As I understand it, if one sells Apple Stock in a 401K and takes the cash proceeds as RMD, then it is taxed as ordinary income and not capital gains.
If instead the stock was not sold and taken out of the 401K put in a IRA (as a stock), would the owner enjoy capital gains rate of instead? Assume that the Apple Stock is held long term per capital gains definintion.
Withdrawals from either a 401(k) or an IRA are treated as normal income, not as capital gains. So transferring from your 401(k) to an IRA would make no difference tax-wise.
401(k)s and IRAs are tax-deferred accounts. You received a tax break when you put the money in that purchased the stock, and when you take it out, you pay tax on the full amount withdrawn, not just the gain.
Similarly, you can't sell securities that have lost money and count it as a capital loss - you pay tax on the amount that was taken out, whether it came from winners or losers.
This is opposed to a non-retirement investment account where you buy stock with "after-tax" funds, thus you only pay tax on the gain to avoid getting double-taxed.
