@Melisj2008 wrote:
Would this be the same for a loan that defaulted in 2021, but was taken originally in 2020?
It doesn't matter when you default, because it doesn't have anything to do with COVID. You can do a rollover of a loan offset up to the tax filing deadline.
When you have a 401(k) loan, you must make repayments by payroll deduction, it's a tax law requirement, and the repayment schedule can be as long as 5 or 10 years. If you leave the company before the loan is repaid, the remaining balance automatically goes into default. You have 60 days to repay the plan administrator, after that they will consider it an "offset distribution" and issue a 1099-R. However, you actually have until the tax filing deadline* to repay the loan. Since the original plan administrator will usually not accept repayment after 60 days, you make "repayment" by making a contribution to a new plan and calling it a "rollover." Then when you file your tax return and you enter the 1099-R for the offset, you can report that you rolled it over, and it won't be taxed.
(The filing deadline for 2021 is April 18, 2022, or October 15, 2022 if you get the automatic extension.)
