Withdrew From 401(k) to Put Into Crypto and It TANKED. What Can He Do?

Tax Relief with Logan Allec, CPA

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Many Americans, caught in the crypto bull run of 2021, liquidated assets in their retirement accounts such as 401(k)s and IRAs and took distributions from them that resulted in a large tax liability and in some cases significant early withdrawal penalties — with the goal of investing them into speculative cryptocurrencies. 2022 saw a significant crash in the cryptocurrency market, with many of these positions wiped out — but those who did this were still left holding the tax bag despite suffering large losses in their cryptocurrency portfolios. What are their options? Can they offset their 2021 income with their 2022 losses? If not, what else can they do? I answer these questions in this episode.