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jt108
Returning Member

got 1099R box 7 code M as distribution for 401K loan with previous jobs; turbotax suggest I can still repay or deposit to traditional IRA as roll over or repayment before tax deadline April 15 2021; how to file or do the paperwork for it?

got 1099R box 7 code M as distribution for 401K loan with previous jobs; turbotax suggest I can still repay or deposit to traditional IRA as roll over or repayment before tax deadline April 15 2021; how to file or do the paperwork for it? I have the money to repay the loan via deposit to Fidelity or Merrill Lynch or any bank; but what do I need to avoid being taxes or penalty?  I am over 55 for tax year 2020.  Thank you. 

1 Best answer

Accepted Solutions
dmertz
Level 15

got 1099R box 7 code M as distribution for 401K loan with previous jobs; turbotax suggest I can still repay or deposit to traditional IRA as roll over or repayment before tax deadline April 15 2021; how to file or do the paperwork for it?

You have until the due date of your tax return, including extensions, to complete a rollover to a traditional IRA of the amount of the code-M distribution to be able to continue to defer taxes on this money.  Complete the rollover (or as much of the gross distribution as you choose to roll over) and then indicate in TurboTax that you moved the money to another retirement account and indicate the amount that you rolled over.  TurboTax will include the gross amount on Form 1040 line 5a but will exclude the amount rolled over from the taxable amount on line 5b.  TurboTax will also include the word ROLLOVER next to the line.

 

The only other thing that you need to do is inform the IRA custodian that this is a rollover of a qualified offset distribution so that the IRA custodian reports it correctly on the 2021 Form 5498 that you will receive next year.

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1 Reply
dmertz
Level 15

got 1099R box 7 code M as distribution for 401K loan with previous jobs; turbotax suggest I can still repay or deposit to traditional IRA as roll over or repayment before tax deadline April 15 2021; how to file or do the paperwork for it?

You have until the due date of your tax return, including extensions, to complete a rollover to a traditional IRA of the amount of the code-M distribution to be able to continue to defer taxes on this money.  Complete the rollover (or as much of the gross distribution as you choose to roll over) and then indicate in TurboTax that you moved the money to another retirement account and indicate the amount that you rolled over.  TurboTax will include the gross amount on Form 1040 line 5a but will exclude the amount rolled over from the taxable amount on line 5b.  TurboTax will also include the word ROLLOVER next to the line.

 

The only other thing that you need to do is inform the IRA custodian that this is a rollover of a qualified offset distribution so that the IRA custodian reports it correctly on the 2021 Form 5498 that you will receive next year.

View solution in original post

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