Deduct 401(k) losses?
Question: Can I deduct the losses in my 401K on my tax return? I am 26 years old. Thanks, Leena, Dallas, TN
Answer: Most of us (almost all of us? Just about everyone?) have losses in their retirement savings plan at work. That's behind all the jokes about 201(k)s. No, you can't deduct those losses on your income taxes. It doesn't matter whether they are paper losses or realized losses. You're funding the 401(k) with pretax dollars and it's compounding (or losing) money sheltered from Uncle Sam. When you do withdraw the money some 40 years from now, you'll pay your federal income tax rate on it. Hopefully by then it will have grown a lot over the decades.