Investment Fees

djmixman's Avatar


16 May, 2021 10:41 PM

Hopefully this makes sense... I'm trying to figure out the best way to handle fee's paid by shares on my 401k account.

I found this thread when searching: Using this method counts all my fees as a sell and registers it as a short term capital gain.

Currently my 401k deducts x amount of money every month from my paycheck and buys into a fund. About mid way through the month the fee is charged to my account and shares of the fund are deducted to cover those costs. Since the fee is deducted at a different time the cost is different. So if I were to add a cash fee to the share purchase it would throw off the cash balance and/or share count of the account.

How would I handle this situation correctly?


  1. 1 Posted by sprimost on 16 May, 2021 11:08 PM

    sprimost's Avatar

    From: sprimost (Just a user....)

    I am going to assume that you are US based. The opinion stated here is
    not intended for tax advice, but meant to provide a method, based on my
    experience, as to handling of this situation.

    In general, transactions (buy/sell) as far as short-term vs. dividends
    vs. long-term is irrelevant. By the time, you are "forced" to sell to
    meet the Required Minimum Distribution (RMD) withdrawal requirements,
    the funds withdrawn are treated as ordinary income. (personally, I have
    given up trying to keep track of how the dividends are paid!)

    But, if you are watching how well the investments are doing, then it
    might make a difference, although, again, it is all the same as far as
    accounting for return on the investment. The only catch is that the
    deduction of the fee does cut into the ROI, so I an see that you really
    do not want to account for the deduction by using a short-term "dividend".

    What I have done (not saying it is right, but it doe seem logical) is to
    enter a transaction as a misc-expense for the fee. The balance in the
    account will be a negative number. You will need an expense category for
    this. When you see the report from the institution for selling of the
    shares,, then enter the number of shares and share price to cover the
    expense, and the balance in the account will revert to zero.

    Thus, at the end of the period, you can figure your return as
    ending-balance minus starting-balance (investment-Report) and know how
    much paid for fees (income and Expense Report)

    Others may comment....


  2. 2 Posted by dwg on 16 May, 2021 11:17 PM

    dwg's Avatar

    I'm a fellow user.

    I'm not sure there is any other viable approach.

    What you need the transaction to do is to reduce the number of units you own in the account, but also to reduce the current value of the investment by the amount of the fees.

    In doing this the amount of the fee is not going to correspond to the cost basis of the units, hence Moneydance thinks it is a capital gain. If you were to change it so there is no capital gain being reported it would throw out the amount of the investment.

    This typically a problem with funds that handle fees by the way of unit reductions. Some other funds force the use of a cash account with minimum balance requirements to handle fees and that all funds go through.

    In my experience capital gain reports produced by finance programs for Fund type investments based on the data that you have in the program are generally rubbish in any case since embedded in the unit data is not just simple purchases and sales but it can also include income and expense items.

  3. System closed this discussion on 15 Aug, 2021 11:20 PM.

Comments are currently closed for this discussion. You can start a new one.

Keyboard shortcuts


? Show this help
ESC Blurs the current field

Comment Form

r Focus the comment reply box
^ + ↩ Submit the comment

You can use Command ⌘ instead of Control ^ on Mac

Recent Discussions

18 Jan, 2022 10:15 PM
18 Jan, 2022 09:40 PM
18 Jan, 2022 09:28 PM
18 Jan, 2022 09:19 PM
18 Jan, 2022 08:28 PM