How are interest and dividends taxed?
Mutual funds hold securities that may pay interest and/or dividends. Mutual fund dividends are paid according to the distribution schedule as outlined in the prospectus for a fund, generally on a monthly, quarterly or annual basis. You can choose to receive dividends as cash or reinvest the funds to buy additional shares. These distributions are taxed as ordinary income. Ordinary income distributions also may include short-term capital gains realized by the fund. If you have questions about your individual situation, contact your plan administrator or a personal advisor, such as an accountant, attorney or other tax professional.
