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Match each tax classification to the correct type of investment income. taxable tax deferred tax exempt funds distributed from a 529 plan that are used for college capital gains in a brokerage account interest earned on a traditional 401(mathrm(k)) account

Question

Match each tax classification to the correct type of investment income.
taxable
tax deferred
tax exempt
funds distributed from a 529 plan that are used for college
capital gains in a brokerage account
interest earned on a traditional 401(mathrm(k)) account

Match each tax classification to the correct type of investment income. taxable tax deferred tax exempt funds distributed from a 529 plan that are used for college capital gains in a brokerage account interest earned on a traditional 401(mathrm(k)) account

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FayeMaster · Tutor for 5 years

Answer

### <br />- Taxable: capital gains in a brokerage account<br />- Tax exempt: funds distributed from a 529 plan that are used for college<br />- Tax deferred: interest earned on a traditional 401(k) account

Explain

## Step 1: Identify the tax classification for capital gains in a brokerage account<br />### Capital gains in a brokerage account typically fall under the 'taxable' category since taxes are due in the year gains are realized.<br />## Step 2: Identify the tax classification for funds distributed from a 529 plan used for college<br />### Withdrawals from a 529 plan used for qualified education expenses are typically tax-exempt.<br />## Step 3: Identify the tax classification for interest earned on a traditional 401(k) account<br />### Interest earned in a traditional 401(k) account is usually tax-deferred until withdrawal, where it is then taxed as income.
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