise, it won’t let me for non- Vanguard ETFs or for individual stocks that I hold. I have to direct those dividends to my settlement account and then periodically move them to my checking account myself by requesting a transfer.
I did not realize that Vanguard would only allow automatic transfers of dividends from their own mutual funds. I'm trying to figure out why they're so restrictive, especially since there's been a gradual push away from mutual funds and to their ETFs in general. I can tell you that Fidelity will automating transfer all dividends and interest from all investments into an account of your choosing on a designated day of the month.
dbr
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by dbr »

This is totally straightforward at Fidelity. I have all my dividends automatically deposited to my checking account.

I would be surprised at any normal broker not allowing this to be set up online.
greybus
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by greybus »

You can direct Schwab to ACH any cash (interest, dividends) that show up in your brokerage account to an outside bank but I was not able to get this done online. It was pretty hard to find the info and there are multiple versions of forms so it's hard to know which one to use, etc. Plus, you have to do this via a paper form (or a PDF that you sign and email to them), and even then I stil had to speak to someone over the phone to complete and verify the info on the form. Once it is set up, you cannot make any changes via the online website, rather you have to call them or send another form.

Here is one of the many PDF forms, you can get an idea of what they offer by looking at the different parts. Look at Section 5
Choose the "All income Plan" or the Flexible Income Plan, and choose either as accrued, or last business day of the month.
https://www.schwab.com/public/file/P-46 ... ADA_2.pdf/

I think this is the most recent Terms and Conditions, but it may not be the most up to date
https://www.schwab.com/legal/schwab-mon ... conditions
Last edited by greybus on Mon Mar 29, 2021 8:05 pm, edited 1 time in total.
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HueyLD
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by HueyLD »

Artsdoctor wrote: Mon Mar 29, 2021 7:53 pm I can tell you that Fidelity will automating transfer all dividends and interest from all investments into an account of your choosing on a designated day of the month.
How do you do that? Can that account be an external bank account?
dbr
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by dbr »

HueyLD wrote: Mon Mar 29, 2021 8:04 pm
Artsdoctor wrote: Mon Mar 29, 2021 7:53 pm I can tell you that Fidelity will automating transfer all dividends and interest from all investments into an account of your choosing on a designated day of the month.
How do you do that? Can that account be an external bank account?
Maybe I am imagining it, but it seems it is just a setting on line. I don't think I called them about it. Keep in mind the ACH account settings would already be the bank account there for transferring money into and out of the account anyway. For us it is just our checking account at the bank down the street. All this does is avoid money getting dumped into the settlement fund and having to go get it by hand.

The day I have selected is the setting that any money distributed by any investment is transferred the day the distribution posts, which is all kinds of different days of the month depending.
RubyTuesday
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by RubyTuesday »

At Vanguard I have dividends deposited to settlement account. Then from there I use automatic transfers to move money monthly to bank account. I have it set for $X,000/month.

When there is less than $X,000 in settlement it transfers the entire balance. So if you truly want all the dividends, perhaps you can do all of the above with X set to very high number (more than you expect to receive monthly.
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RAchip
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by RAchip »

Where is there an “insured MM” that pays 0.6% or higher?
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HueyLD
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by HueyLD »

dbr wrote: Mon Mar 29, 2021 8:08 pm
HueyLD wrote: Mon Mar 29, 2021 8:04 pm
Artsdoctor wrote: Mon Mar 29, 2021 7:53 pm I can tell you that Fidelity will automating transfer all dividends and interest from all investments into an account of your choosing on a designated day of the month.
How do you do that? Can that account be an external bank account?
Maybe I am imagining it, but it seems it is just a setting on line. I don't think I called them about it. Keep in mind the ACH account settings would already be the bank account there for transferring money into and out of the account anyway. For us it is just our checking account at the bank down the street. All this does is avoid money getting dumped into the settlement fund and having to go get it by hand.

The day I have selected is the setting that any money distributed by any investment is transferred the day the distribution posts, which is all kinds of different days of the month depending.
When I went to Account Features and selected Dividends and Capital Gains, my only two choices are Reinvestment or Deposit into Core Account. There was not an option to transfer to an external linked bank account.
livesoft
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by livesoft »

HueyLD wrote: Mon Mar 29, 2021 8:04 pm
Artsdoctor wrote: Mon Mar 29, 2021 7:53 pm I can tell you that Fidelity will automating transfer all dividends and interest from all investments into an account of your choosing on a designated day of the month.
How do you do that? Can that account be an external bank account?
Yes, the account can be an external bank account. I do this as already described in a previous link on the forum somewhere.

