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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)
IRS Cost Basis Reporting
For Cost Basis information and frequently asked questions, please click the following link for related information from the IRS:
Cost Basis Reporting - What you need to know
Although our aim is not to provide tax advice, we have provided this glossary of terms to aid in your understanding of some of the specialized terms used in this section of our web site and in connection with taxes within the United States of America related to your Transamerica Funds investment as an individual U.S. taxpayer. Special rules may apply to corporate or other shareholders. For more complete discussions of these terms please consult your tax adviser or other sources of information such as
- Year-End Transamerica Funds tax forms and other information we may send Transamerica Funds shareholders
- Your investment professional
- Internal Revenue Service (IRS) forms, publications or other resources at 1-800-TAX-1040 (1-800-829-1040) or their website at www.irs.gov
ACH (Automated Clearing House)
Also referred to as direct deposit, the electronic banking network in the U.S. through which payments are sent between banks and their customers. The ACH network allows Transamerica Funds to deposit money directly into a shareholder's bank account for things such as dividends, or redemptions (either as requested or under a Systematic Withdrawal Plan or a recurring schedule). Payments flow the other way as well where shareholders purchase Transamerica Funds shares, paying for them via money transferred from their bank account. Direct deposit is faster, more secure/private, convenient and less costly than paying by check.
Alternative Minimum Tax (AMT)
Federal or state tax rules that aim to have taxpayers compute their taxes both through traditional means as well as an alternate set of rules. If the AMT rules produce a tax liability greater than that from traditional means, the taxpayer generally must pay the higher AMT required tax. The IRS instituted these rules to ensure some taxpayers with certain situations pay at least some tax. Some portion of tax-exempt fund dividends may be derived from private activity bonds, which are a tax-preference item for the AMT.
Average Cost Basis
The IRS approved method Transamerica Funds uses to track shareholders' cost basis of fund shares of taxable non-money market accounts. More specifically, Transamerica Funds uses the "single-category" average cost basis, which does not keep separate cost basis categories for both long-term and short-term basis. Transamerica Funds does however keep track of your short-term or long-term holding periods (how long you held your shares), based upon the first-in-first-out (FIFO) method. If you sell shares of a taxable non-money market fund account during the year, Transamerica Funds will send you Form 1099-B after year end, which generally will show the average cost basis of shares sold to consider using to complete your income tax returns.
An asset you own such as an investment (mutual fund shares, stocks, etc.)
Capital Gain Distribution
The gain (profit) or loss resulting from the sale of a capital asset such as an investment. If the fund sells investment securities at gain, it distributes those profits to shareholders as a capital gain distribution. If a shareholder sells fund shares of a taxable account at a profit, the shareholder realizes a capital gain. Mathematically, capital gain or loss = proceeds minus cost basis. The capital gain or loss is short-term if the investment was held one year or less, or long-term if the investment was held longer than one year. Current federal individual income tax rates tax most net long-term capital gains at a maximum rate of 20%.
Contingent Deferred Sales Charge (CDSC)
Also termed a back-end or rear-load, a sales charge or exit fee imposed on certain Transamerica Funds share classes sold within a specified period. These charges are usually assessed on a sliding scale, such as 5% of amounts redeemed the first year, 4% the second year, 3% the third year, and so on.
Generally the original price paid for an investment, used to determine capital gain or loss on sales of investments such as fund shares or securities the fund owns. Generally, front-end loads are part of cost basis as it is included in the price you paid for such shares. See also contingent deferred sales charge and average cost basis.
See ACH (Automated Clearing House).
Dividend (or income dividend)
Distribution or payment of a mutual fund's net income (interest and dividend income less fund expenses) to its shareholders, whether paid in cash or reinvested to purchase additional fund shares. For taxable accounts, dividends are taxed as income in the year they are received, whether in cash or reinvested. Tax-exempt funds might distribute taxable dividends, though that is usually not their aim. They usually distribute tax-exempt (exempt-interest) dividends. For year-end tax reporting on taxable accounts, mutual funds include income dividends that are not tax-exempt dividends plus any short-term capital gain distributions in one category on your Form 1099-DIV as ordinary dividends. Income dividends paid by taxable money market funds are dividend income to shareholders, not interest income.
Ex-dividend; Ex-dividend Date
Also termed "ex" or "ex-date" for short; a synonym for "without dividend," it is the day or days on which stock or mutual fund shares are purchased that are not entitled to receive a recently declared dividend or capital gain distribution. For mutual funds, the ex-date usually comes after the record date, whereas for corporate stock, ex-dates typically come before the record date. An income dividend or capital gain distribution gets deducted from a fund's share price on the ex-date, even if the fund price ended overall either up or down for the day due to market fluctuations.
