Distributions From Mutual Funds

Gail Maidenbaum, MBA January 20th, 2021

This time of year, you might glance at an account statement and see there has been an adjustment. But there may not be any cause for concern.

Many mutual funds in December pay shareholders capital gains distributions that they have accumulated throughout the year.1

Typically, mutual fund companies start making estimates about distributions as early as November and most finalize the payment by mid-December.1

It’s important to remember that if your mutual fund is in a tax-deferred account—and you are reinvesting distributions—the potential distributions may be a non-event at this time. But you may owe taxes when you begin to sell your holdings.

On the other hand, if your mutual fund is in a taxable account, you may owe 2020 taxes on the distributions whether you reinvested the distribution or accepted payment.

Most of the larger mutual funds companies have posted information on their websites regarding year-end distributions. But the estimates can be confusing, so please contact our offices, and we may be able to provide some guidance.

You may also recall, one of the reasons we created Concord Asset Management last year was to create a platform that put us in control of the distribution and the underlying effects. If you would like to learn more, give me a call.

Remember, today’s update is for informational purposes only and is not a replacement for real-life advice. Mutual fund distributions may only be one part of your overall tax situation, so make sure to consult your tax, legal, or accounting professional before modifying your strategy.

1Morningstar.com, November 9, 2020

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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investment advisory services are offered through Concord Wealth Partners, an SEC Registered Investment Advisor.

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