Repayment of retirement distribution

[agreen7004]

I took out a loan on my retirement plan and am making payments to pay it back. Does this count towards my traditional roth deduction? It asks if part of the money put into your roth was repayment of a retirement distribution.

[MaryK1]

No, the loan is a separate transaction, it is not considered a distribution because if qualified you can borrow the money but must make payments to replace the funds.  For the IRA repayments, unless it's a rollover, your "repayment" is treated as a regular contribution.

However, there is one situation where your IRA "repayment" contribution gets special treatment:

- You took the distribution because you were in the military reserves and you got called to active duty after the September 11, 2001 terrorist attacks (and before December 31, 2013). You could take the money out of any qualified retirement plan, such as a 401(k) or IRA, but you must put it into a traditional or Roth IRA. You have up to two years after your active duty ends to repay the money.