@ivatan wrote:
I found the IRS webpage that explains this. It looks like I can do the plan loan offset amount rollover is the distribution code (box 7) of my 1099-R shows "M". However, the code that shows in box 7 is "1". Can I still do this rollover to an IRA account? How?
@dmertz do you have any comment?
I believe the 1099-R should have had both code 1 and code M (M1 or 1M).
I would start by asking the plan to send a corrected 1099-R.
I don't think the new plan will ask to see the 1099-R. If you had made the rollover contribution before the 1099-R was issued, you wouldn't have one to show. I don't know what other proof the new plan might want; they might only want your signature attesting to the offset distribution, or they might want to see your loan documents, but I don't think they will want to see the 1099-R.
Where the lack of a code M could cause trouble is with the IRS, if their computers get around to matching the different forms (in this case, they would have to match the 1099-R from the old plan with the form 5498 from the new plan, in which case they might call it an unallowed rollover). You would get a letter from the IRS asking for an explanation, and you would reply with copies of documents showing that it was an offset distribution due to termination. It would help in this instance to have a copy of a letter you sent to the plan asking for a corrected 1099-R.
But I would not delay making the offset rollover while you wait for the corrected 1099-R. I think you are still ok to make the offset rollover even though the plan didn't use the right code, as long as you can prove to the IRS that it really was an offset distribution.
