401k has dropped from 184k to around 100k.

I have resigned employment with the company. If I roll over 401k assets to an IRA. Will the lower existing amount be transferred and the loss recognized or can the amount still have a chance to rise to previous higher amounts?

If the existing amount is recognized, is the lost amount tax deductible?:confused::confused:

Whenever you roll from one account to another the amount available to roll over is the market value of the account when it rolls. So in your case your new rollover IRA would start with $100K. You can not take a tax deduction on the loss, because any gains or losses are defered until you make a withdrawal, and then all withdrawals are taxed at ordinary income rates, not capital gains rates.

I had similar concerns, but a financial manager pointed out to me that even though your 401k nvestments would be sold low, you would also be buying low in the replacement securities you purchase for your IRA.

As ebaines said, any losses are paper losses and not deductible at this time.

Thank you very much for your input! :)

Quote:

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Originally Posted by ebaines

Whenever you roll from one account to another the amount available to roll over is the market value of the account when it rolls. So in your case your new rollover IRA would start with $100K. You can not take a tax deduction on the loss, because any gains or losses are defered until you make a withdrawal, and then all withdrawals are taxed at ordinary income rates, not capital gains rates.

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Yes, remember this is the risk with any investment, and the reason also if and when things go back up, they can go back up even better depending on the investments the account is put in.

Comments on this post
felix martinez agrees: Great. Thanks. One last question. Since the market has been dropping I changed my future contributions to very conservative. Will the previous aggressive allocations remain so that they can possibly rise aggressively again? Thanks for your help.

First, don't use the comments feature for asking a follow-up. Use the Answer This Question options.

Changing your future contributions doesn't change the balances of previous contributions.

Thanks for your help. It's truly appreciated. I'm a newbie, but a quick learner.

Have a great day!