I am filing a 1099-R with code M1 for early distribution under the age of 59. Used money for down payment of house. I quit the job. How do I avoid taxes for this?

Forum|Forum|7 years ago
June 1, 2019
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dmertz

Level 15

The only way to avoid taxes and early-distribution penalty on this money is to come up with the money and roll it over to a traditional IRA or to a traditional account in another qualified retirement plan. The code M indicates that you have until the due date of your 2018 tax return, including extensions, to roll over as much as you are able. Whatever amount you are unable to roll over will be subject to ordinary income tax and early-distribution penalty on your 2018 tax return.

fredplaza

Level 2

I am also filing a 1099-R with code M1. My employer allowed me to take a loan off my 401K. I switched jobs before the loan was paid off. The 401K company repaid the loan with money in the 401K fund. I thought the deadline was Dec 31 2018, but you are saying if I come up with the loan balance before April 15, 2019, I won't get taxed?