Will the IRS tax the capital gain as well? Or they will just tax the money I cntributed?
2007-09-02 14:32:24 · 6 answers · asked by sel_bos 3 in Business & Finance ➔ Taxes ➔ United States
If I withdraw money after 65. Will they tax the capital gain?
2007-09-02 14:42:39 · update #1
1) There is no "Capital Gain" in a 401k. It is all taxed as ordinary income.
2) If you contribute $100,000 over your working lifetime and in grows to $400,000, the $400,000 is taxed as you withdraw it.
2007-09-02 16:29:02 · answer #1 · answered by Wayne Z 7 · 2⤊ 0⤋
For withdrawals from a 401K, the entire withdrawal is taxed, both the amount that you contributed and also any gain. It's taxed at regular income rates. The advantage of the 401K is that the money grew tax-deferred while you had it in there.
2007-09-02 21:47:01 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
The term "capital gain" does not apply to investments in a 401k. All gain inside a 401k is ordinary gain.
All distributions from your 401k are taxed as ordinary income. You can begin distributions at age 59.5 without an additional 10% penalty, but you will still owe the income tax.
2007-09-03 11:38:17 · answer #3 · answered by ninasgramma 7 · 0⤊ 0⤋
IRS will only tax the funds when you take them out. 401K fund contributions are pre-tax from your paycheck and deferred until withdrawal at retirement age of at least 59 1/2.
2007-09-03 02:25:09 · answer #4 · answered by Anonymous · 0⤊ 0⤋
if you mean when you start to withdraw it, all withdrawals are taxed, whether its your contribution, company match or interest, dividends or capital gains.
2007-09-02 21:38:42 · answer #5 · answered by Anonymous · 1⤊ 0⤋
Huh? 401(k) is put in pretax and grows tax free.
2007-09-02 21:38:07 · answer #6 · answered by Anonymous · 0⤊ 3⤋