Group 1 - The article discusses the challenges investors face with capital gains distributions that are not withheld for taxes, leading to large tax bills when filing returns [1][3] - It suggests proactive measures to manage tax liabilities, including increasing withholding from other income sources or making quarterly estimated tax payments [3][5] - Investors may also contact mutual funds directly to inquire about withholding options, although this is not commonly facilitated [4] Group 2 - Capital gains distributions occur when mutual funds or ETFs sell underlying investments, resulting in taxable income for investors, even if they haven't sold their shares [5][7] - These distributions are typically announced by funds in November or December, making it difficult for investors to anticipate their tax liabilities [6] - The income from capital gains distributions is taxed as long-term capital gains, regardless of the duration of ownership of the fund shares, with rates of 0%, 15%, or 20% based on overall taxable income [8]

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