Withdrew 30K in a deferred Traditional IRA and Lost 150K in ’16. Deduction?

Submitted by Christopher Jones on Tue, 2017-04-11 19:17

In 2016, I withdrew 3OK then later lost 150K from my tax-deferred traditional IRA that was a rollover from a previous employer’s tax deferred retirement account. The losses were all incurred from stocks that were bought and sold in 2016. At the end of 2016 my retirement account was a complete loss down to 300 bucks. My broker did not generate a 1099B form. Accountants in Chicago at large firms are telling me that the 30K distribution could have triggered a category for tax deduction (albeit very unusual) because my loss was much larger than my distribution amount even when I am in a tax deferred account. They are stating that the broker should have produced a 1099B but that some brokers do not always do that for this situation and that my 3K deduction is up to the broker. Has anyone encountered this situation or know where i can locate the answer? Different accountaints tell me different recommendations on this so I think the situation is not common.

Thanks,

Chris



Submitted by John Peterson on Tue, 2017-04-11 19:27

The $30,000 you withdrew is taxable in 2016 and you should have rec’d a 1099-R. If you invested the $30,000 poorly and lost some/all of that you likely have deductible capital losses from those transactions.The investment losses on the $150K still in the TIRA don’t generate any losses on your personal tax return. 

Submitted by Christopher Jones on Tue, 2017-04-11 19:44

What if the 30k was used to buy a car i returned to dealer next day and they charged me 5k restocking fee so loss of 5k

Submitted by Alan - IRA critic on Tue, 2017-04-11 19:52

  • You would only have a misc deduction possibility if you had basis in your IRA from non deductible contributions. If so, you would file an 8606 with your 2016 return to determine the remaining basis after the distribution. If you then closed out your TIRA (all of them if you have more than one) this year, you have a potential loss to the extent your remaining basis exceeds the amount distributed this year. But you did not mention any IRA basis.
  • You need to find out why no 1099B was issued if you sold stocks in a taxable account. For the IRA distribution you should have a 1099 R.

Submitted by Christopher Jones on Tue, 2017-04-11 19:59

This was always in a tax deferred traditional ira. Broker says they never issue 1099b for tax deferred ira acct. Accountant says some brokers do in my situation. By basis do you mean i wouldve had to invest after tax money to create basis

Submitted by Alan - IRA critic on Tue, 2017-04-11 20:15

  • Yes, you would have had to make non deductible TIRA contributions and file Form 8606 for each year you did that, or have rolled over after tax money from an employer plan to have any IRA basis.
  • After you returned the car, you could have rolled the 25k left back to the IRA within 60 days, or even added 5k from your other funds to complete a full rollover of 30k. 

 

Submitted by Christopher Jones on Tue, 2017-04-11 20:40

What about filing form 8949 sales and other dispositions of capital assets to show losses. Says 1099b should be  reported or substitute statement from broker. Broker has substitute statement

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