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I borrowed money from my retirement account. I defaulted. I rec'd 1099R for the balance I owed. During same year I repaid amt. Where do I put that deduction?

 
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dmertz
Level 15

I borrowed money from my retirement account. I defaulted. I rec'd 1099R for the balance I owed. During same year I repaid amt. Where do I put that deduction?

You do not get a deduction.  Repayments of a loan from a 401(k) or similar qualified retirement plan after a deemed distribution reported with code L (possibly along with code 1) in box 7 of the Form 1099-R become after-tax basis in your retirement plan.  When you later receive distributions from the plan, a portion of each distribution will be a nontaxable distribution of the after tax-basis in proportion to the amount of after-tax basis in the account relative to the overall account balance.

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Carl
Level 15

I borrowed money from my retirement account. I defaulted. I rec'd 1099R for the balance I owed. During same year I repaid amt. Where do I put that deduction?

Can you please clarify "I defaulted"? Was it a 401(k) employer sponsored retirement account? Did you leave/quit/get fired from that job before paying off the balance?
With a 401(k) employer sponsored retirement plan, if you have a loan out against that plan and then lose your employment for any reason, the balance becomes due and payable in full within 30 days. (or 60 days, depending on the plan rules.) If not paid off in the specified period, then the balance owed becomes an early withdrawal. That will result in the issuance of a 1099-R. Having paid it back after the grace period has expired (grace period defined by the plan administrator) does not change it from being an early withdrawal. Only thing is, since you did pay it back I don't know how this would be handled tax-wise. I would expect the plan administrator to return that money to you, since they already issued the 1099-R.
There are others in this forum more knowledgeable on this IRA / 401(k) stuff, and hopefully they can education us both. I have never in my 10 plus years in this forum seen your specific situation before. Maybe @dmertz can jump in here.

I borrowed money from my retirement account. I defaulted. I rec'd 1099R for the balance I owed. During same year I repaid amt. Where do I put that deduction?

It is a retirement account I have separately from my employer retirement account.  I think it's a 403b or something like that.  It's with AXA.  I missed the grace period for my payment and was told I couldn't pay it after the grace period.  They issued me a 1099R. A few months later, in order to borrow from the account again for a remodel on my house, I paid the money back.  I did not get anything from them showing this other than my regular account statement. I am already retirement age so it's not an "early" withdrawal.  I think I should at least be able to claim the same amount I paid as a deduction from my income since I put money back into my account.

I borrowed money from my retirement account. I defaulted. I rec'd 1099R for the balance I owed. During same year I repaid amt. Where do I put that deduction?

The answer was posted below.  The plan will keep track of what you paid back.  You don't get a deduction now.  Then when you take a Withdrawal in the future it will be prorated and part of it will come out Tax free.
dmertz
Level 15

I borrowed money from my retirement account. I defaulted. I rec'd 1099R for the balance I owed. During same year I repaid amt. Where do I put that deduction?

You do not get a deduction.  Repayments of a loan from a 401(k) or similar qualified retirement plan after a deemed distribution reported with code L (possibly along with code 1) in box 7 of the Form 1099-R become after-tax basis in your retirement plan.  When you later receive distributions from the plan, a portion of each distribution will be a nontaxable distribution of the after tax-basis in proportion to the amount of after-tax basis in the account relative to the overall account balance.

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