Are there holding periods associated with distributions of qualified dividends?
The general holding period rule for distributions of qualified dividends is that you must hold the security for at least 61 days during the 121-day period surrounding the ex-dividend date. If you hold mutual funds, this holding period requirement applies at the mutual fund-level as well. At the fund-level, for dividends to be treated as qualified dividends taxed at the lower rates, the mutual fund must have held the stock for at least 61 days during the 121-day period surrounding the ex-dividend date. We will report amounts that the fund received as potential qualified dividends on your Form 1099-DIV. However, you must also meet the holding period requirement. As such, you must have held the fund’s shares for at least 61 days during the 121-day period surrounding the ex-dividend date. To determine the holding period, begin counting on the day after the shares were purchased and count the number of days held, including the date sold.
