@jafox01 wrote:
Sorry, I'm still a bit confused. I paid off the loan prior to the timeframe required. Since it was paid off, do I acknowledge this 1099r that is showing a tax penalty on my current taxes and file as is, or do I just disregard this 1099r form and keep the loan payoff letter with the 1099r form I was issued?
Once the loan goes into default the loan becomes a distribution and is reported as a distribution on the Form 1099-R probably with a code L in box 7 of the form. Your payoff of the loan is not a factor.
Second opinion @dmertz