I think it goes like this: I set up my settlement account to transfer daily to my external banking account. If the settlement account balance is $0.00, then no transfer will take place. I have my dividends and interest go to my settlement account. The net result is that the day after money appears in the settlement account (day after payable date), the money is sent to my external checking account. That maintains my settlement account balance at $0.00. This OK with me because I do not make trades in my Fidelity account ever.
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Topic Author
GettingComfortable
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by GettingComfortable »

RAchip wrote: Mon Mar 29, 2021 8:11 pm Where is there an “insured MM” that pays 0.6% or higher?
One is a well-known online bank, another is a regional institution that, by invitation, has high yield MM accounts.

Don't just rely on Bankrate dot com, etc. -- they promote banks that pay them. :annoyed
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GettingComfortable
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by GettingComfortable »

Thanks all, so far. Working toward the answer(s) of ???

1) Vanguard, if mutual fund(s) but not ETF(s)

2) Fidelity may be able to do both.

Any others?

I don't like getting the run-around, so one that's easy to setup online is likely to get the brass ring!
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by AlohaJoe »

Artsdoctor wrote: Mon Mar 29, 2021 7:53 pm I'm trying to figure out why they're so restrictive, especially since there's been a gradual push away from mutual funds and to their ETFs in general.
Probably because there are millions of Bogleheads who will complain about Vanguard's shortcomings but never actually switch to a competitor, so there's little pressure to improve. Just look at the threads; people act like changing brokers is one of the biggest decisions of their lives.
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Cheez-It Guy
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by Cheez-It Guy »

If you are OK with the Vanguard arrangement for mutual funds only, or the workaround with automatic monthly withdrawals, these are very easy to set up online. The prior is just a holding-level dividend and capital gains option.
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Artsdoctor
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by Artsdoctor »

AlohaJoe wrote: Mon Mar 29, 2021 9:41 pm
Artsdoctor wrote: Mon Mar 29, 2021 7:53 pm I'm trying to figure out why they're so restrictive, especially since there's been a gradual push away from mutual funds and to their ETFs in general.
Probably because there are millions of Bogleheads who will complain about Vanguard's shortcomings but never actually switch to a competitor, so there's little pressure to improve. Just look at the threads; people act like changing brokers is one of the biggest decisions of their lives.
Actually, it's because of Vanguard's restrictive policies that I have moved assets from Vanguard to Fidelity. I started this process a few years ago and the differences in flexibility are significant.
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by dbr »

HueyLD wrote: Mon Mar 29, 2021 8:14 pm
dbr wrote: Mon Mar 29, 2021 8:08 pm
HueyLD wrote: Mon Mar 29, 2021 8:04 pm
Artsdoctor wrote: Mon Mar 29, 2021 7:53 pm I can tell you that Fidelity will automating transfer all dividends and interest from all investments into an account of your choosing on a designated day of the month.
How do you do that? Can that account be an external bank account?
Maybe I am imagining it, but it seems it is just a setting on line. I don't think I called them about it. Keep in mind the ACH account settings would already be the bank account there for transferring money into and out of the account anyway. For us it is just our checking account at the bank down the street. All this does is avoid money getting dumped into the settlement fund and having to go get it by hand.

The day I have selected is the setting that any money distributed by any investment is transferred the day the distribution posts, which is all kinds of different days of the month depending.
When I went to Account Features and selected Dividends and Capital Gains, my only two choices are Reinvestment or Deposit into Core Account. There was not an option to transfer to an external linked bank account.
Well, I am set up to have all distributions paid directly to my checking account the day they post. Perhaps you could call and they will find the setting for you. My settlement accounts at Fidelity are at zero balance unless I suppose I sold something and then I would have to see if the proceeds also can be directed to checking. I mean an account at an external bank. The deposit is labelled "Electronic Deposit Fid Bkg Svc Llc"
Last edited by dbr on Tue Mar 30, 2021 8:34 am, edited 1 time in total.
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Artsdoctor
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by Artsdoctor »

HueyLD wrote: Mon Mar 29, 2021 8:14 pm
dbr wrote: Mon Mar 29, 2021 8:08 pm
HueyLD wrote: Mon Mar 29, 2021 8:04 pm
Artsdoctor wrote: Mon Mar 29, 2021 7:53 pm I can tell you that Fidelity will automating transfer all dividends and interest from all investments into an account of your choosing on a designated day of the month.
How do you do that? Can that account be an external bank account?
Maybe I am imagining it, but it seems it is just a setting on line. I don't think I called them about it. Keep in mind the ACH account settings would already be the bank account there for transferring money into and out of the account anyway. For us it is just our checking account at the bank down the street. All this does is avoid money getting dumped into the settlement fund and having to go get it by hand.

