Author Topic: The funds offered in my 401k don't pay dividends?  (Read 2689 times)

Mogadishu

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The funds offered in my 401k don't pay dividends?
« on: March 30, 2016, 09:28:03 AM »
Hello All,

Long time lurker.  But registered because I am perplexed by this.
I work for a large company.  I am invested in index funds within our companies 401k plan through Fidelity.  The index funds I have to choose from are managed by BlackRock.  It says the fund is a collective investment trust. 
None of the funds pay dividends.  I called Fidelity but they could not explain where the dividends are going so I am asking a much smarter community to help explain to me how this fund works?  I know they are getting dividends but have no idea how they are given back to me.  Im assuming in share price somehow but it seems very strange.

Thank you for any help

forummm

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Re: The funds offered in my 401k don't pay dividends?
« Reply #1 on: March 30, 2016, 10:07:28 AM »
Sometimes the funds in tax advantaged accounts don't pay dividends--they reinvest them. So after the firms pay dividends to BlackRock you still own X number of fund shares, but the shares are more valuable because BlackRock used the dividends to buy more shares of the firms in the index. My employer does this and I think BlackRock manages the index funds for my account.

Mogadishu

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Re: The funds offered in my 401k don't pay dividends?
« Reply #2 on: March 30, 2016, 10:42:21 AM »
Thank you Forummm,  Your answer eases my nerves I thought I was being swindled somehow.

JetBlast

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Re: The funds offered in my 401k don't pay dividends?
« Reply #3 on: March 30, 2016, 01:25:56 PM »
My 401k index funds are the same and they are CITs managed by BlackRock. It is buried in the plan documentation that the dividends from shares held are reinvested and not paid out. I remember it took me a while to find the relevant passage when I went looking a couple years ago.

Heckler

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Re: The funds offered in my 401k don't pay dividends?
« Reply #4 on: March 30, 2016, 03:31:37 PM »
My work's Sunlife index funds which are wrappers over Blackrock S&P500 and EAFE indexes are the same.  No dividends, but SL rep explained the asstes dividends are reinvested. 

Just another reason I pull them out annually to my self directed Vanguard and ishares ETFs.

JR

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Re: The funds offered in my 401k don't pay dividends?
« Reply #5 on: March 31, 2016, 06:02:20 AM »
The SSGA funds in my 401k do the same.