Question about selling index funds:

[CrazyIT]

Actually selling or exchanging Index funds.

Last year I needed to move my 401K into my IRA (both from the same brokerage but different accounts)
I had to first move my 401K funds (all index funds) into my IRA brokerage account (also all index funds but different then the ones in the 401K) so now I have like funds and want to exchange from one total market index fund to another just to consolidate funds.

I noticed the Index funds I own pay a dividend in mid December.

 This seems like a dumb question but what happens to an upcoming dividend when I sell or exchange some of the funds from one index fund to another prior to the dividend payout?   Will I lose out on the dividends if I exchange the funds?  Is timing important here? 
All of this will happen within the IRA Brokerage account.  Don’t plan on withdrawing any or causing a taxable event. 

Seems I could have googled this question but couldn’t find any information relevant?

MMM Experts??

[ATtiny85]

You don't lose anything. The fund drops by the amount of the dividend when the dividend is paid. Net nothing (in tax advantaged).

Consolidate and move on.

[MustacheAndaHalf]

I thought the OP was concerned over bad timing, like this:
(1) you sell before the "record date" for one fund, and do not get a dividend
(2) you buy a new fund after its "record date", and do not get a dividend
(3) the new fund's price drops on the payable date as everyone else gets a dividend

You might look up the index fund (ETF?  mutual fund?) and click "distribution" for details of past dividends.  Most likely, the record date is week(s) from now, giving you time to move between funds.  I can't be more specific without knowing the funds.

[ATtiny85]

Sure, good point M_a_half. I would stay clear by a couple days just to keep from being confused by the various dates. But I got the sense from the OP that it was more about "missing out on the dividend" of the fund they currently own.

OP, let us know. If you give the tickers we (normally all the folks way better and smarter than me) can also look things up.

You could also just wait and get clear of the current and future fund distro dates and not worry about it if these types of details are not interesting and you just wanted to check to make sure you weren't making a silly move.

[CrazyIT]

Both good points and thank you so far. 

I will be the first to admit I have been good at saving and adding to the funds but now close to 4 years of FIRE its time to do some withdrawals and like mentioned consolidations.

Both funds are total stock market index funds.

Exchange from:    One from my old work 401K is FSKAX (This was the only total market available to me in the 401K)
Exchange to:        New one in IRA is FZROX  (zero expense ratio)

I did try and find the "record dates" but could only find the past year dates.  (admittedly didn't want to dig too deep tho)

I did a test exchange with a small amount and found the exchange took place the same day so I think like ATtiny85 mentioned just do it and move on.

In case anyone is interested in what started this here is my post from last year.

https://forum.mrmoneymustache.com/post-fire/unexpected-'rule-of-55'-ending-due-to-401k-terminating/msg3050505/#msg3050505

[MustacheAndaHalf]

I didn't find an announcement of the date of record for either of those funds.
https://www.fidelity.com/mutual-funds/information/distributions#/?table=actuals

Fidelity seems to pick the first or third week of December to pay dividends.  Considering this is the first week of December, I wouldn't do it this week.
https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/31635T708

The goal is to save 0.015% expense ratio and have simpler holdings, correct?  Since you will have a mixture of holdings this month either way, I'd wait for the dividend then exchange into one fund.

[ChpBstrd]

I thought the OP was concerned over bad timing, like this:
(1) you sell before the "record date" for one fund, and do not get a dividend
(2) you buy a new fund after its "record date", and do not get a dividend
(3) the new fund's price drops on the payable date as everyone else gets a dividend

You might look up the index fund (ETF?  mutual fund?) and click "distribution" for details of past dividends.  Most likely, the record date is week(s) from now, giving you time to move between funds.  I can't be more specific without knowing the funds.

Probably just a typo above, but it relates to the OP's question so I'll point it out.

The price would drop on the day after the record date, not the payment date. If, for example, the record date is today, 12/4/2023, and the payment date will be 12/15/2023, you would still get the dividend on 12/15/2023 even if you sold on 12/5/2023. Likewise, the price of the fund would be expected to drop between 12/4/2023 and 12/5/2023 because people buying on the 5th don't get a December dividend anymore. That is, 12/5 is the "ex-dividend date".

In practice, dividends are usually small enough that the effect of dropping on the ex-div date is overwhelmed by whatever direction the market is going that day. So I personally would not worry too much about this. If you missed the December dividend you would also miss the drop on the ex-dividend date. Likewise if you received two dividends in December you would have experienced the drops of two ex-dividend dates. It's a wash.

[MustacheAndaHalf]

I thought the OP was concerned over bad timing, like this:
(1) you sell before the "record date" for one fund, and do not get a dividend
(2) you buy a new fund after its "record date", and do not get a dividend
(3) the new fund's price drops on the payable date as everyone else gets a dividend

You might look up the index fund (ETF?  mutual fund?) and click "distribution" for details of past dividends.  Most likely, the record date is week(s) from now, giving you time to move between funds.  I can't be more specific without knowing the funds.

Probably just a typo above, but it relates to the OP's question so I'll point it out.

The price would drop on the day after the record date, not the payment date. If, for example, the record date is today, 12/4/2023, and the payment date will be 12/15/2023, you would still get the dividend on 12/15/2023 even if you sold on 12/5/2023. Likewise, the price of the fund would be expected to drop between 12/4/2023 and 12/5/2023 because people buying on the 5th don't get a December dividend anymore. That is, 12/5 is the "ex-dividend date".

In practice, dividends are usually small enough that the effect of dropping on the ex-div date is overwhelmed by whatever direction the market is going that day. So I personally would not worry too much about this. If you missed the December dividend you would also miss the drop on the ex-dividend date. Likewise if you received two dividends in December you would have experienced the drops of two ex-dividend dates. It's a wash.

Oops, thanks for the correction.  I mapped the wrong term to ex-dividend date.

"After the ex-dividend date, the share price of a stock usually drops by the amount of the dividend."
https://www.investopedia.com/articles/investing/091015/how-dividends-affect-stock-prices.asp

Fidelity's dates earlier this year were 3 days apart (Apr 14 to 17), so once the date is known I wouldn't expect too long a wait.