@catspaw21 wrote:
i tried that. it seems not to be accepting it. i may delete it and just try to re-enter it again. But at least now i know why it wasnt giving me the three year option, so thank you.
If you have a loan from your 401(k) and you default on the loan payments, you have a "deemed distribution." That's code L. This distribution is subject to a 10% early withdrawal penalty unless you are over age 59-1/2. It can't be offset by performing a rollover to a new plan or by repaying the loan. The tax can't be extended over 3 years because the deemed distribution is not covered under the CARES act. Unfortunately, you just owe the tax.
If you separated from service, so the loan payments were not made, I believe that would be an "offset" distribution, and you could avoid the tax and penalty by making a rollover contribution before the deadline of your next tax return (which was May 17 unless you got the extension). But deemed distributions are not eligible for rollover.
You are just stuck with the tax and penalty, sorry.
