This is indeed confusing add to that the plan manager have no idea the existence of the law and simply won't listen, I feel the pain described above.
It's strange, this case I am facing, the 1099-R has M1 in box 7 (offset distribution) but the box 2 taxable amount is equal to the amount owe when leaving the employer. There is no rollover. But then the employment was resumed with the same employer and the loan was reinstated (still with a "default" flag as what was told). Then the remaining balance is repaid back in full to the same 401k account, which is after 60 days.
Since there was no rollover involved, I guess the final full repayment was allowed because the employment was resumed? In this case, what a correct 1099-R should show? I'm thinking 1099-R would still have a M1 in box 7 but zero taxable amount in box 2?
Thanks!
