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Here you can find important information about how taxes, dividends and other distributions may impact your fund holdings. You can also find historical information about dividends, distributions and capital gains from Transamerica mutual funds.
Transamerica does not provide tax advice. You should consult with a qualified tax professional for guidance about your particular situation. Additional information is available from the Internal Revenue Service website. (www.irs.gov)
2015 IRS Cost Basis Reporting
For Cost Basis information and frequently asked questions, please click the following link for related information from the IRS:
2015 Cost Basis Reporting - What you need to know
|Taxable Events||Dividend and Capital Gain Distributions|
|How fund earnings are distributed to shareholders||Selling (Redeeming or Exchanging) Fund Shares|
|Tax Withholding||Mutual Fund vs. IRS Terminology on Distributions (Taxable Accounts)|
|How Distributions Affect Share Price and Account Balance||Be Careful to Avoid "Buying a Distribution" (Taxable Account)|
|Capital Gain Distribution|
The information below offers a broad overview on how taxes are involved with mutual funds. Transamerica does not provide tax advice. You should consult with a qualified tax professional for guidance about your particular situation.
Additional information is available on the Internal Revenue Service website. For specific information regarding year-end tax reporting and IRS forms Transamerica Funds may send to you, click here: Year-End Tax Reporting for Transamerica Fund Shareholders.
Mutual funds, like most financial products, involve taxes. A "taxable event" is a transaction that creates tax implications. Mutual fund taxable events may result when:
In addition, some states may impose an intangibles tax on the value of shares owned.
Other important distribution information for individual taxpayers:
Generally, when you sell (redeem or exchange) mutual fund shares, you create a taxable event. Tax implications vary, depending on the type of account you own:
As with all mutual funds, Transamerica Funds may be required to withhold U.S. federal income tax at the fourth lowest tax rate applicable to unmarried individuals (currently 28%) on all taxable distributions payable to you if: a) you fail to provide the fund with your correct taxpayer identification number; b) you fail to make required certifications; or c) if you have been notified by the IRS that you are subject to backup withholding.
Backup withholding is not an additional tax; it is a method by which tax laws ensure the collection of taxes due. Any amounts withheld may be credited against your U.S. federal income tax liability.
|Tax Terminology||Reported to you/IRS on Form
1099-DIV for Individuals
|Federal Tax Rates|
|Ordinary Income dividend (non-tax-exempt income/funds)||Ordinary dividends/income||Same as regular taxable income such as wages|
|Income dividends (federally tax-exempt income)||Exempt-interest income dividends||N/A|
|Short-term capital gain distributions *||Ordinary dividends/income||Same as regular taxable income such as wages|
|Dividends from qualifying dividends||Qualifying dividends||Maximum rate of 15% for individuals|
|Long-term capital gain distributions *||Capital gain||Lower capital gain rates|
|Return of capital distribution||Non-taxable distribution/return of capital||N/A**|
*As a result of funds selling investments at a profit and paying these profits to shareholders. These distributions are taxable even if paid by 'tax-exempt' funds. **This represents a return of your principal, not money from fund earnings. Such a distribution reduces your cost basis since part of your investment was returned to you. Funds rarely make such a distribution.
Regarding distributions and their effect on share price and account balance, first keep in mind three important dates:
Distributions are generally taxable events that do not increase the value of your account. When distributions are paid, the total distribution per share reduces the fund's Net Asset Value (NAV) per share by the same amount.
If distributions are reinvested, the fund adds shares to your account soon after the ex-date. Since the NAV price is lower, however (assuming no market fluctuation effects on the ex-date), your account balance is unchanged from the distribution.
If you receive distributions in cash, no shares are added to your account since the money is paid out to you, and your account value would decrease by the amount of cash paid.
Examples of a cash distribution and reinvested distribution:
Effect of distribution on share price and account value
|Scenario 1: John receives the distribution in cash||Scenario 2: John reinvests the distribution|
|1,000 shares owned x $2.00 per share = $2,000 cash paid to John.||1,000 shares x $2.00 per share = $2,000 in additional shares purchased.|
|No shares are added to John's account.||$2,000 divided by ex-date price of $20.50 per share = 97.561 shares added to John's account.|
|Account value on ex-date = $20,500 (1,000 shares x $20.50 per share).||John now owns 1,097.561 shares.|
|Total investment value on ex-date = $22,500 ($20,500 account value + $2,000 cash paid).||Total investment value on ex-date = $22,500 (1,097.561 shares x $20.50 per share)|
As an investor, you should be aware of the potential of "buying a distribution" by investing near the "record date" of a distribution. Because distributions are made evenly across all shares owned on the record date, regardless of how long you've owned them, when you invest just before or on the record date for a fund's distribution, you end up receiving a portion of your investment back in the form of a taxable distribution. This may result in a tax liability for you without having received the growth potential of those shares over time past. The negative outcome is exaggerated if you are investing a large sum of money close to the record date of a fund that is making a relatively large capital gain distribution.
Of course, if your new investment is of a lesser amount, a distribution near the time of your purchase may have little impact on your taxes. Also, some funds may not have any distributions to make late in the year. Most mutual fund companies make preliminary distribution estimates available a month or so in advance of the distribution, so that you can evaluate whether to invest before or after the upcoming distribution record date.
Consult your financial professional or a tax advisor regarding your personal circumstances.
Transamerica Funds are advised by Transamerica Asset Management, Inc. and distributed by Transamerica Capital, Inc.
These materials are not intended to provide tax, accounting, legal advice or investment recommendations.
Shares of the Funds may only be sold by offering the Funds’ Prospectus.
You should consider the investment objectives, risks, charges, and expenses of the Funds carefully before investing. The Prospectus contains this and additional important information regarding the Funds. To obtain the Prospectus and/or a summary Prospectus, please contact your financial professional or call 800-851-7555. The Prospectus should be read carefully before investing.
Investing in mutual funds involve significant risks, including the risk that you may lose part or all of the money you invest. For a complete discussion of the risks associated with each fund, please read the prospectus carefully.