Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
safe
New Member

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?

 
1 Best answer

Accepted Solutions
Opus 17
Level 15

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?

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.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

1 Reply
Opus 17
Level 15

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?

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.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Dynamic AdsDynamic Ads
Privacy Settings
v