Thank you for your interest in T. Rowe Price mutual funds. We want you to be aware of the distributions that our mutual funds may pay out near the end of each year and other information on related income tax issues. We hope it will help you make well-informed investment decisions.
T. Rowe Price funds generally distribute all income and net capital gains realized by a mutual fund to shareholders each year. If you invest shortly before a fund distributes gains, you may, in effect, receive a portion of your investment back as a taxable distribution. When this happens, unless you hold shares in a tax-deferred account, such as an IRA, you may have to pay income or capital gains tax on the distribution. In certain cases—especially if a fund is expecting a large distribution—it may make sense to wait until after a fund has distributed its gains before you invest.
Although tax considerations often play an important role in your investment decisions, they should not be the deciding factors in your overall investment strategy. You always will want to try to maximize your investment returns—in light of your time horizon, investment objectives, and tolerance for risk—but an investment decision that minimizes taxes could be to your advantage.
T. Rowe Price funds that have year-end distributions will declare them on various dates in December. Please check the declaration/record dates on our Dividend Distributions page. Anyone owning shares at the close of business on these dates will receive the distribution. Except for investments held in tax-deferred accounts, such as IRAs, investors holding shares on the record date will have to report the distribution amounts on their tax returns. Although the income generated by municipal bond funds is free of federal and, possibly, state and local taxes, any capital gains paid by these funds are subject to federal and, usually, state and local taxes. If you invest after the record date, you will not receive year-end distributions.
In mid-October, we provide preliminary estimates of the dividends and net capital gains that T. Rowe Price funds expect to distribute based on information currently available on our Dividend Distributions page. You may view amounts in mid-November for updated estimates and in December for final distribution amounts.
T. Rowe Price provides shareholders various tax form packages and provides information about the tax consequences of investments. For additional information about taxes, visit the Tax Planning section.
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To open a mutual fund or Brokerage account or to request a prospectus or summary prospectus for any T. Rowe Price fund, please call 800-225-5132; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing.
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This information has been prepared by T. Rowe Price for informational purposes only. T. Rowe Price (including T. Rowe Price Group, Inc., and its affiliates) and its associates do not provide legal or tax advice. Any tax-related discussion contained on this page is not intended or written to be used, and cannot be used, for the purpose of: (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised on this page.
Internal Revenue Service Circular 230 Notice
The information, including all linked pages and documents, on T. Rowe Price Web sites is not intended to be tax advice and cannot be used to avoid any tax penalties. You should consult your own tax advisor. Please see Legal Information for more details.