Frequently asked questions

Q: How do I request a duplicate year-end Investor Statement or tax form?
A: To request a duplicate year-end record or tax form to be mailed to your address of record, please call us at 1-800-447-4930. It will take a minimum of five days to receive your duplicate record.

Q: What is a capital gains distribution?
A: A capital gains distribution are payments (usually annually) to mutual fund shareholders of long-term capital gains the fund has realized on the sale of portfolio securities.

Q: If I reinvest my dividend and capital gain distributions, do I still have to pay taxes on these distributions during the current tax year?
A: Yes. Dividend and capital gain distributions are taxable if the distributions are taken in cash or reinvested in additional fund shares.

Q: Why is an exchange taxable if I didn't receive any cash proceeds from the transaction?
A: When an exchange between funds is performed, shares are redeemed from one fund and the proceeds are used to purchase shares of another fund. For tax purposes, the IRS treats the redemption side of an exchange as though it were a cash redemption. Thus, the shareowner is subject to tax on any resulting capital gain.

Q: What if I perform a redemption or exchange that results in a capital loss?
A: Any capital gains you incur may be offset by capital losses you incur from investment activities. Your net capital gain or loss will be calculated on Schedule D of your federal income tax return. The amount of your capital gain or loss will be contingent on the cost basis of the shares you sold. Please seek competent tax advice for the calculation of your cost basis and the amount of capital gains and losses.

Q: Where can I find my cost basis information?
A: The Cost Basis and Gain (Loss) Information can be found in the last three columns on your Form 1099-B. The average cost basis calculated on your Form 1099-B is only applicable:

• if you have used the single-category average cost basis method for calculating your cost basis on previous redemptions or exchanges from the same fund, or
• if this is your first redemption or exchange, and you elect to use the single-category average cost basis method.

Q: If my contribution is postmarked by April 15, does it meet the cut off?
A: Contributions can be made to your Traditional/Roth IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. For most people, this means that contributions for 2007 must be made by April 15, 2008.

 A maximum allowable contribution is the aggregate amount that can be contributed to IRAs in a tax year and is the lesser of $4,000 ($5,000 if you are 50 or older) or 100% of earned income. If someone contributes more than the maximum allowable amount, the difference is considered to be an "excess contribution" and may be subject to a 6% penalty depending on how the excess is handled, and when it is corrected and removed. Any current year contribution may be removed and treated as an excess if the contribution and related earnings are removed by the tax return due date (including extensions).

Q: Is there a tax penalty for removing excess contributions?
A: A maximum allowable contribution is the aggregate amount that can be contributed to IRAs in a year and is the lesser of $4,000 ($5,000 if you are 50 or older) or 100% of earned income. If someone contributes more than the maximum allowable amount, the difference is considered to be an "excess contribution" and may be subject to a 6% penalty depending on how the excess is handled, and when it is corrected and removed. Any current year contribution may be removed and treated as an excess if the contribution and related earnings are removed by the tax return due date (including extensions).

State Farm Agents do not provide tax, legal or investment advice.

This information is intended to serve as a reference tool to assist you with filing your federal and state tax returns, but it is not intended to serve as legal or tax advice. For any specific tax questions, you should contact the IRS at 1-800-829-1040, visit their website or consult your professional tax advisor.

State Farm VP Management Corp Risk/Important Disclosures. State Farm Mutual Funds Prospectus. The State Farm College Savings Plan Enrollment Handbook (PDF 260 KB) .

Need Assistance? 1-800-447-4930

AP2007/12/9739