The tax law provides a variety of vehicles for retirement savings, including: • IRAs (regular IRAs, Roth IRAs, SEP IRAs) • 401k and 403b plans • Plans such as SEPs and SIMPLEs designed for small businesses Any of these plans can be set up to permit investments in mutual funds. (If the plan is set up by an … Continue reading “Mutual Funds and Retirement Savings”
Other pages in this guide deal with specific types of mutual fund dividends. Here is some additional general information about these dividends. Reinvested dividends Most mutual funds allow you to reinvest your dividends, and many investors choose to do so. When you have your dividends reinvested you’re treated the same as if you received the … Continue reading “Other Issues for Mutual Fund Dividends”
Mutual funds sometimes make distributions that don’t represent earnings. When you receive this type of distribution, you’re considered to be getting back some of the money you invested in the company. That’s why these payments are sometimes called return of capital distributions. The IRS used to call them nontaxable distributions but now calls them nondividend … Continue reading “Nondividend Distributions”
Some mutual funds are established to provide a way to invest in municipal bonds and other securities that produce tax-exempt interest. Distributions from these mutual funds are usually composed mainly of tax-exempt interest. Under the special tax rules for mutual funds, you should treat the tax-exempt interest portion of your dividend the same as if … Continue reading “Exempt Interest Distributions”
If a mutual fund has long-term capital gains, it can designate part of its dividend as a capital gain distribution. The shareholders report this part of the dividend as if it were their own long-term capital gain. These amounts are called capital gain distributions or capital gain dividends. This treatment applies only to long-term capital … Continue reading “Capital Gain Distributions”
