JulieR
Expert Alumni

Retirement tax questions

capital gains distribution is a payment to shareholders that is prompted by a fund manager's liquidation of underlying stocks and securities in a mutual fund or derived from dividend and interest earned by the fund's holdings minus the fund's operating expenses.  You will pay tax on a capital gain distribution even if you never received the distribution in cash. The following link explains more about how capital gain distributions are taxed. How Capital Gain Distributions Are Taxed