My 401k fund has an option for investment in S&P 500 index fund, however the investment doesn't come with any dividend yield. S&P 500 index funds such as VOO, SPY come with a dividend yield. Do you know whether S&P 500 index funds available in 401k come with a dividend? If not, I am wondering where the dividend goes - if I put the same money in individual brokerage account for index funds, I would get higher yield than what I would get in 401k account.
Is the S&P 500 index fund a mutual fund? With a mutual fund, dividends a̴r̴e̴ ̴u̴s̴u̴a̴l̴l̴y̴ ̴(̴m̴a̴y̴b̴e̴ ̴a̴l̴w̴a̴y̴s̴?̴)̴ can be automatically reinvested without the dividends showing up on your statements.
With an ETF, you will see the dividends on your statements even if they are reinvested.
Either way, your are still getting the dividends.
Although the answer by google-cloud is perfectly satisfactory to the OP, it is nonetheless incorrect in several places.
Mutual funds, including index funds, have the choice of
- paying out the dividends that they collect from the stocks that they hold to their shareholders, and then the shareholders pay income tax on the money that they receive (unless their investment is inside a tax-deferred plan),
- pay income tax on the dividends since that money is taxable income to the mutual fund.
Almost universally, mutual funds choose to distribute the dividends to their shareholders and pass on the tax burden to their shareholders. The share price of the mutual fund shares (the Net Asset Value or NAV as it is called) falls by the dividend paid per share. Now, each shareholder has the option of reinvesting the dividends in the same fund instead of getting cash from the mutual fund, and in many cases, this is the default option when the account is set up. Re-investing in the fund means that the shareholder now has more shares than before, but since the NAV is smaller, the shareholder who looks at his holdings will see no change in the dollar value of his holding in the mutual fund. But, regardless of whether the shareholder reinvests the dividend or takes it in cash, that dividend is (dividend) income to the shareholder, and income tax must be paid on it unless the mutual fund is held in a tax-deferred plan.
In 401(k) plans and IRAs and such, re-investment is the default option since a cash payment to the account owner would be a distribution from the tax-deferred plan, and possibly subject to penalties for premature withdrawal etc, but reinvestment is not mandatory. Many 401(k) plans, IRA agreements etc allow the dividend payout to be invested in a different mutual fund within the plan. But, either way, google cloud's claim that dividends don't show up on 401(k) statements is not true; dividends do show on 401(k) plan statements as do the number of shares that are purchased as a result of reinvestment of the dividends.