An IRS form Transamerica Funds sends to report dividends or short-term capital gain distributions to non-US shareholders.
An IRS tax form Transamerica Funds will send to you and the IRS if you sold (redeemed) shares from a non-money market fund taxable account during the year. It shows you details such as proceeds, cost basis and gain or loss, to be used to complete your income tax return. Redemptions of taxable account money market fund shares are not reported on this form because their cost basis is usually the same as the proceeds from the sale of shares.
An IRS tax form Transamerica Funds will send to you and the IRS showing the dividends and/or capital gain distributions made to an individual's taxable account during the tax year. Corporate shareholders are not sent this form. This form is also not sent where an individual's total taxable distributions are less than $10 for the year, however you must still report this taxable income on your income tax return. If this applies to you, you may find the year-end totals from your year-end investment report/confirmation. Income dividends paid by taxable money market funds are dividend income to shareholders, not interest income.
An IRS tax form Transamerica Funds will send you and the IRS if you had any taxable distributions (including in-kind distributions) from a qualified tuition program (Section 529) or a Coverdell ESA (Section 530) during the year.
An IRS tax form Transamerica Funds will send you and the IRS if you had any taxable withdrawals from tax-deferred accounts such as IRAs during the year.
An IRS form Transamerica Funds sends reporting contributions for Transamerica Funds tax-deferred (retirement plan) accounts such as IRAs, naming State Street Bank as custodian. This form also reports the (fair market) value of the Transamerica Funds account as of December 31 of the preceding year.
An IRS tax form Transamerica Funds will send you and the IRS reporting contributions and rollovers made to a Coverdell Education Savings Account naming State Street Bank as custodian.
An IRS tax form Transamerica Funds will send you and the IRS reporting contributions and rollovers made to a Coverdell Education Savings Account naming State Street Bank as custodian.
The length of time investments are owned. For shares of taxable non-money market accounts you may have sold or exchanged, your holding period, and thus any resulting capital gain or loss, is short-term if you held the shares for one year or less, or long-term, if the shares were held for more than one year. When selling mutual fund shares and using average cost basis information Transamerica Funds may provide you, it is assumed the shares you held the longest time are sold first (first-in-first-out or FIFO).
A tax imposed by federal, state or local governments on income. See also Alternative Minimum Tax (AMT).
Individual Retirement Account (IRA)
A tax-deferred retirement account in which individuals can invest up to $5,500 a year for tax year 2016 and 2017 (or $6,500 for those aged 50 or more). Earnings are tax-deferred (or tax-free with a Roth IRA) until withdrawals begin at age 591/2 or later. For Traditional IRAs, a 10% penalty (additional income tax) generally applies to earnings withdrawn before age 591/2. Withdrawals from a Traditional IRA must begin by age 701/2. Contributions are deductible against earned income under certain circumstances, depending on income levels and retirement plan participation.
A tax imposed by some states or jurisdictions that is based upon the value of assets such as mutual fund shares, as distinguished from taxes on income.
A sales charge applied to the purchase of a mutual fund as a form of compensating brokers or financial professionals for their advice and service. See contingent deferred sales charge, back-end load, front-end load.
Also termed "return of capital" distributions; not to be confused with tax-exempt dividends, any such amount a mutual fund would distribute would represent a return of your investment principal or cost basis for taxable accounts. Such distributions, if any, would be reported to recipients of Form 1099-DIV and reduce your cost basis.
An IRS term representing taxable dividends that are not (long-term) capital gain distributions that are reported on Form 1099-DIV. For mutual funds, this category represents income dividends and short-term capital gain distributions paid. Ordinary dividends are taxed at ordinary income rates (unless qualified - see below), just like wages and most other income, as opposed to lower, capital gains tax rates. Tax-exempt dividends are not included in ordinary dividends.
Paper Gain or Loss
Also termed an "unrealized gain or loss", any profit or loss on an investment (mutual fund shares or securities a fund owns) that is not realized because they have not actually been sold. If an investment is purchased and its price (fair market value) increases, a paper or "unrealized" capital gain has taken place. This gain only becomes realized (and thus taxable) upon selling the investment. See realized capital gain or loss.
Payable or Payment Date
The date on which declared dividends or capital gain distributions are disbursed to shareholders of record. For Transamerica Funds accounts with the cash dividend by check option, this is the date checks are mailed. For cash dividend accounts by direct deposit, this is the date that payments are credited to bank accounts.
The amount realized (received) from the sale of an asset such as mutual fund shares. For funds with contingent deferred sales charges, it is the amount from redemption reduced by any such charges.
