Do I pay tax and penalty on QLPO if I rollover before Oct 16, 2023 but after April 15, 2023

[briodad83]

I have a QLPO (qualified loan plan offset) and received a 1099-R with Box 7 value of 1M.

I intend to rollover that amount to a RolloverIRA before the extended deadline (10/16/2023) but not before the regular deadline (4/15/2023) because of my current financial situation.

My understanding is that even I file an extension or not, my understanding is that I need to pay taxes owed or else I will owe fees/interest or penalties. In this case, will I incur fees/interest/penalty on this QPLO if i pay before extended deadline but after regular deadline?

[dmertz · Accepted solution]

The deadline to complete the rollover is October 15, 2024, but only if your file your tax return or request a filing extension by April 15.  If you intend to roll the distribution over by the deadline, it would probably be best to request a filing extension by April 15, pay any balance that would be due under the assumption that you will complete the rollover by October 15, then, if you don't complete the rollover, file the tax return reporting whatever amount you do end up rolling over and pay any additional amount due.  If you pay with your request for filing extension 90% of your eventual tax liability, you'll get an automatic waiver of any penalty or interest on the additional tax that needs to be paid with your filing.