| Mutual funds are taced at long term capital | | | | distributions (distributed usually every |
| gains rate right? Wrong. There seems to be | | | | year), long term capital gains (distributed |
| some confusion to how mutual funds are taxed. | | | | usually every year) and then when you sell |
| What you need to know is there are | | | | the fund you will have another long term |
| distributions on mutual funds that are | | | | capital gain (I am assuming you made money |
| taxable. These are called annual | | | | with the fund). I did not mention dividend |
| distributions and are made in late November | | | | tax because not all funds have dividends, |
| and early December. These distributions, if | | | | that would make 4 taxes on mutual funds.With |
| the fund has any gains, are taxed at either | | | | portfolio turnover rates at about 75% we are |
| ordinary income or long term capital gains | | | | finding that the distributions are becoming |
| tax.This is where the anti-annuity crowd | | | | more short term than long term. This means |
| usually steps in and says mutual fund tax | | | | higher taxes on these distributions. These |
| treatment is so much better than variable | | | | distributions can continue even if the mutual |
| annuities, is this true? It is not. You have | | | | fund goes down. |
| 3 taxes with mutual funds, the short term | | | | |