Bipartisan legislation on mutual funds allows retirement savings to build faster
Washington, DC â?? Mutual fund shareholders can look forward to more profitable, long-term investing and a more secure retirement thanks to a bipartisan bill introduced today by Senators Mike Crapo (R-Idaho), Tim Johnson (D-South Dakota) and Jim Bunning (R-Kentucky). The bill would allow shareholders who automatically reinvest distributions to keep more of their own money working for them longer by deferring capital gains taxes until they actually sell the investment. The bill remedies an unfairness in the tax code that makes saving difficult for middle-income Americans. Currently, shareholders in taxable mutual funds are subject to yearly capital gains taxes even if they sell no shares and simply reinvest capital gains distributions back into fund shares. Under the Generating Retirement Ownership Through Long-Term Holding (GROWTH) Act, investors in mutual funds would be treated like investors in individual stocks and would pay capital gains taxes only when they sell the investment. â??The government needs to do more to help Americans prepare for retirement and the tax code should help, not hinder, the process,â?? Crapo, a member of both the Senate Finance and Banking Committees, said. â??American families have historically low savings rates. The GROWTH Act provides a better tool to grow long-term retirement investments and this bipartisan legislation will be a step in doing everything we can to promote sound investing and preparation for retirement savings.â?? The GROWTH Act would immediately help the more than 30 million Americans saving for retirement in mutual funds outside of employer plans and/or IRAs.â??Private savings are crucial to economic independence at retirement, and mutual funds represent a huge portion of the savings held by American workers. In South Dakota, there are nearly 267,000 mutual fund shareholders with more than $20 billion in assets. This bill will encourage workers to automatically reinvest and get workers to think about the long haul by contributing to national savings and building up their own retirement nest egg,â?? Johnson said, a member of the Senate Banking Committee. â??I am pleased to work with Senator Crapo on this legislation to encourage secure retirement savings.â??Companion legislation for the GROWTH Act was introduced in the House (H.R. 2121) earlier this year.