Advanced Underwriting Consultants

Question of the Day – June 9

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My 61 year old client has made $30,000 in aggregate deductible contributions to his traditional IRA.  The account is now worth $25,000, and the client intends to surrender the account.  May he take a deduction for the loss?

Answer: No.  The client will pay ordinary income tax on the distribution from the IRA.  The fact that his account has gone down in value means that the income tax result is smaller than it might otherwise be.

Because the account is made up of previously untaxed money, there is no deduction for any loss upon surrender.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.