Are there tax consequences when reinvesting proceeds from the sale of a mutual fund?
Yes, you will pay taxes on any gain if the mutual fund is not being held in a tax advantaged retirement plan. The amount of capital gains tax you pay will depend on your basis and the length of time you have held the fund. A common mistake we see is that too often, an investor does not keep track of all the dividends and capital gains that have been credited and reinvested along the way. All these amounts need to be added to your original purchase to figure your cost basis.
