How do I claim my 401K loan repayments after I have been forced from my job? Monies being used to repay the loan have already been taxed.

[SweetieJean]

Glad we could help.

[Anonymous]

as a loan, the money you got shouldn't have been taxed at that time thus the repayment will not result in a tax deduction. 

on the other hand if the loan was outstanding more than 5 years it would have been reported as a distribution and there should be no need to pay it back.  

[jt108]

I'm over 55 and got 1099R as distribution code M for my 401k loan; how do I repay the loan to avoid tax as distribution during 2020 if I already left the employment and got 1099R since I cannot repay to employer? turbotax special rules said you can still repay the loan before tax deadline? can I deposit as to traditional IRA as rollover or repayment? but what paper work do I need for IRS? 

[dmertz]

Yes, 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.