Tax Treatment

Publications and Resources

401(k) Fee Disclosure Form. ACLI, working with the American Bankers Association and the Investment Company Institute, developed a 401(k) Fee Disclosure Form designed to assist companies in making informed cost-benefit decisions when selecting 401(k) service providers.

As stated in a previous section, with a defined contribution plan, your taxable income is reduced by the sum of your contributions (within legal limits) and your investment gains are tax-deferred until you receive retirement income.

How you receive your retirement benefits affects the amount of tax that will be due. Monthly payments are taxable as ordinary income.

Also keep in mind if you withdraw funds from your plan before retirement, you will pay a tax penalty. (There are exceptions in certain circumstances, such as disability, death, or catastophic medical expenses.)

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