Date: Thu, 20 Jul 2006 09:13:56 -0500
From: joetaxpayer 
Subject: Re: Something I do not understand about 401(k)'s
Newsgroups: misc.invest.financial-plan
	processed by UCSD_GL-v2.1 on mailbox8.ucsd.edu;
	Thu, 20 July 2006 07:13:38 -0700 (PDT)
	iQBVAwUARL+PpPl/I4+O31e5AQGjeAIA4ahg92Jn5kGesHxAeZ6iVJzDRK9fmqiz
	WL9+MqBRtPn61ns0riTi+Bpi6+k0oFYAmXr2XTaxILFZwtzs7ZFftg==
	=t00u



aceindahole wrote:

> OK I understand now.  So when theny are taxed and trades etc I make now
> etc... will be taxed long term or short term??

Deposits to the 401(k) are pretax (unless it's a ROTH 401).

All trades remain inside the account are not taxable events. Only 
withdrawal from the account are taxed.

At the time of withdrawal, it's taxed at ordinary income level. i.e. not 
the capital gain rate.

There's a point to be made that depending on your income level now and 
post retirement projected income, that you should only put in the 401 
the ammount your employer will match.

Good savers in a low tax bracket now may very well find they are taking 
withdrawals at a higher tax rate.

JOE