1099R M1 Code...

Forum|Forum|6 years ago
January 31, 2020
5 replies
48 views

I am filing a 1099-R with code M1 for early distribution under the age of 59. A loan was taken out but not entirely paid back from a bank for my old job. But it wasn’t taken from a retirement account...why would I get a 1099 for this?

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ColeenD3

Level 15

What type of a job-related loan could it have been if it were not from a retirement account. Call the plan adminstrator if you are in doubt.

haileigh2008Author

Level 2

It was just a loan my husband was able to take out at the bank at his job. It didn’t come from a retirement account and he was making payments deducted from his pay checks.

dmertz

Level 15

The money actually was taken from your retirement account. When you left the company your loan was satisfied by reducing the balance to your credit in your qualified retirement account in an offset distribution. This is equivalent to the plan making a taxable distribution to you that you immediately turn around to pay off the loan, so you received a 2019 Form 1099-R that must be reported on your tax return. The taxable amount of this distribution is also subject to a 10% early-distribution penalty unless you have an exception that applies.

If you can come up with the money to do so, you have until the due date of your 2019 tax return, including extensions, to roll this distribution over to another retirement account and continue to defer the taxes and avoid the early-distribution penalty.

haileigh2008Author

Level 2

We got two 1099’s one from a standard early withdrawal from his 401K and then the second was the code M.

dmertz

Level 15

The code M for the offset distribution simply extends the rollover deadline from the normal 60 days to the due date of your tax return, including extensions. The sum of these two Forms 1099-R represents the total amount distributed from your 401(k). Both Forms 1099-R must be reported since both represent money distributed from your 401(k). The amount that was reported on the code M1 Form 1099-R was turned around to pay off the loan.