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401k - Short-Term and Long-Term Capital Gains?

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  • 401k - Short-Term and Long-Term Capital Gains?


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Answer #1 | 28/12 2013 21:32
A 401k is a retirement plan and all earning, dividends or capital gains of whatever nature are considered as ordinary income upon distribution after retirement, because you never paid taxes on that money in the first place.
Answer #2 | 28/12 2013 22:17
In this case, it does not matter, as no gain triggers a taxable event. Cost basis is also not important since you bought the investment w/ pretax money. You pay taxes on the distributions you take later in life. If you can, work it out such that the distributions you take are low enough and you may not have a tax liability even then. In any event, congrats on the effort, long term savings is a big deal and matters.
Answer #3 | 29/12 2013 12:24
Inside your 401k capital gains is a non-issue. Same would be the same in an IRA. Since they are retirement accounts they are tax sheltered so you won't have to do deal with taxes until you retire and you start pulling the money out.
Answer #4 | 30/12 2013 09:39
All dividends will be reinvested back into the mutual fund/ETF/stock that paid them. When you are talking about a tax advantaged account (like your 401K), there are no "long term" or "short term" payouts. The designation of a payout as long term or short term is only for tax purposes. Since all the payouts will be inside your 401K, it does not matter if the payout is short or long term because it is not taxed until you withdraw the money at retirement. At retirement - - all the withdrawals are taxed as ordinary income.

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