Question
What is the tax on 401k?
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26th Nov 2009 by David Becker
The tax that is paid on a 401k can come in many forms. If you withdraw your money from a 401k after the age of 65, and the money that was place in the account was post income tax money, then you will be taxed at the current capital gains rate. The tax in this case will only be on the gain, if there was a gain. If the money was placed in the account on a pre-tax basis, then the money will be taxed at ordinary income rates along with capital gains rates. If the money in your 401k is taken out prior to 65, the money will be taxed with a 10% penalty along with the other rates listed.
The tax that is paid on a 401k can come in many forms. If you withdraw your money from a 401k after the age of 65, and the money that was place in the account was post income tax money, then you will be taxed at the current capital gains rate. The tax in this case will only be on the gain, if there was a gain. If the money was placed in the account on a pre-tax basis, then the money will be taxed at ordinary income rates along with capital gains rates. If the money in your 401k is taken out prior to 65, the money will be taxed with a 10% penalty along with the other rates listed.
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20th Oct 2009 In Retirement
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