topic IRA LOSS DEDUCTION in Retirement tax questions

IRA LOSS DEDUCTION

JosephJ — Sat, 01 Jun 2019 03:22:30 GMT

Earlier I was advised I could take a loss deduction if I withdrew the entire traditional IRA. I just read it must only be my basis which is the total amount of the nondeductible contributions in my traditional IRA. The monies that were lost drained the account almost to $0 but they were funds that were rolled in from an active employer 401k. Does that make this ineligible for a loss deduction? The amount was ~ $95,500. Thanks!

Probably. A 401K usually consists of employee pre-tax con...

Hal_Al — Sat, 01 Jun 2019 03:22:32 GMT

Probably.

A 401K usually consists of employee pre-tax contributions and matching employer pre tax contributions. After tax contributions, by the employee, are also allowed. Only if you made sufficient after tax (essentially non deductible) contributions that exceeded the amount you withdrew, then you would be allowed a deduction.

There's another technicality you should be aware of; you must have removed all traditional IRA funds, not just this one account, to get a deduction and also not have the distribution not be taxable.

I think I cannot deduct as most of the post tax I roll in...

JosephJ — Sat, 01 Jun 2019 03:22:34 GMT

I think I cannot deduct as most of the post tax I roll into my personal account and all pre-tax into this IRA. It is the only one I have. It sounds as if I may just have to consider this as erosion with no taxes paid but unable to capitalize on any deduction. Thank you.

"I may just have to consider this as erosion with no taxe...

dmertz — Sat, 01 Jun 2019 03:22:36 GMT

"I may just have to consider this as erosion with no taxes paid"

Exactly. You do not get a deduction for the loss of money on which taxes were deferred. Along with losing the money, you lost the obligation to pay the deferred taxes on that money.