No, you
do not have to add this as income. A loan from a qualified plan
(401k) is not considered a taxable transaction as long as you are paying
the loan back according to the terms of the loan. Also, if you quit
employment it is a deemed distribution and it becomes taxable at your
termination. If you received a 1099-R, you should contact your employer IMMEDIATELY.
If you received a 1099-R, this may mean the 401K administrator has treated it as a distribution and you must report it as such on your tax return. What code is in box 7?
You should not have received it if you are current on repaying the loan.
Thank you Texas Roger, I'm flummoxed on this...the code is 1 in box 7 but my employer is deducting money weekly from my check
Code 1 means early distribution no known exception. You need to contact your employer and find out why a 1099-R was issued for the distribution of the loan amount when you are repaying it.
Thank you for the advice, I will contact them on Monday. Really appreciate it!
No, you
do not have to add this as income. A loan from a qualified plan
(401k) is not considered a taxable transaction as long as you are paying
the loan back according to the terms of the loan. Also, if you quit
employment it is a deemed distribution and it becomes taxable at your
termination. If you received a 1099-R, you should contact your employer IMMEDIATELY.