Offsetting 401k withdrawal taxes

[Irving Franco]

Is away to offset the income tax on a 401k withdrawal that will be used to purchase investment real estate. I know I can move the money into a self directed IRA and going that route, but I'm curious if you can take a 401k withdrawal and use other tax losses within the year to offset the income tax.

I live in California which has higher income taxes, I have a W-2 job and do not qualify as a real estate professional

[Irving Franco]

@Chris Seveney

I understand that the 10% penalty will happen, but I’m more interested in offsetting the federal and state income taxes. For example, if I withdraw $100k from my 401k I would be assessed a $10k penalty, and roughly $35k in income taxes. In theory, I would be able to offset the $35k in income taxes with some type of loss. So if I use $100k that I withdraw from my $401k to purchase a property, can I use cost segregation or other forms of “loss” to offset the $35k due in income taxes from the withdrawal.