Comments on: Answering A Few Questions From Mutual Fund Week http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/ Financial talk for the rest of us Sat, 16 Feb 2013 01:14:45 +0000 hourly 1 http://wordpress.org/?v=3.5.1 By: bill http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/#comment-42025 bill Tue, 03 Jul 2007 00:37:57 +0000 http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/#comment-42025 In reference to the above about capital gains and dividends, do they have an ex-dividend date and ex-capital gains date on mutual funds? I know on stock they have and ex-dividend date. Can someone clarify this?

]]> By: MossySF http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/#comment-14893 MossySF Mon, 02 Apr 2007 06:02:35 +0000 http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/#comment-14893 Sarah, Trent is right. I moved a bunch of money into Vanguard funds October last year and had to pay full taxes on the dividends and cg distributions even though I had barely held the funds for 2 months.

]]> By: mh1 http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/#comment-14823 mh1 Sun, 01 Apr 2007 18:52:27 +0000 http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/#comment-14823 I’ve been meaning to put forth this question to you for a while, but have been waiting for a relevant post. Regarding dividends (which I assume you’re speaking of by mutual fund payout) in a Roth IRA, if these funds are automatically reinvested, does the addition of the payout to your portfolio count toward your IRA cap (e.g. $4000/yr)?

]]> By: Sarah http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/#comment-14637 Sarah Sat, 31 Mar 2007 21:54:41 +0000 http://www.thesimpledollar.com/2007/03/31/answering-a-few-questions-from-mutual-fund-week/#comment-14637 Let’s say you bought $100,000 worth of a fund. Two days later, the annual distribution occurs. You get a check for $30,000 and your fund’s value drops to $70,000. You’re then on the hook for the capital gains tax on that $30,000.

I’m pretty sure this isn’t right. In this scenario, your shares of the fund haven’t appreciated at all (you paid $100K; two days later the fund returns you $30K, leaving you with $70K in the fund, for the same total of $100K). You have nothing to pay taxes on because you haven’t recognized and realized any gains. The people who would pay taxes would be the folks who bought into the fund earlier. They would have recognized gains which would be realized by the sale of the fund’s assets.

Turnover actually simply refers to the buying and selling of stocks by the fund. It’s bad primarily because each transaction has a cost, and you indirectly must pay your share of those costs. A distribution is just another (undesirable) result of turnover.

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