S. 1839, the Generating Retirement Ownership through Long-Term Holding Act, allows individual investors to delay paying taxes on capital gains distributions from mutual funds and similar investment companies when those distributions are automatically reinvested to purchase additional shares. Instead of paying taxes immediately, investors would only owe taxes when they eventually sell their shares or upon their death. The bill also grants a special tax benefit by treating reinvested shares as held for more than one year, potentially qualifying them for favorable long-term capital gains tax rates. The legislation does not apply to dependent children or to trusts and estates, and it takes effect for tax years ending after the bill's enactment. This change is intended to encourage long-term investment by reducing the annual tax burden on investors who automatically reinvest their dividend earnings.
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