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sonicblue28
New Member

I recieved a 1099r that I paid back 6 months later in the same tax year am I still taxed on it

 
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HelenaC
New Member

I recieved a 1099r that I paid back 6 months later in the same tax year am I still taxed on it

Yes, it's probably taxable. You generally have 60 days from the date you receive the distribution from the plan to redeposit it as a rollover. As long as you redeposit the money into the same retirement account or another qualified retirement account within the grace period, you won't owe the taxes or penalties. However, if you don't roll over the money in time and don't get receive a special waiver from the IRS, you'll owe income taxes on the distribution and, unless you're 59 1/2 years old, an additional 10 percent tax penalty. When you redeposit the money, you have to return the same amount withdrawn, including any taxes withheld, not just the amount you received. 

For additional information, click on Rollovers of Retirement Plan and IRA Distributions | Internal Revenue ...

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4 Replies
dmertz
Level 15

I recieved a 1099r that I paid back 6 months later in the same tax year am I still taxed on it

What is the code in box 7 of the Form 1099-R provided by the payer?
Is the IRA/SEP/SIMPLE box marked?
sonicblue28
New Member

I recieved a 1099r that I paid back 6 months later in the same tax year am I still taxed on it

1L
HelenaC
New Member

I recieved a 1099r that I paid back 6 months later in the same tax year am I still taxed on it

Yes, it's probably taxable. You generally have 60 days from the date you receive the distribution from the plan to redeposit it as a rollover. As long as you redeposit the money into the same retirement account or another qualified retirement account within the grace period, you won't owe the taxes or penalties. However, if you don't roll over the money in time and don't get receive a special waiver from the IRS, you'll owe income taxes on the distribution and, unless you're 59 1/2 years old, an additional 10 percent tax penalty. When you redeposit the money, you have to return the same amount withdrawn, including any taxes withheld, not just the amount you received. 

For additional information, click on Rollovers of Retirement Plan and IRA Distributions | Internal Revenue ...

dmertz
Level 15

I recieved a 1099r that I paid back 6 months later in the same tax year am I still taxed on it

Code 1L means that you received a deemed distribution for defaulting on the loan.  A deemed distribution is not eligible for rollover, is taxable, and the code 1 indicates that it is subject to a 10% early-distribution penalty unless you have an exception that applies.  The taxable amount of the distribution shown in box 2a of the Form 1099-R will be included on Form 1040 line 16b and the 10% early distribution penalty will appear on Form 1040 line 59.

A deemed distribution simply makes the loan amount taxable.  It does not satisfy the loan, so you were still required to pay back the loan.  Loan repayments made after the deemed distribution become after-tax basis in your qualified retirement plan.  When you eventually receive distributions from the plan, a portion of each distribution will be a nontaxable distribution of your after-tax basis and the remainder of each distribution will be taxable (and potentially subject to an early-distribution penalty).  This means that you won't pay taxes on the same money twice.

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