The day I have selected is the setting that any money distributed by any investment is transferred the day the distribution posts, which is all kinds of different days of the month depending.
When I went to Account Features and selected Dividends and Capital Gains, my only two choices are Reinvestment or Deposit into Core Account. There was not an option to transfer to an external linked bank account.
I should back up and clarify.

At this point, I use Fidelity for most of cash flow needs so I don't even have another banking/checking account. Vanguard is for investments but I found that they had become so difficult to deal with that I started moving more assets to Fidelity since I was managing several trust accounts. Transferring among trust accounts at Vanguard had become onerous and now that I've dealt with Fidelity, the comparisons are very striking.

I have a brokerage account at Fidelity from which all bills are paid. All of the trust accounts at Fidelity dump interest and dividends automatically into that brokerage account on the 5th day of each month. I have not tried to transfer assets automatically from Fidelity to an outside bank because I don't have one. I'm sorry I didn't describe it in more detail above.
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GettingComfortable
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by GettingComfortable »

FYI update, on my progress:

After-tax brokerage account opened at VG. First purchases of a VG fund and a VG ETF successful in mid-April, after sweeping in my initial investing money and waiting for a week for them to clear.

Set the purchased VG fund's int/div to auto-transfer to hub bank account, and it did so correctly in early May although with delayed reporting of the source and amount (initially the website incorrectly reported it as a sweep out of my small remaining balance in the FMMF settlement fund, so showed a negative balance!). The fund's int/div sweep-out does not show, at least not yet, as having passed through the settlement fund on its way to my bank account; maybe it doesn't?

The ETF's div hasn't been paid yet, but FMMF's tiny one did and was appropriately reinvested in FMMF.

There was not an option, on the website, to have the ETF's div auto-sweep to the external hub bank account (old website version still in effect), so will either have to setup the auto-sweep out of the FMMF account as suggested above by PITA phonecall (will have to wait many months to do so as my to-invest monies come in and my purchases are complete, otherwise VG will sweep back out my purchasing-monies that I swept in!). However, maybe if/when a full new VG website is visible to me they will have the option of having ETFs' divs/int auto-sweep out available. Time will tell ...
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by sycamore »

GettingComfortable wrote: Thu May 06, 2021 10:25 am There was not an option, on the website, to have the ETF's div auto-sweep to the external hub bank account (old website version still in effect),
As far as I know, there is no option to sweep ETF dividends or CGs to a bank account. If you go to My Accounts > Profile & Account settings > Holding level dividend and capital gain elections, and then click on "Change Election" for one of the accounts, the next page has various notes. One of them is:
You can only choose bank transfer or check for Vanguard mutual funds.
I think that's just a shortcoming with Vanguard Brokerage Services, doesn't matter that the page has the old or new style or website version.

Maybe someday they'll add support for "Send me a check" or "Transfer to a bank account" with ETFs. I don't think it's an issue with the website version, it's more of a back-office limitation. I take that back: with Vanguard, it's probably a problem both with their website and their back-office :(
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by tfb »

HueyLD wrote: Mon Mar 29, 2021 8:14 pm When I went to Account Features and selected Dividends and Capital Gains, my only two choices are Reinvestment or Deposit into Core Account. There was not an option to transfer to an external linked bank account.
In case you're still looking to withdraw dividends and capital gains automatically from Fidelity to an external bank account, first set your choice to Deposit into Core Account above, and then Account Features -> Payments and Transfers -> Automatic Withdrawals. You can create an automatic withdrawal plan to withdraw earnings daily.
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HueyLD
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by HueyLD »

Thank you Harry.
adherenceEnergy
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Re: Setting up automatic ACH transfers of dividends/interest?

Post by adherenceEnergy »

sycamore wrote: Thu May 06, 2021 12:12 pm As far as I know, there is no option to sweep ETF dividends or CGs to a bank account. If you go to My Accounts > Profile & Account settings > Holding level dividend and capital gain elections, and then click on "Change Election" for one of the accounts, the next page has various notes.
An indirect way is to first make sure dividend & capital gain distributions to get deposited into your settlement fund. Next go to "my accounts" > "profile and accounts settings" > "automatic withdrawal" > "add automatic transaction"

Then pick move money to "a bank account", frequency "every month" > ... > withdrawal from money market > then pick an amount more than you get from dividend distributions. If the amount is more than the dividends, they just withdrawal whatever is in there. This isn't perfect, but if you pick the data right (after dividends usually get distributed), you should get them pretty shortly.
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