While some people may suggest you contribute regularly, it's not required. But it's a good way to make investing a habit, so you don't have to put as much effort into it.
The IRS taxes you on gains, when you sell. If you invest $20k and sell for $30k, you have $10k of gains.
The stocks in a fund will also issue dividends, which you'll receive quarterly. I think Vanguard Total Stock Market has about 1.2% dividend. So if you invested $20k, you might receive $240 in dividends, which are typically taxed at 15% (maybe 0%). So that would be about $36 in tax to hold $20,000 worth of investments.
[/quote]
Thank you very much!