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    wendypickles's Avatar
    wendypickles Posts: 1, Reputation: 1
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    #1

    May 19, 2009, 08:33 PM
    401K loss
    I need to move my 401K... layed off and I cannot keep the funds in this account. When I pull the money and move it to an IRA I am going to have an actual cash loss of $12,000 dollars. Can I use this loss as some kind of tax deduction on my taxes next year??
    Thanks...
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    May 20, 2009, 10:07 AM

    Nope, sorry. For two reasons:

    1. When you roll the money to an IRA you're not actually making a withdrawal.

    2. Even if you did make a withdrawal and it was at a loss from your initial investment you still couldn't claim a loss on your taxes, because you never paid income taxes on the portion that is "lost." For example - if you defer $10K of salary into your 401(k), and later on there is only $8K to withdraw, you would pay taxes on only $8K. So you automatically avoid taxes on the $2K that was lost.
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