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First of all, Losses on a QTP are deductible by the account owner. The deductions only apply if all of the amounts from that account have been distributed and the total of the distributions are less than the contributions made to the account minus any prior withdrawals from the account.The loss must be listed as a miscellaneous itemized deduction and is subject to the 2% of Adjusted Gross Income limit.
Generally, if you receive a taxable distribution, you also must pay a 10% additional tax on the amount included in income
However if your plan has suffered losses and did not have earnings than you do not include anything in income and hence there is no 10% penalty.