Tucker,
While you cannot deduct losses in qualified accounts, one way to make "lemonade from lemons" is to convert part/all of your Traditional IRA to a Roth IRA when your account balance is down, which if you are like virtually everyone else, 2022 was not kind to you. The idea is you are is you are "selling low" when you convert, and then hoping the rebound will come once that money is in your Roth IRA. In effect, you "recover" your loss with tax-free gain.
I hope that helps. I am a big fan of converting qualified money to a Roth IRA, provided the taxpayer is in a lower tax bracket. If taxpayers can convert money and keep their total income in the 12% federal tax bracket, I think they should. Also, to get the most out of the conversion, taxpayers should not withhold any money from the IRA to pay for taxes, but she pay the tax from other, nonqualified sources. The reason is that the taxpayer should convert as much as possible, and if they withhold money for taxes, that money of course never goes into the Roth IRA.
If you are like a lot of advisors, I think we will see tax rates go up in the future. That is the best reason to convert now, provided the taxpayer is in a lower tax bracket.
RT, CFP
