I also dealing with the 2 codes in Box 7 "1M" (number one & letter M) for my 1099-R.
History behind this is that I had a 401k loan but I left my employment & the employer generated two 1099-R's - one for a Rollover (Box 7 code "G") & the 2nd one for the outstanding loan I had with codes "1M".
When I enter "M" there is no extra 10% penalty added to the Tax Due Box but after enter "1" in the second #7 box then the 10% penalty is added to the Tax Due Box.
This is the what Publication 1099-R Instructions say about this on their page 8 thru the top of page 9 for PLAN LOAN OFFSETS & it just mentions to enter code "M".
Page 9 of IRS 1099-R Instructions….
Plan loan offsets. If a participant's accrued benefit is reduced (offset) to repay a loan, the amount of the account balance that is offset against the loan is an actual distribution. Report it as you would any other actual distribution. Do not enter Code L in box 7. A qualified plan loan offset is a type of plan loan offset that meets certain requirements. In order to be a qualified plan loan offset, the loan, at the time of the offset, must be a loan in good standing and the offset must be solely by reason of (1) the termination of the qualified employer plan, or (2) the failure to meet the repayment terms because the employee had a severance from employment. Report a qualified plan loan offset as you would any other actual distribution. In addition, enter Code M in box 7
Thank you for your advice.
