Understanding Reinvestment Fees

When dividends or distributions are reinvested, any fees associated with the reinvestment must be evaluated based on how the fee is charged.

Fees Included in the Reinvestment Transaction

If a reinvestment fee is deducted directly from the dividend or distribution at the time of reinvestment, and the Gross, Net, and Price-per-Share calculations only reconcile when the fee is included in the transaction:

• The fee is considered part of the cost of acquiring the reinvested shares.
• The cost basis of the reinvested shares includes the full gross dividend amount, including the portion used to pay the fee.

In this case, the fee should be recorded as part of the reinvest transaction, because it is counted as part of the cost of the acquisition of shares. This treatment ensures that share quantities, per-share price, and total basis all calculate correctly.

Fees Charged Separately

If a fee related to reinvestment is charged separately from the transaction (for example, as a periodic account-level or service fee):

• The fee is not included in the cost basis of the reinvested shares.
• Such fees may be recorded as investment expenses.

If you have a reinvestment fee that is part of the reinvestment transaction:

• Go to Accounting > Securities > Reinvest
• Select the Date and Ticker as normal
• For the Invested Amount field, enter the Net amount of the dividend
• Enter New shares as normal
• Enter the fee in the Service Fee box
• The Total amount of distribution box will automatically fill in with the Gross/total amount of the dividend.

If you have a fee that is not part of the reinvestment transaction.

• Go to Accounting > Cash Accounts > Expense
• Enter the Date, Amount, and choose the account.
• Set the Type as Investment
• Category is up to you
• We suggest to leave Allocation Method as By ownership share
• We suggest to enter a comment that the expense is charged by the brokerage for reinvestments.