The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: catccc on January 14, 2022, 12:48:29 PM
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I made a really, really big mistake. I just noticed $17K sitting in my settlement fund in my Roth IRA account. IDK why it was ever set this way, but my Roth IRA and my husband's Roth IRA have been sending dividends and capital gains to the settlement fund instead of reinvesting. I'm definitely kicking myself over this! I'm not going to do the math on what I've truly missed out on in terms of earnings, I'll feel terrible!
For DH it was only $7K, but that still sucks that we've essentially had $24K sitting on the sidelines over all this time. In our Roths!!!
I guess I never looked at it because I just look at the balances and holdings. The settlement fund isn't listed with the holdings, it's above them. (Vanguard website layout.)
Just a PSA to go check yours. Double check or triple check! I would have sworn I was reinvesting all this time. All my other accounts (traditional IRA, rollover IRA, taxable brokerage) had the proper elections.
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Generally good advice!
An exception can be if you have funds in your taxable account that may offer loss-harvesting opportunities in the future, you may want to turn off dividend reinvestment for that fund in all of your accounts. If you harvest losses in your taxable account, and a few weeks later (or earlier) you reinvest dividends from that same index fund in your IRA, you've just created a wash sale.