The end of the year is a tricky time to buy mutual fund shares in a taxable account. The tax law forces mutual funds to distribute their recognized capital gains annually, and they often do so through a big December distribution. This means you can buy an entire year's worth of tax liabilty for a mutual fund share in a single day.
Fortunately, many funds, including the Vanguard family of funds, let you know when they plan to drop the capital gain bomb. It's worth a few minutes to check these figures before invest that check from Grandma.
This is another installment in our 2009 Year-end planning series. Accept no substitutes!
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to