Can 401k management fees be taxable?

Can 401k management fees be taxable?

Posted in the 401K Forum

Concerned

Great Neck, NY

#1 May 26, 2011
I participate in a company sponsored traditional 401k. My only holding within it is a stock index fund. The fund management company sells some of our shares quarterly to collect their fees. Since this is a tax deferred account, does that mean when I retire I will owe taxes on the shares that had been sold over the years for these fees?
Jon T

Seattle, WA

#2 Jul 5, 2011
Concerned wrote:
I participate in a company sponsored traditional 401k. My only holding within it is a stock index fund. The fund management company sells some of our shares quarterly to collect their fees. Since this is a tax deferred account, does that mean when I retire I will owe taxes on the shares that had been sold over the years for these fees?
No - there are no taxes for buying/selling at a profit in a qualified account such as an 401k or an IRA, and also no ability to write off any losses! Taxes are owed only when you withdraw funds from the account and are treated as income for the year in which the funds were distributed, then taxed at your personal tax rate at that time.

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