"Andrew Koenig" <ark[at]acm.org> writes:
- quote -

With mutual funds, the default option is usually to
reinvest all distributions (both dividends and cap-gains
distributions) in the fund. Fidelity (and many other
brokerages) will also freely reinvest dividends from
individual stocks for you as well, but it's not usually
the default behaviour for stocks. If you have a
brokerage account (which you must if you have individual
stocks there) there's a "cash" account within it - for
Fidelity, in an IRA brokerage account, it's usually
their cash reserves money market fund (for a taxable
account, it could be that or one of their muni money
market funds). If you do not have dividends re-invested,
they'll usually just get added to your cash account there.

- quote -

That's more a question of what kind of account it is (ie. mutual
fund, brokerage, etc) and what can be done with the cash.
For a mutual-fund only account, they'd still probably associate
a "cash" account - usually a money market fund - with the
other funds.

But, yes, if you have an IRA account and dividends/distributions
were not reinvested somehow within the account (ie. to a cash
account or reinvested in the fund itself, etc) and instead the
account was sending checks to you, they'd all be taxable events,
possibly subject to penalties.


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On Sep 2, 8:23 am, "Kenny" <ke...[at]notvalid4mail.net> wrote:
- quote -


In an IRA account the dividends are credited to your account (IRA).
For MF dividends, they are either reinvested or swept into MMF.

On Sep 2, 10:23 am, "Kenny" <ke...[at]notvalid4mail.net> wrote:
- quote -

The dividends have to remain inside the account, or would be treated
as distributions. Your brokerage IRA account would include a money
market fund into which the dividends are paid. You could periodically
reinvest the money that accumulates there.

Dave

"Kenny" <kenny[at]notvalid4mail.net> wrote in message
news:hM-dnd5nu4Q-WUfbnZ2dnUVZ_oqhnZ2d[at]comcast.com...

- quote -

I would think that dividends in an IRA would have to be reinvested in the
IRA -- otherwise you would effectively be making a withdrawal from the IRA
and might be liable for penalties if you have not yet reached age 59.5.

I was thinking about buying a couple of dividend paying stocks for my
Fidelity IRA account, but I am wondering what happens when the
dividends are paid. Are the dividends paid into my CMA, or is a check
sent to me? I was unable to find anything on Fidelity's web site about
this.

Thanks!

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