Paul Schott Stevens, president of the Investment Company Institute, applauded Senators Michael Crapo (R-Idaho), Tim Johnson (D-S.D.) and Jim Bunning (R-Ky.) for introducing companion legislation for the GROWTH Act in the Senate. Representatives Paul Ryan (R-Wis.) and William Jefferson (D-La.) first introduced the legislation in the House in May.
"Senators Crapo, Johnson and Bunning have provided crucial leadership in introducing legislation that would help the broad spectrum of American mutual fund investors save for retirement," Schott Stevens said in a statement. "As the nation grapples with a retirement crisis, this measure can provide a significant boost for millions of investors already saving for long-term goals."
Under present law, which was written 60 years ago, mutual funds are required to annually distribute net capital gains, and investors in taxable accounts must pay taxes on those distributions, even if they decide to automatically reinvest those gains directly back into the fund. The GROWTH Act, or the Generating Retirement Ownership Through Long-Term Holding Act of 2005, would allow mutual fund investors to defer the tax on all reinvested capital gains distributions until the shares are redeemed. This is consistent, the bill's proponents maintain, with how investors who hold stock directly are taxed.
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