I have a beneficiary 401k which is valid for the 10% early fee to be waived. Can I use a 45k capital loss against the 20% federal or 6% state withholdings?

[Opus 17 · Accepted solution]

No, because withdrawing from a 401(k), even an inherited one, is ordinary income, not capital income.

If you don't have any other capital gains, you deduct $3000 of the capital loss this year and carry the rest forward.