@bkmDanno wrote:
Hi, I have a similar situation but with twist. I have a loan from my Vanguard 401-k and I've been laid off. Vanguard says my company set it up such that these loans have to be paid back WITHIN 90 DAYS of layoff. But the Tax Cuts and Jobs Act says the deadline is now the due date of the employee’s tax return for the year in which the distribution occurs, including extensions. I need to know which one is the OVERRIDING RULE. Thank you.
They are both correct.
You have 90 days to repay Vanguard. If you don't, they will treat the remaining amount of the loan balance as a "offset distribution" and issue a 1099-R at the end of the year, that you will report on your 2020 tax return.
If you don't repay Vanguard, you have until the filing deadline next year (April 15, or October 15 if you get an extension) to make a rollover contribution into a new account. It can be a new IRA in your name, or maybe the retirement plan at your new job. You can't just send them a check, you need to contact them in advance and make sure they know to process this as a rollover of an offset distribution (because normal rollovers must be made within 60 days). If you make the rollover properly, the 1099-R for the offset won't be taxable, even though you need to report it on your return.
Nothing in the law says Vanguard has to accept the money back after 90 days, but you can put it into a different qualified account.
