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How Can I change the dividend payment method from reinvestment to payout or vice versa?

I guess many of us who invest in mutual funds don't aware of this option to change from dividend reinvestment to payout or vice-versa. This option is called as Dividend Transfer Plan or Change in dividend option.

This option works best when you have invested in any ELSS Scheme with dividend reinvestment option, as after that every year dividend gets reinvestment and that results in each dividend is lock in for 3 years and this process will go on and on and you will never able to redeem all your units in ELSS Fund.

 I come across many queries related to this issue as query from blog reader
"I invested in a tax-saving scheme (ELSS) three years ago and have opted for dividend reinvestment. Dividends have been reinvested every year. However, I am unable to redeem the dividends as the mutual fund says that the reinvested dividend is under lock-in. Why is this so?"

So in order to avoid this situation you can change your dividend option. As for the reinvested dividend, you can redeem the same three years after the date of reinvestment. 

Now how to makes changes in dividend option

You may change the dividend option to payout by giving a simple request letter to the fund, signed by the unit holder(s). Please mention the folio number and the scheme in your letter requesting for the change. 

Once the option is changed, your dividend will be paid out to you.

Points to consider before giving written request for "Change in Dividend option

1. The request should be addressed to the AMC

2. It should mention complete details of the relevant holding - scheme name, folio number, units held, value, etc.
3. It should clearly specify the "change from" and "change to" options

If you have online access to your investment, then you can able to make changes in dividend option.

In Franklin Templeton option is available under 
My Profile ---->>> Overview----->>> Dividend

In some website option is available under switch option.

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