July 2019 Dividend Income

Well, I wanted to get over $100 each month, and I’d say I crushed it by an extra $0.01 this month! Thanks Disney for coming through for me on the semi-annual basis this month!

I received $100.01 in taxable July 2019 dividend income. Nothing too crazy this month besides a very obscure 401k rule which resulted in an extra $10.5k in my taxable account. (It’s not that great actually, more on this at the end.)

Dividend Growth

A little quiet, but I got a solid showing out of Medtronic. I haven’t regretted adding them one bit and I would like to add another share in the next week or two when I accumulate enough dividends.

I’d have to invest $146 at my current 2.06% portfolio yield to increase my income this much.

My overall taxable portfolio yield dropped from 2.32% to 2.06%, mostly due to picking up a lot more VTI. This is a lower yield than I might have aspired for when I first started investing, but I am happy to trade the low yield for a bit of growth potential.

Forward Dividend Income

Is that spike real??? It actually is. Didn’t I say I wasn’t making new contributions until I finished school and got back to the workforce? Yes I did. I had to retroactively decrease some of my 2019 401k contributions. More on that below!

For now, my VTI holding went up about 150%. Can’t complain!

Purchases – VTI, PFE

Purchased 168 shares of Vanguard Total Stock Market (VTI) @ $153.86/share

Huge contribution to my VTI holding! My long term goal is to evenly balance my individual stocks with VTI. Lately I’ve been sitting around a 2:5 ratio by weight. This purchase puts me at about a 3:5 ratio by weight. Still some ways to go but this is an enormous chunk.

Purchased 2 shares of Pfizer (PFE) @ $43.20/share

I realized I have been neglecting my PFE holding in favor of more tech-based stocks. Time to add a few PFE shares!

So Where Did This Huge Chunk of VTI Come From?

Continue only if you enjoy hearing about obscure IRS rules regarding 401k plans!

My employer was acquired by another company and the deal closed early this year. I was fortunate to have plenty of advance notice and a bit of a severance, so I front loaded my 401k to the full $19,000 limit allowed by the IRS. Awesome!

Sadly, it was not to be. I learned last month that I had overcontributed. What? How? I checked, and I definitely did not go over $19,000.

It turns out that my employer’s 401k plan ended on the same day that the closing happened. The General Limit on employer plus employee contributions in a single year is $56,000.

The IRS prorates the $56,000 limit over the duration that the plan exists. For me, that was January and February, or 2 months out of 12. $56,000 x (2 / 12) = $9,333.

I had overcontributed by $9,666. Not only that, but that amount had grown to over $10,500 during the time I had it in the market.

I had to withdraw the original overcontribution, plus the gains I had made. I lost all the gains and will have have a tax professional handle this when the time comes.

For now, I put that straight into VTI in my taxable account. I would much rather have left this in my tax-sheltered account. My plan is to become employed again with a few months left in the year and hopefully max out my full $19,000, at which point I won’t have lost much throughout the process besides some time in the market and some invalid gains I’ll pay back.

Head on over to my portfolio page if you’d like to see what companies pay me in other months!

2 thoughts on “July 2019 Dividend Income

    1. It turns out it is an IRS rule, and both corporations involved were not aware that would be the case! Fidelity was the plan administrator and apparently they run periodic tests of some sort. That’s how it was caught. I don’t have an employer yet! My classes wrap up next month, and I’m applying already. Hopefully they will have a 401k!

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