sharpcougar
Level 3
‎04-20-2022 07:24 PM

Ok guys - I have not seen this before...

Client took out $88k 401k distribution in 2021. She did it because she thought she would need the funds due to surgery she had and a purchase of a house in Florida (she was planning to move there).

She changed her mind about moving and ended up paying back $67k in the same year she took the distribution. Did you guys see this before?

As always -appreciate your insights.

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TaxGuyBill
Level 15
‎04-20-2022 07:51 PM

Was it within 60 days of the distribution?  If so, it seems like a rollover to me.

Just-Lisa-Now-
Level 15
Level 15
‎04-20-2022 07:56 PM
If she paid it back within 60 days, rollover, if not, taxable event and she probably needs to get it back out of there.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
Terry53029
Level 15
Level 15
‎04-21-2022 09:15 AM

Did she really take a distribution, and receive a 1099R, or did she take a loan ?

qbteachmt
Level 15
‎04-21-2022 04:23 PM

I am assuming you already put this on extension. That will also provide for corrective distribution by the due date of the return, which might also be a bit of a loss (since the market has been down from year end), so it might not hurt too badly if this isn't qualified as Rollover.

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K-Tax
Level 2
‎04-21-2022 04:25 PM

Doesn't the 60 day rule only apply if the taxpayer returns the entire amount in full including any tax withheld?

Was it a loan or an actual distribution on 1099R? Makes a big difference.

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qbteachmt
Level 15
‎04-21-2022 04:31 PM

There can be a partial Rollover (redeposit).

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