Where do I report withholding on my 1099R 401k Loan?

[elle25149]

I took out a loan from my 401k for house repairs. Federal Income Tax withheld is 722. Where on Turbo Tax do I report this? When I enter the 1099-R information it reads it like a distribution, not as a loan that I repaid. 

[DoninGA · Accepted solution]

If you received a Form 1099-R for the withdrawal from your 401(k), the plan administrator deemed that this was a distribution and not a loan.  You report the 1099-R on your tax return as received.

If this was truly a loan from the 401(k) you would not have received the 1099-R.

[Opus 17]

We would need to know why the plan trustee considered it a distribution rather than a loan.  

One possibility is that you left the company.  The outstanding balance becomes converted to a distribution and does not have to be paid back.  Another possibility is that the loan was deemed to violate some plan rule or IRS rule. If it was a non-qualifying loan, that is counted as a distribution, but it still has to be paid back.  Because you already paid tax, this creates an after-tax basis in the account, even if the account is normally pre-tax.  

We can help you understand and explain this, but we need more details.  You should have gotten a letter or other documents from the plan that your loan was considered non-qualified.

[elle25149]

Thank you for your reply. I found out only now when trying to amend my return with the 1099-R information that it had been considered a distribution and not a loan. It was repaid as I said, and I am still employed with the same company, nothing has changed. No letter was received from the plan either and I spoke to an agent on the phone who guided me when taking out the loan. Nothing was mentioned about not being qualified.

Further, I took out another loan upon satisfying the repayment of the first loan. The portal confirms the first loan is paid off. 

[elle25149]

Thank you for clarifying this. 

[Opus 17]

@elle25149 

It's possible the 1099 was issued in error.  Or, maybe you were notified at the very beginning that it was a non-qualified loan.

What is the code or codes in box 7 of your 1099-R?

@dmertz 

[dmertz]

As noted, what you received was processed as a distribution from the 401(k), not a loan.  There can be no tax withholding on a loan, so it was not a loan.  You post suggests the you "repaid" the distribution, which would have to have been done as a 60-day rollover unless the distribution was related to a federally -declared disaster.  Note that if you were under age 59½ at the time of the distribution, it's likely that the distribution had to be performed as a hardship distribution that is not eligible for rollover unless the house repairs were related to a federally declared disaster.