Losses On Retirement Accounts

Losses incurred inside retirement accounts, such as 401(k)s IRAs and the like, cannot be claimed as a loss on your income tax return. That's because the money in the plan went in on a before-tax basis (i.e. you were not taxed on the money), so you cannot claim a loss.

When your employer kicked in the match, you did not report that deposit.

The only time you can claim a loss on a retirement account is when you have after-tax contributions and, when all accounts are closed, the total distributions are worth less than the after-tax contributions.