Does the history of captial gains/losses from 401K accounts get counted?

Question

What happens to all the captial gains/losses from a 401k account. For example, say you start contributing to a 401k when you are 25 years old for 20 years and do the reallocating of assets (stock, bonds, fixed investments, matching stocks). I know while you have the 401K active, as long as the transaction is in a 401k, it's a non tax event. But what happens when comes time to cash in the 401K? Does the history of gains/losses count? To give a particular example, let's say right now, I have assets as stock funds, bond funds, interest income and company matching. Before I cash it out, I transfer everything to interest income for safety. How then does the taxes get treated? thx

Answer 1

For tax purposes, the money in a 401(k) does not exist until it is taken out of the 401(k). At that point, the FULL amount is ordinary income. Anything that happened while the money was inside the account in meaningless for tax purposes.

Answer 2

The only thing that counts are the withdrawals from the plan. They are taxed as ordinary income regardless of whether they're contributions, employer matches, capital gains or interest. How the gains accumulate within the 401(k) and how you allocate or reallocate the funds within the 401(k) are immaterial to the tax treatment of the withdrawals.

Answer 3

Withdrawls from a 401k are taxed as regular income regardless of how the gains were made within the 401k.

Answer 4

Capital gains and losses in a 401K don't get any special treatment, and there's no tax reason to track them. You pay tax at whatever your rate is when you withdraw the money.

Answer 5

No just the amount you wish to cash out gets heavily taxed