After a rough year for the stock market, investors may not expect to receive a surprise tax bill from year-end actively managed mutual fund payouts, experts say.
When a fund manager sells underlying assets at a profit without losses to offset it, those gains are passed along to investors.
And some fund managers sold profitable underlying assets as money has continued shifting from active to passively managed funds.
As a result, some investors may see year-end mutual fund distributions, despite stock market losses in 2022, the report found.
Lucas said mutual fund payouts often "slip under the radar" and need to be included as part of an investor's year-end tax planning.