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Nick-Y
Level 2

Financial Loss in a 457 account during transfer to a IRA

My wife retired from teaching in 4Q19 and a sum of money (not her primary pension but a parting bonus) was placed into a Ohio 457 account she was told to create by her school system.  In 1Q20, those funds were transferred to a IRA established in her name at a large broker at the guidance of our wealth advisor.

 

My question:  Between the initial 4Q19 deposit into the 457 account until the time of transfer to the IRA in 2020, the account lost approximately $700 in value.  Where, if anywhere, is that recorded in our 2020 taxes?  If not in our 2020 taxes, can the loss ever be recorded?  The only place that loss is displayed is on her 1Q20 457 statement, not in any 1099-xxxx or other document.

 

Thanks in advance

 

Nick

1 Best answer

Accepted Solutions
MinhT1
Expert Alumni

Financial Loss in a 457 account during transfer to a IRA

The loss occurred within the retirement account (the 457 plan).

 

All income and losses within the retirement account are not taxed. You do not report this loss on your tax return.

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2 Replies
MinhT1
Expert Alumni

Financial Loss in a 457 account during transfer to a IRA

The loss occurred within the retirement account (the 457 plan).

 

All income and losses within the retirement account are not taxed. You do not report this loss on your tax return.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
dmertz
Level 15

Financial Loss in a 457 account during transfer to a IRA

To add to what MinhT1 said, the money in the 457(b) is money on which you and your wife have not yet paid taxes.  Since this is pre-tax money, a loss in value represents money on which taxes will never have to be paid in the first place, so that's how you realize a reduction in taxable income as a result of the loss.  Getting a separate tax deduction for the lost value would be removing it from your lifetime taxable income twice, double-dipping.

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