Attn: Tax Preparers or Anyone who knows: Losses on 401K and stocks

[Myhearts]

Hello all, Hearts here...

Question?  We had about $2500 in losses on my husband's 401k and I was just reading on AOL money that we could actualy deduct the losses up to $3K.. 

Is this true and how do we prove the losses?

Hearts

[Anonymous]

What if my 401k drops in value?

Generally, you can not claim a capital gains loss on your retirement accounts that already are receiving favorable tax treatment. The only time you would have a loss is when you receive a distribution that had previously been taxed. For more information, see Publication 575, Pension and Annuity Income. (The 2008 version will be posted shortly.)