Retirement plan distributions refer to the withdrawals made from retirement accounts, such as 401(k)s or IRAs, typically upon reaching a certain age or when the account holder retires. These distributions are significant because they are subject to specific tax rules that determine how much of the withdrawal is taxable income and whether any penalties apply. Understanding the realization and recognition of gains and losses is crucial as these distributions may impact an individual's taxable income and overall financial situation during retirement.
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