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I took a loan from my 401k July 2017. I left my job 2018. My loan has defaulted. Can I come up with the loan amount by April 19th to avoid paying taxes on the loan?

Forum|Forum|7 years ago
June 1, 2019
4 replies
51 views

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TurboTax Deluxe Online

Best answer by dmertz

If the code in box 7 of the Form 1099-R includes code M (and not code L), you have until the due date of your tax return, including extensions, to complete the rollover of the offset distribution if you can come up with the money to do so. An offset distribution is not a defaulted loan, the offset distribution satisfies the loan. The regular due date of your 2018 tax return is April 15, 2019 (unless you live in Maine, Massachusetts, in which case it's April 17, 2019). If you request a filing extension by the regular due date, the extended due date is October 15, 2019.

A

Anonymous

Have you already received a 1099-R for the defaulted loan?

ellen-sekyereAuthor

Level 2

Yes

dmertzAnswer

Level 15

If the code in box 7 of the Form 1099-R includes code M (and not code L), you have until the due date of your tax return, including extensions, to complete the rollover of the offset distribution if you can come up with the money to do so. An offset distribution is not a defaulted loan, the offset distribution satisfies the loan. The regular due date of your 2018 tax return is April 15, 2019 (unless you live in Maine, Massachusetts, in which case it's April 17, 2019). If you request a filing extension by the regular due date, the extended due date is October 15, 2019.

A

Anonymous

Yes, under the new tax law, you have until 4/19 to rollover the amount of the loan, plus the amount of any tax that was withheld from the distribution to avoid tax and any early distribution penalty.