Which of the following best describes distributions from a traditional defined contribution plan?
A)Distributions from defined contribution plans are fully taxable as ordinary income.
B)Distributions from defined contribution plans are partially taxable as ordinary income and partially nontaxable as a return of capital.
C)Distributions from defined contribution plans are fully taxable as capital gains.
D)Distributions from defined contribution plans are partially taxable as capital gains and partially nontaxable as a return of capital.The full amount of distributions from defined contribution plans is taxable as ordinary income.

Question

Quizplus · Accepted Answer

Distributions from traditional defined contribution plans, such as 401(k)s or traditional IRAs, are fully taxable as ordinary income. This means that the full amount withdrawn from the plan is subject to income tax in the year it is withdrawn.

Which of the Following Best Describes Distributions from a Traditional