Is 401K ordinary dividends or capital gains?

[HelenaC]

It's neither.  When you take money out of a retirement account, it doesn't matter whether it was a dividend, capital gain, or return of capital because all of the distributions are generally considered ordinary income.

• The tax-deferred nature of the 401(k) means that you won't pay taxes at the time that those dividends or capital gains are paid into your 401(k). Rather, you'll be taxed only once you start taking money out of your 401(k), typically after retirement. So if you receive a dividend in your 401(k) in 2018 but don't take 401(k) withdrawals until 2020, you won't start to pay taxes on that dividend until 2020.

See  Will I pay taxes on a dividend or captial gain from a 401(k)?