December was a busy month. Schwab performed a number of end of year transactions to my IRA account...but several where, instead of REINVESTMENT OF DIVIDENDS were downloaded as BUY SHARES which messed up my cash balance, throwing off the entire Schwab account balance as of the end of year statement I received.
No big deal to fix, simply editing the 3 offending transactions and change the type to REINVEST DIVIDENDS did the trick (that even keeps he number of shares and price intact). Others on the same date were fine. They were a mixture of LT and ST Capital Gains and such.
But I wonder if others have seen that type of activity as well with their Schwab accounts?
Worth trying to explain this to them on a phone call or email for their awareness?
I have seen situations where the downloaded transactions do not use a single ReinDiv transaction, but use a Div transaction accompanied by a Bought transaction. The second approach accomplishes the same result as far as shares owned and cost basis (but - as I recall - does, or may, produce somewhat different results for things like returns).
My understanding is that there is often good reason for the Div/Bought case: typically when I see that, it is for securities which can not receive true reinvestments - securities such as stocks - or even mutual funds, when those funds are held in an account not controlled by the mutual fund issuer (such as a Vanguard fund held in a Schwab account).
As I see it, a true reinvestment can only occur when a mutual fund is held with the financial institution that is the issuer of that mutual fund. A true reinvestment never issues a dividend to the owner of shares, it just credits the owner's account with the number of shares that dividend would have bought - and that can only be done by the issuer (for example: by Schwab, for a Schwab mutual fund held with Schwab).
As I interpret it; stocks (for example) can not have true reinvestment transactions (regardless of whether the brokerage says they will automatically "reinvest" dividends for the stocks you hold with them). In order to implement "reinvestment" for a stock, the financial institution receives the real-world dividend (the cash), then purchases shares of the same security. So in the real-world there is no "reinvestment"; just dividends and buys. When that happens, the dividend and the buy can occur on different dates - and I believe such a "reinvestment" - where the real-world buy occurs on a date later than the real-world dividend - can only be accurately reflected in Quicken by recording both transactions (the dividend, followed by the buy) with their correct dates.
I don't recall ever seeing the result of the case mentioned above, where only the buy transaction was downloaded.
I do have several accounts with Schwab (and I have left those accounts de-activated for downloading until just recently, when it seemed that most of the Schwab issues were resolved), and I do have some "reinvestments" that are downloaded as two transactions: a dividend and a buy. But I have not seen only a buy transaction in that situation.
If your Bought (instead of Reinvestment) transactions were for Schwab mutual funds, I'd say that was just plain wrong. If those Bought transactions were for securities other than Schwab mutual funds, it sounds like the corresponding Dividend transactions may have been missing from the download. That might be worth taking up with Schwab - to see whether Schwab intended you to get what you received.
Schwab posts Div transaction first, then related Buy transaction. I often see Div downloaded a day ahead of Buy from Schwab. As previously stated, it's easy enough to edit those into ReinvDiv transaction in Quicken if so desired.
I've seen that too - and in downloads from financial institutions other than Schwab.
But my comment that you replied to said I've never seen ONLY the buy transaction downloaded. Meaning: even when the Div and Buy occur on different dates (which can occasionally be several days apart), I ALWAYS eventually see both. As I interpreted Andrew's problem, it sounded like the Div transaction(s) never downloaded.
But if the real-world Div transaction occurred on a different date than the Buy transaction; combining the two transactions into a single ReinvDiv transaction will get either the date of the investment income incorrect, or the initial date of ownership incorrect (creating the possibility of miscalculating the short-term/long-term gains).
Yes, that is what I believed I saw. But since I've changed it, I can't
100% swear (although I would have seen the other transaction) there was only a BUY. I'll be real sure to watch out for this next time.
Just as an aside, assuming that the 1099 has what Schwab believes the LT or ST gains are and are reported to the IRS as such, I would never assume the Q is more in sync, unless one is really are sure and wish to pursue that end. Just my thoughts.
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