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<<I think it just hit me... since the money you put in was pretax, your cost basis as far as taxation goes is $0/share so, as you said, you'll be taxed on what you take out and not on the gains over what you put in.>>

Bingo!! Absolutely correct. Your basis on pre-tax dollars is zero. And you'll be taxed at ordinary rates when you take distributions.

<<I was thinking you should be able to identify specific lots and stuff to figure the gains.... but it doesn't really matter since you've never paid taxes on any of the money in the 401k.>>

You've got it down cold. Perfect.

The ONLY exception is when the 401k invests in YOUR company's stock, and you take a distribution of the stock. There is a method by which you can take the stock and pay capital gains rates on the appreciation. That very issue has been discussed here (just recently, as I recall). And I also know that TMF Pixy (Dave Braze) has also written articles on this issue in the retirement section. So if this applies to you, you might want to check it out.

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