Under the heading Taxation, I don't understand the statement "Earnings from investments in a 401(k) account in the form of capital gains are not subject to capital gains taxes."

That seems to be misleading. All profits in a 401k are subject to normal income taxes upon withdrawal, excepting possibly for a special provision called NUA for company stock inside a 401K.

I am thinking the original author is probably trying to say, compared to mutual funds which often have annual capital gains distributions with tax liability, 401K allows savings to accumulate tax-deferred until withdrawal.

So the first sentence should say: "Income taxes on pre-tax contributions and investment earnings in the form of interest and dividends add: and capital gains are tax deferred."

Upon withdrawal all 401K gains are taxed as normal income (short term gains tax treatment), excepting for a special provision called NUA which allows favorable tax treatment (lower long term gains tax rates) for certain company stock gains, subject to the NUA rules.

TBILLT (talk) 16:22, 10 July 2018 (UTC)TBILLT[]

I think it's accurate in that the gains themselves are not taxed while in the fund. Withdrawal is another issue, one that that sentence is not addressing. JesseRafe (talk) 17:13, 10 July 2018 (UTC)[]

Withdrawals are taxed, not profits. See the link in the preamble. Understanding the withdrawals instead to be an allocation of principal between the account's two owners allows for, and explains why, everyone gets a benefit from permanently sheltering profits from tax. Obviously they could not get that benefit if profits were taxed on withdrawal. 174.7.167.228 (talk) 13:14, 15 August 2020 (UTC)[]

This can be readily seen by simple calculation. — Preceding unsigned comment added by 159.118.108.99 (talk) 18:50, 3 November 2018 (UTC)[]

starts from the 400 billion dollar medical expenses, and the one man that started it. — Preceding unsigned comment added by 208.89.33.32 (talk) 18:28, 6 October 2021 (UTC)[]

KiwiSaver isn't a tax deferred arrangement (it has no tax offset or effect on your net income). The statement in paragraph two of Other Countries implies that KiwiSaver is an equivalent scheme to a 401(k) (noting that the UK and Australia do have similar, albeit not identical, schemes). Happy to discuss, but I'm going to remove the NZ reference unless there is a specific point to it being a comparison (that NZ does not have an equivalent). Roche-Kerr (talk) 00:45, 25 April 2024 (UTC)[]

Please add reliable sources as tagged. As B-Class and higher level articles age, editors tend to add more content that is not necessarily sourced well, or sources might "link rot". Bearian (talk) 12:43, 28 May 2025 (UTC)[]

The sentence reads: "The same benefit as from the Roth account from the permanently tax-free profits on after-tax saving". I have read this over and over again and I am not able to parse a meaning out of it.

First off, this is purporting to contrast traditional vs. Roth accounts. But then it lists the first of those differences as "The same benefit as from the Roth account". This just makes no logical sense. Are they the same, or are they different?

What are the profits? The return on investment earned by the account? If so, that should probably be clearly defined somewhere above this sentence.

Can it really be said those profits are tax-free if you are taxed on the withdrawals? Why does it mention "after-tax saving" if, with traditional accounts, you haven't paid tax on contributions and so the savings isn't after-tax? Tylerfh2012 (talk) 13:49, 23 May 2026 (UTC)[]

Seems not worth salvaging to me, I can't even tell for sure if it's talking about traditional or Roth. I removed it. –CWenger ( • ) 15:53, 23 May 2026 (UTC)[]