What is the qualified dividend holding period requirement and how do I meet it?

To get the lower qualified-dividend tax rates, the IRS requires you to hold the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. For preferred stock dividends tied to periods over 366 days, the requirement stretches to more than 90 days in a 181-day window. The point is to stop people from buying a stock right before a dividend, grabbing the payout at the low rate, and immediately selling. If you sell too soon, that dividend is bumped down to ordinary (non-qualified) treatment at your higher regular rate. This mainly bites active traders and anyone using covered calls or hedges that reduce risk during the window; long-term buy-and-hold investors easily satisfy it.