Can IRA losses be written off against income at retirement? (follow-up question)?

Question

Original question:
I'm 46 years old and I have a traditional IRA which is invested in the stock market. Some of the investments incurred losses. Just for example, I invested $5000 into a stock that went out of business and is no longer trading.

If possible can this $5000 loss be written off against the $3000 per year limit? If so, when? ....at retirement when I start withdrawing from the IRA?
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Follow-up question:
An answer from "David Z" said that because no taxes were paid on the traditional IRA contributions, losses could not be deducted.

In my situation, my traditional IRA contributions were not tax deductible because my income exceeded the IRS threshold.  So, all of my traditional IRA contributions were paid with after-tax money.  Does this change anything?

Alex36 · Accepted Answer

From IRS.gov (Publication 590):

Recognizing Losses on Traditional IRA Investments

If you have a loss on your traditional IRA investment, you can recognize (include) the loss on your income tax return, but only when all the amounts in all your traditional IRA accounts have been distributed to you and the total distributions are less than your unrecovered basis, if any. 

Your basis is the total amount of the nondeductible contributions in your traditional IRAs.

You claim the loss as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions on Schedule A, Form 1040. Any such losses are added back to taxable income for purposes of calculating the alternative minimum tax.

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Can IRA losses be written off against income at retirement? (follow-up question)?

1 Answer