Do I have to report dividends from my 401k if they are just reinvested into the account?

Question

I know I will have to when I take money out of the fund, but until I access it, I'm thinking I don't have to. Please let me know if I'm mistaken on that.

Answer 1

The great thing about 401ks are you don't have to report anything until you withdraw it. It can make $1,000,000 and you still don't report anything (if you don't withdraw anything). Of course, it could lose $1,000,000 and you won't be able to write it off. You could lose everything you put into it and have nothing when you retire and STILL won't get to claim a loss (unless you had put in post-tax contributions). Keep in mind that borrowing from the 401k is NOT a withdrawal until and unless it goes into default.

Answer 2

Nope...inside a 401k there are no taxable events. The dividend reinvest doesn't even change your account value. Simply lowers the share price and buys up the corresponding number of shares at a lower price to bring your account back up to same value it was prior.


Only when you take money outside of a 401k does it become taxable. But a loan is not considered taking it outside. With a loan, the plan is loaning you money using your account as collateral. You really aren't borrowing it from yourself as many people think.

Answer 3

If you're not withdrawing them, no.