Recoup loss on taxes from 401K from a Market Value Adjustment (MVA)

[Nate402]

I had a significant loss in my 401K funds, through no fault of my own, that I wasn't sure if I could claim some kind of loss for on my tax return.

Here are the details:

• I had $50K in my 401K from the employer I retired from, in a very low-risk fund. It was in a fund that never lost money, and barely made interest. It was no risk, but hardly any return.
• Apparently, my old employer was acquired by a different company, and they changed 401K providers.
• I was not notified this happened.
• I only discovered this randomly after one day I logged into my 401K account on the old 401K provider's website, and I saw my account was missing.
• After tracking down the company that acquired my old employer, they told me that they sent me a letter in September about this.
• They said the letter said I had to move my 401K balance into to a different fund to avoid what they called a "6-8% MVA ("Market Value Adjustment")" for them transferring my 401K from one provider to the new provider.
• They said that this 6-8% Market Value Adjustment occurred when the fund my 401K was in was sold from the old 401K provider's fund and then purchased into a fund from the new 401K provider.
• The problem is that I NEVER received this letter, thus, was NEVER aware that I needed to take an action to avoid this 6-8% Market Value Adjustment. I obviously would have acted immediately to avoid such a gigantic Market Value Adjustment.
• So, without my knowledge, my 401K was transferred to a different financial institution, and I lost nearly $4,000 because of this Market Value Adjustment.

Is there an way to recoup any of this loss through my federal and/or state tax filing?

Thank you.

[DavidD66]

There is nothing you can do about from an income tax perspective.  You can contact the former 401(k) plan administrator to determine if they acted properly.  The company probably didn't do anything that violates the law.  However, if you think they did, you can file a complaint with the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor, or consult with an ERISA attorney.  If you want to prevent something like that from happening again, you can rollover your 401(k) to an IRA where you will have more control over it.