New 401k loan repayment rules (Tax cuts & jobs act)

[macuser_22]

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@apdrew wrote:

Can you clarify how the rollover of an offset distribution should occur? If I'm understanding your response, I only need to start an indirect rollover with the new plan custodian (fidelity)  but just make sure they record it is a rollover of an offset distribution. And I don't need to involve the old plan custodian (vanguard) in this part of the rollover process if they have already completed the offset distribution and report no outstanding loan.

For context here, I had a 401k with an outstanding loan and was terminated. It has been more than 60 days and Vanguard has completed an offset distribution. I am now trying to "repay"/rollover the outstanding loan into my new 401k with Fidelity and it is still before the tax filing deadline. As I understand it, I have the option to: 1) complete an indirect rollover of the offset loan, and 2)  complete a direct rollover of the remaining 401k balance; for part 1 I can work directly with Fidelity only and for part 2 I need to initiate with Vanguard. Does that make sense and sound right to you?

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If your 1099-R for the offset distribution has a code M in box 7, then you have until the extended due date to replace that money using other funds in an eligible retirement account as a rollover.  Assuming that this is a 2020 1099-R with a box 7 code M then report it in TurboTax as a rollover.

[acs11012]

@macuser_22 I have a question about this as well. I received my 1099-R and in box 7 it has the code 1M so it sounds like it’s a QPLO.

If I file an extension for my taxes then I technically will have until October to transfer the gross distribution about to an IRA right?

When filing the tax in turbo tax will I enter the 1099 information in and then will it have a prompt to ask if any of it was paid back? 

[macuser_22]

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@acs11012 wrote:

@macuser_22 I have a question about this as well. I received my 1099-R and in box 7 it has the code 1M so it sounds like it’s a QPLO.

If I file an extension for my taxes then I technically will have until October to transfer the gross distribution about to an IRA right?

When filing the tax in turbo tax will I enter the 1099 information in and then will it have a prompt to ask if any of it was paid back? 

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Question 1 - yes - you can replace it with other funds up to the due date or extended due date if an extension is filed.

#2 - TurboTax will ask what you did with the money - you say it was rolled back.