401K rollover stolen

Forum|Forum|1 year ago
November 6, 2024
1 reply
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We were victims of Oxford scam/theft. Our 401K rollover to a gold 401K was stolen. How do we report loss on taxes?

Opus 17

Employee

Sorry, there is no deductible loss here, for two reasons.

1. Theft is not deductible for 2018-2025 as a result of the 2017 tax reform, unless the theft occurred as part of a federally declared disaster of some kind.

2. Even if theft losses were deductible, your loss is not deductible because you have no basis in the 401k. All the contributions and growth was tax-free when it occurred, and whatever you withdraw is taxable. Your "tax reduction" is that fact that you won't pay taxes now because you have less to withdraw. You can't deduct something from your taxable income if it was never included in your taxable income in the first place.

jenglenn2005Author

Thank you. To be clear so cannot claim loss but do we need to declare anything? Like if we get form for rollover? Even though it never was deposited?

Opus 17

Employee

@jenglenn2005 wrote:

Thank you. To be clear so cannot claim loss but do we need to declare anything? Like if we get form for rollover? Even though it never was deposited?

If you get a 1099-R for the withdrawal, that will create an issue because it needs to be reported, and "stolen" is not one of the usual options in Turbotax. I will ask another expert how they think this should be handled.

@dmertz