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Unfortunately you cannot use the losses in a 401(k) to offset the income or penalty from taking a distribution from the plan. However, depending on the reason for taking a distribution you may be able to avoid paying the 10% penalty for a distribution prior to age 59 1/2. For example, if the funds are directly rolled over to an IRA and then withdrawn from the IRA to pay college expenses, certain medical expenses, or for a first time home purchase up to $10,000 then the penalty will not apply.
If you have only made voluntary nondeductible employee contributions to the plan (very unlikely) then it may be possible to claim a loss as a miscellaneous deduction subject to 2% of AGI.