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Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Re: Question on 401k Taxes Date: 6/25/2007 2:47 PM
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So, there is no separation of tax rate between contribution and gains ?

Correct. And it is for this reason that people sometimes recommend holding stock that you intend to hold for the long term in a taxable account. If you held the stock in a taxable account, then the gain would be taxed at your capital gains rate, which maxes out at 15%.

If you held the stock in your 401k, then you'd effectively be taxed at your marginal tax rate when the dollars are distributed from the account.
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