An IRS term used to describe ordinary dividends subject to a maximum 20% tax rate.
Realized Capital Gain or Loss
Usually referred to simply as a "capital gain or loss".
The date (as of close of business) on which a shareholder must own fund shares in order to receive a declared dividend or capital gain distribution, or to vote on fund issues in a proxy or shareholder meeting.
The effective date on which reinvested shares are posted to Transamerica Funds accounts using the reinvestment privilege.
The share price used to determine the number of shares reinvested into an Transamerica Funds account using the reinvestment privilege. Distributions from Transamerica Funds reinvest option accounts are reinvested at NAV (Net Asset Value) - no sales loads are charged.
The feature Transamerica Funds offers for shareholders to reinvest their dividends or capital gain distributions to purchase additional fund shares, or to direct dividends from one fund to purchase shares of a different Transamerica fund. Transamerica Funds accounts are established with this privilege unless shareholders request distributions to be paid in cash. Transamerica Funds does not charge any fees to reinvest dividend or capital gain distributions. Reinvesting distributions may enhance investment returns over time due to the compounding effect of growth and/or distributions over time.
Systematic Withdrawal Plan (SWP)
A feature offered by Transamerica Funds where money is paid to shareholders by direct deposit or check as a result of periodic redemptions (sales) of shares from their Transamerica Funds account. As with most any redemptions, there are tax consequences of selling mutual fund shares.
Also termed a "retirement", "qualified plan", or "tax qualified" account; it is an account or investment whose accumulated earnings are not taxed until the investor takes possession of (withdraws) them. In IRAs, for example, all dividends, interest and appreciation accumulate until the account owner starts withdrawing funds from the account, usually at age 591/2. Contributions that may have been deducted off of income in the past are also included as taxable income when withdrawn.
Also termed a "regular" or "non-retirement" account, it is an account whose earnings (such as dividends or capital gain distributions) are taxable as they are paid/credited.
Tax-exempt (exempt-interest) Dividends
Dividends paid by a tax-exempt fund from its net tax-exempt income (interest income on tax-exempt investments such as municipal securities less fund expenses). The federal government and many states generally do not impose income tax on tax-exempt dividends.
A mutual fund that invests in municipal securities and distributes tax-exempt dividends which are dividends that are generally not subject to income tax. Short-term or long-term capital gain distributions paid by these funds are not exempt from income taxes however, and shares of these funds, just as fund shares in taxable accounts, may be subject to some states that impose an intangible tax.
The yield before taxes that a taxable mutual fund or bond would have to pay to be equal to the tax-free yield of a mutual fund or municipal bond. The tax-equivalent yield depends on an investor's tax bracket. The higher the tax bracket, the more attractive the tax-free income becomes. For example, a tax-free yield of 7% is equivalent to a taxable yield of 9.7% for an investor in the 28% federal income tax bracket, and to a taxable yield of 10.9% for an investor in the 36% tax bracket.
Wash Sale (loss deferral)
Within the meaning of the IRS and fund shares, the purchase of fund shares within 30 days before or after having sold or exchanged shares of the same fund at a loss. The IRS disallows deducting such as loss in the year sold, but rather makes you defer deducting the loss until such time you dispose of the shares purchased that triggered the loss deferral. If this situation applies to your Transamerica Funds account, Transamerica Funds adjusts your Form 1099-B information for wash sales. In the rare case you sold shares in December at a loss and had a purchase in January the next year, Transamerica Funds will send you a corrected Form 1099-B in February, so do not prepare your taxes until you're sure you have a final form 1099-B.
Amounts withheld by Transamerica Funds either at your request, or perhaps required to be done according to federal or other government laws. Any federal or state withholding that was withheld by Transamerica Funds from dividend or capital gain distributions, or from any sales or exchanges of Transamerica fund shares is paid to the IRS or your state on your behalf. Any such withholding will be reported to you and the IRS on applicable tax forms Transamerica Funds may send you. Withholding either increases your refund or reduces the amount you owe the government on your income tax returns.
The income earned on an investment, expressed as a percentage of the price. The period over which yield may be calculated can vary such as a 1 day, 30 day or annual (365 day) yield. For mutual funds, the Securities and Exchange Commission requires a standardized formula be used to quote "30-day SEC yield". See tax-equivalent yield.
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. Neither Transamerica nor its agents or representatives may provide tax or legal advice. Anyone to whom this material is prompted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors regarding their particular situation and the concepts presented herein.
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 888-233-4339. 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.
You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. The Fund may impose a fee upon sale of your shares or may temporarily suspend your ability to sell shares if the Fund's liquidity falls below required minimums because of market conditions or other factors. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.