1099-r

[sirsire]

I took a loan out on my 401k.  durring the repayment term i went out on disability for medical reasons.  When i came back to work the repayment plan was not activated again and when i got a notification reguarding the distribution the company said it was defaulted.  So I paid it off before the end of the year and now i have a 1099-r and it is making me pay so much in extra penaties.  is there a form to fill out with the irs for this situation?

Thank you

[DawnC]

The ordinary income tax portion can't be waived.   After you enter the 1099-R, you will be asked some folllow-up questions where you can indicate if you qualify for a penalty exemption.  

Most retirement plan distributions are subject to income tax and may be subject to an additional 10% tax.   Generally, the amounts an individual withdraws from an IRA or retirement plan before reaching age 59½ are called "early" or "premature" distributions. Individuals must pay an additional 10% early withdrawal tax unless an exception applies.  Click this link for the list of exceptions - 401Ks exceptions are in the first column.