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Actually, there is a trick with company stock and 401(k)'s. Actually, a couple. First, you can elect to have dividends distributed penalty-free while you're working.

I have a concern about this. My husband is receiving dividends from stock in a 401K that is reported as non-qualified dividends for tax purposes, meaning it is taxed at the individual tax rate rather than the new nifty lower rate for dividends (same as capital gains).

When he takes his lump sum of stock at 59 1/2 and pays personal rate on the cost basis and then pops the stock into a taxable account, do the dividends from this stock revert to the nifty lower rate? One would think so, but we can't find anything written about it.

I hope that wasn't too confusing.

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