Only the Earnings, and Not the Amount Invested, Are Taxed

question 53

True/False

Only the earnings, and not the amount invested, are taxed when distributed from a 401(k).

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Definitions:

HST

Harmonized Sales Tax, a combined tax that includes both federal and provincial sales taxes, applied in some regions of Canada.

Pay-No-HST

A situation or offer where the Harmonized Sales Tax (HST) is not applied, making the purchase effectively tax-free.

Cumulative Investment

The total amount of money that has been invested over a period, including reinvested earnings.

Extra Funds

Additional money available beyond what is necessary for regular expenses, which can be saved or invested.