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Old 06-18-2022, 01:19 PM
 
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Is there a provision to claim Tax Deductions for 401K losses. Say someone invests 20.5K into 401K and at the end of the year, the value is only 14-15K, what options does the investor have?
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Old 06-18-2022, 01:24 PM
 
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Originally Posted by juggie View Post
Is there a provision to claim Tax Deductions for 401K losses. Say someone invests 20.5K into 401K and at the end of the year, the value is only 14-15K, what options does the investor have?
Distribute all the money and pay tax on the smaller amount instead of paying tax on the larger amount.
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Old 06-18-2022, 01:52 PM
 
Location: Spain
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No. By it's nature the assets in a 401k can't have a tax basis until they aren't in a 401k.
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Old 06-18-2022, 05:15 PM
 
Location: OH>IL>CO>CT
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Some reading here may help you understand that retirement plan losses in value are not deductible.

https://finance.zacks.com/tax-deduct...sses-4615.html

"retirement plans sometimes lose money and the Internal Revenue Service places a number of restrictions that don't allow taxpayers to claim those losses as deductions."

One of the risks of "playing the market".
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Old 06-18-2022, 05:50 PM
 
Location: 5,400 feet
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401k contributions are considered pre-tax, meaning the contributed funds have not been taxed as income. So, there can be no tax deduction from income that has not been taxed.
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Old 06-18-2022, 08:31 PM
 
1,137 posts, read 1,097,485 times
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Originally Posted by juggie View Post
Is there a provision to claim Tax Deductions for 401K losses. Say someone invests 20.5K into 401K and at the end of the year, the value is only 14-15K, what options does the investor have?
Rollover to a roth
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Old 06-18-2022, 08:43 PM
 
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No. By it's nature the assets in a 401k can't have a tax basis until they aren't in a 401k.
Less expensive to do but there still isn’t a “deduction”
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Old 06-18-2022, 09:25 PM
 
Location: Spain
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I was responding to OP, not you. I know it isn't a deduction.
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Old 06-19-2022, 07:37 AM
 
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I was responding to OP, not you. I know it isn't a deduction.
My apologies, that was intended to be a response to Marcl.
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Old 06-19-2022, 10:01 AM
 
37,594 posts, read 45,972,346 times
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Originally Posted by juggie View Post
Is there a provision to claim Tax Deductions for 401K losses. Say someone invests 20.5K into 401K and at the end of the year, the value is only 14-15K, what options does the investor have?
Certainly not. You need more understanding of what a tax deferred savings account is.
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