Answers to your crisis questions

Question: I know I can't deduct losses in an IRA. But how about 529s? My children are four and six, and their 529s are underwater. --Ken Olberg, Houston

Answer: It's possible to harvest tax losses in a 529 plan, but tricky. First, you have to close the account entirely, not just sell a fund within the plan. Second, because 529 losses fall into the category of miscellaneous deductions, you can deduct only those losses that exceed 2% of your adjusted gross income. Finally, you may be on the hook to repay any state tax deductions that you took on the contributions.

As a result, you are probably better off staying put. Because your kids are young, you have time to make up for losses. If you pull out now, you may miss a rebound.

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