Comments on: Are capital losses considered when taxing an early 401k withdrawl? http://www.secretfinance.com/blog/are-capital-losses-considered-when-taxing-an-early-401k-withdrawl/ Thu, 09 Feb 2012 06:14:51 +0000 http://wordpress.org/?v=2.7 hourly 1 By: TaxMan http://www.secretfinance.com/blog/are-capital-losses-considered-when-taxing-an-early-401k-withdrawl/comment-page-1/#comment-1327 TaxMan Wed, 04 Mar 2009 09:42:15 +0000 http://www.secretfinance.com/blog/are-capital-losses-considered-when-taxing-an-early-401k-withdrawl/#comment-1327 The only time losses are considered is when you contributed post-tax money to the 401(k). People rarely do this because post-tax contributions don't save taxes when contributed like pre-tax contributions do. If you pull out your entire 401(k) and you contributed over $11,000 post-tax, see a tax-preparer or accountant on how to handle it. Otherwise, if all of your contributions were pre-tax, you'll pay through the nose. Do whatever you can to not pull out the money. If you are pulling it out because you are unhappy with the people handling the 401(k), roll it over to an IRA instead. The only time losses are considered is when you contributed post-tax money to the 401(k). People rarely do this because post-tax contributions don’t save taxes when contributed like pre-tax contributions do. If you pull out your entire 401(k) and you contributed over $11,000 post-tax, see a tax-preparer or accountant on how to handle it. Otherwise, if all of your contributions were pre-tax, you’ll pay through the nose. Do whatever you can to not pull out the money. If you are pulling it out because you are unhappy with the people handling the 401(k), roll it over to an IRA instead.

]]> By: Wayne Z http://www.secretfinance.com/blog/are-capital-losses-considered-when-taxing-an-early-401k-withdrawl/comment-page-1/#comment-1326 Wayne Z Sun, 01 Mar 2009 14:59:58 +0000 http://www.secretfinance.com/blog/are-capital-losses-considered-when-taxing-an-early-401k-withdrawl/#comment-1326 You would be taxed and penalized on the $11,000. The $6000 "loss" has no bearing on the return as it is in a tax deferred account. My advice is to not cash it out though. Depending on what state you are in, you will lose about half of it to taxes and penalties. You would be taxed and penalized on the $11,000. The $6000 “loss” has no bearing on the return as it is in a tax deferred account.

My advice is to not cash it out though. Depending on what state you are in, you will lose about half of it to taxes and penalties.

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