If a 1099-R with a code M (qualified plan loan offset) is rec'd and they want to repay new plan or IRA by extension time, how should this be entered in return?

[George4Tacks]

It is very likely too late to do anything. You, as the paid preparer should do some deep research. Just enter the 1099 as presented and cry with the client when they see how much tax and penalty they owe for not coming to you much sooner. 

[kafagans81]

After TCJA they have until the extended due date to do so, I’m just wondering mechanically how it should be input into the return. 

[qbteachmt]

"After TCJA they have until the extended due date to do so, I’m just wondering mechanically how it should be input into the return."

What was the reason that they got reported as a loan offset? Did they lose that job or violate the repayment terms? Has it been 5 years since they took out the loan? Does the new employer accept offset rollovers?

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-loans

"a plan loan offset amount is treated as an actual distribution for rollover purposes and may be eligible for rollover. If eligible, the offset amount can be rolled over to an eligible retirement plan. Effective January 1, 2018, if the plan loan offset is due to plan termination or severance from employment, instead of the usual 60-day rollover period, you have until the due date, including extensions, for filing the Federal income tax return for the taxable year in which the offset occurs."

You asked about IRA:

"2. Can I roll over the outstanding loan balance from my retirement plan into an IRA?

IRAs (including SEP-IRAs) do not permit loans. If this transaction was attempted, the the IRA could be disqualified."

The most recent changes are from CARES Act. For termination repayment, what they have is the time given by the original plan administrator, which can have been longer than in the past.

https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-...

"Certain loan repayments may be delayed for one year: If a loan is outstanding on or after March 27, 2020, and any repayment on the loan is due from March 27, 2020, to December 31, 2020, that due date may be delayed under the plan for up to one year."

"It is optional for employers to adopt the distribution and loan rules of section 2202 of the CARES Act. An employer is permitted to choose whether, and to what extent, to amend its plan to provide for coronavirus-related distributions and/or loans that satisfy the provisions of section 2202 of the CARES Act. Thus, for example, an employer may choose to provide for coronavirus-related distributions but choose not to change its plan loan provisions or loan repayment schedules."

Only you know what applies, here. For the year 2022, you are entering what happened, not what they intend to do.

[Jabback]

Did you find any solutions to this

[qbteachmt]

"Did you get any response on this?"

Did you not read the replies already here? Yes, there has been Response. Yes, it's right here.

Just follow what the IRS tells you to do, and do some due diligence with your taxpayer.

[Jabback]

Kind of a jerk response, but whatever. 

I just needed to find the actual "clicks" of where to put the indirect rollover in to demonstrate the rollover contribution. I finally found it buried in the 1099-R sub pages. Not asking about the regulations around doing. nor was the original post. 

[qbteachmt]

"Kind of a jerk response, but whatever."

Kind of a jerk question, to update someone else's topic from a different tax year, but...whatever.

"Not asking about the regulations around doing. nor was the original post."

Well, another reason not to update someone else's topic is when your question is different. Yes, part of the title has to do with repaying to an IRA, which is not allowed, as already replied:

"2. Can I roll over the outstanding loan balance from my retirement plan into an IRA?

IRAs (including SEP-IRAs) do not permit loans. If this transaction was attempted, the the IRA could be disqualified."

And the repayment to a new employer plan also needs to be allowed, and that is the other part of the title and another part of the reply already here.

"the actual "clicks" of where to put the indirect rollover"

Did you google it:

proconnect 1099-r rollover

Expand the subitems here:

https://accountants.intuit.com/support/en-us/help-article/retirement-benefits/common-questions-form-...

It helps to read the replies and do your own research first, to see if the answers are already provided.