Yes, but it isn't as easy as deducting capital losses.

You have to close out all of your Roth IRA accounts (you can keep any traditional IRA accounts open, unless you want to write off those losses, too). If the amount you receive when you cash out the Roth accounts is less than the amount you contributed through the years, then you may be able to write off the loss. And since you don't have any earnings, you won't have to worry about the 10% early withdrawal penalty.

It's considered a miscellaneous itemized deduction -- just like job-hunting costs, investment expenses and employee business expenses -- so you'll have to itemize. But if your miscellaneous deductions do not exceed 2% of your adjusted gross income you're out of luck. Only the amout above the 2% trigger is tax-deductible.

Still, if your losses are big enough, the move could give you a good tax break. Say you contributed $7,000 to your Roth IRAs over the past three years and the account is now worth $1,000. If you closed out all of your Roths, you'd have a loss of $6,000. If your adjusted gross income was $50,000 for the year, you could write off $5,000 [$6,000 - .02($50,000)]. If you're in the 27% tax bracket, that will lower your tax bill by $1,350.

The downside is that after you close out those Roth IRAs, you lose the opportunity for that money to grow tax-free for retirement. You can always open a new Roth IRA account next year and start contributing up to $3,000 per year, but you can't make up for those past contributions. So it may not be worthwhile to close these accounts unless you have a major loss. If you do close these accounts, try to invest the maximum in an IRA, 401(k) or other tax-advantaged retirement plans so you can build up your nest egg again.

MORE: Kiplinger.com | Your Retirement | Column

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