In time-deferred pre-tax funds, such as 401K and IRAs, I understand that the contributions and capital gains tax is not paid until after they are released. In this case upon retirement/a certain age of the contributor.
Treasury Bonds do not incur any capital gains tax, but gain interest at 4% currently. The contributions were pre-tax dollars. How would this time-deferred fund be taxed upon dissolution?
If I understand correctly, only the initial income tax would be levied upon the old contributions and NOT on the final value of the entire fund