Yes, this seems odd. The box 5 indicates that money is after-tax contributions and box 1 being the same amount indicate that only after-tax money was used to pay the loan which makes it a wash - that amount can still be rolled over.
Because a code M is only used after a separation from service then I suspect that there is other before tax money that was either also distributed or it remains in the plan.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
