Which of the following best describes distributions from a traditional defined contribution plan?
A) Distributions from defined contribution plans are fully taxable to the recipient as ordinary income.
B) Distributions from defined contribution plans are fully taxable to the recipient as long-term capital gains.
C) Distributions from defined contribution plans are partially taxable to the recipient as capital gains and partially nontaxable as a return of capital.
D) Distributions from defined contribution plans are partially taxable to the recipient as ordinary income and partially nontaxable as a return of capital.

Question

Quizplus · Accepted Answer

Distributions from defined contribution plans, such as 401(k) or IRA plans, are fully taxable to the recipient as ordinary income. This means that the distribution will be subject to federal and state income taxes, and may also be subject to penalty taxes if taken before age 59 1/2.

Which of the Following Best Describes Distributions from a Traditional