Community Discussion: Reinvested Dividends
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The complaint is that Merrill downloads multiple transactions to Quicken for a single Reinvestment transaction that occurred at Merrill.
The implication of the complaint is that there is some mandatory form for downloading all "reinvestments" (namely, as a single reinvestment transaction) and that Merrill is not adhering to the rules. I don't believe there is any single "correct" way to download all "reinvestment" transactions.
I have an account at Merrill, and I can confirm that - at least for certain securities - Merrill does download reinvestments as the original poster states. Namely:
1.) A dividend transaction with a category of _divinc. 2.) An uncategorized withdrawal transaction for the amount of the dividend and 3.) A Shares Added transaction for the new shares acquired, with no value (no cost).I believe there is only one real mistake in the Merrill download referred to by the op (I see the same mistake in my downloads from Merrill): the downloaded Shares Added transaction shows a "Total cost" of $0.00, when it should show a Total cost of the amount of the dividend.
Otherwise, as the op notes, the net impact of the 3 downloaded transactions is nearly correct: account holdings are correct, as is the account cash balance. The only problem is that the security's cost basis is incorrect (because the Shares Added transaction is missing the "Total cost").
The original poster does not say what specific security (or securities) the reinvestment transactions are for; I think that the specific security matters.
As I view it, there are two types of reinvestments: true reinvestments and "pseudo-reinvestments" (my terminology).
A true reinvestment can only occur for a mutual fund held by/at the issuer of the mutual fund (a Merrill mutual fund held at Merrill, or a Vanguard mutual fund held at Vanguard, for example). When a true reinvestment occurs there is only one real-world transaction: a reinvestment transaction. The amount of the dividend is used to issue more shares of the mutual fund (the number of shares the dividend would have purchased) into the customer's account on the same day the dividend was issued ... and no real-world dividend is ever recorded in the customer's account.
A "pseudo-reinvestment" occurs when the customer has chosen to reinvest dividends for a security, but the security is either a mutual fund NOT held in an account with the issuer, or the security is a non-mutual fund (where no true reinvestment is possible) but where the financial institution where the security is held has agreed to automatically buy shares of the security (for no charge) whenever the security issues a dividend. In these situations there is always a divided transaction, which the financial institution where the security is held uses to buy more shares of that security.
"Pseudo-reminders" always (must) consist of two transactions in the real-world - a dividend transaction and a buy transaction - and those two transactions do not necessarily occur on the same date. In theory, that means that using a single reinvestment transaction to represent the dividend/buy pair of transactions that actually occurred, could cause income for a certain period to be incorrect, or cause the short-term/long-term holdings determination for the security to be incorrect.
It is not at all uncommon for financial institutions who perform pseudo-reinvestments to create multiple transactions for Quicken (I know that Merrill, Schwab and USAA do). But not every financial institution creates the same transactions for Quicken to represent pseudo-reinvestments; and I'm unaware of any rules governing such transactions. I believe the financial institutions who download reinvestments similarly to Merrill's approach are just providing Quicken users with the option to, relatively easily, choose how (at least certain) reinvestment transactions are to be recorded in Quicken.
One thing is certain: Quicken has nothing to do with the way financial institutions handle pseudo-reinvestment transactions sent to Quicken , nor can Quicken do anything about it.
In the specific case of Merrill not including the cost (the amount of the dividend) in the downloaded Shares Added transaction, Merrill customers using Quicken will likely have to convince Merrill to add the Shares Added cost amount to their downloaded transactions.
In the meantime, the current Merrill downloaded pseudo-reinvestment transactions can be handled relatively easily in one of three ways.
1.) Edit the Shares Added transaction to become a Bought transaction with the dividend amount as the cost, and delete the Withdrawal transaction. 2.) Edit the Shares Added transaction to include the dividend amount as the Total cost, and categorize the Withdrawal transaction as a "transfer back into the same account" (the Quicken investment account). 3.) Edit the Dividend transaction to be a Reinvestment transaction with the dividend amount buying the Shares Added share quantity; delete the Shares added and Withdrawal transactions (this approach could possibly cause the dividend income to fall in the wrong period, or the share holdings duration calculation to be off).At the end of the day, I believe it will come down to a user decision that weighs the effort of handling the various downloaded transactions for the "pseudo-reinvestment" compared with some consideration of which approach provides the most accurate results (including, I believe, some Quicken investment performance calculations seen at Investing > Portfolio).