People...your 401k and IRA won't be affected by the Capital Gains tax because those are non taxable

[dkf]

accounts. Just sayin...

On edit: When you take distribution of your 401k or IRA, you will be taxed on income, not on capital gains. Unless it is a Roth IRA and you won't be taxed as capital gains or income because you used after tax money to fund it.

[mrreowwr_kittty]

1. Thank you!

And these politicians who constantly mention 401ks in the same breath as capital gains either don't know what the hell they're talking about, or they're doing it deliberately.

[rfranklin]

2. NO, you will pay income tax when you take money out...

after you retire and it will be at the rate that matches your income level at that time.

[dkf]

3. Exactly...taxed at income rates, not capital gains tax rates.

I'll clarify that in the Original Post...

[mrreowwr_kittty]

4. But you're not paying taxes on them while they are in the account.

They're tax deferred, and then taxed at your income rate. Capital gains doesn't even enter into it.

[dkf]

5. Yeah, I was getting my hair done the other day and the

woman to the side of me was complaining how raising the capital gains tax rate was going to affect her IRA and her 401K and she seemed sophisticated enough...she was talking about the economy, etc to the girl doing her hair. I was wondering if she was deliberately trying to scare the hairdresser into being scared of capital gains taxes. It pissed me off.

I should have broken in and straightened her out, but I don't interrupt other people's conversations...

Next time I go in I better tell that girl how it really works.

[mrreowwr_kittty]

6. Discussion I had recently with a fellow Dem activist:

Great woman, but fairly affluent and clearly a little out-of-touch with regular people. She understood the part about 401ks and IRAs, but she still insisted that a lot of retirees were going to be hurt by raising capital gains, because they were living off those types of investments. Meaning the ones she knows in her tony neighborhood. She really seemed to think that their experience was the norm. Most people are lucky to have a pension or IRA to supplement their meager SS, let alone capital gains from investments.

[dkf]

7. I wish most people were well off enough to be justifiably terrified of the Capital Gains tax.

The people who should be terrified are the hedge fund managers.

If I were selfish enough to want to keep every bit of those billions, I'd be terrified too.

[mrreowwr_kittty]

8. 86% of capital gains income goes to 5% of Americans.

And we know which 5% that is.

[lapfog_1]

10. You place a bet

and if it's a year after you bet... you pay 15% of the GAIN to the government.

Raise it to 25%. Or even 28%. It's just not that big a deal.

I invest $10,000 in stock. If I do really well, in a year I will have $10,700 (7% return).
I will owe the government $105 on my gain right now. Or, if President Obama introduces legislation to increase the cap gains, I'll owe $175.

And that's if I make than $700 overall in the market (I can deduct other losses from my gains).

And I don't do any work other than pick some stocks to buy.

If I don't sell them, I don't owe a thing in taxes, no matter how much the paper gain.

I can even use the gain as collateral for a tax free loan to myself, and pay myself some nominal interest on the loan (the interest will be taxed).

[LiberalFighter]

11. For sure... set the hairdresser straight about the facts.

I would had interrupted her anyhow but politely.

Saying something along the line that yes there are investments that have capital gains tax if they aren't in a 401k or IRA.

[dkf]

12. Problem was she had enough things wrong that I was afraid

I'd get into an argument or something...

[LiberalFighter]

9. Which was part of the reason for 401k's