Retirement account distribution that was repaid

Forum|Forum|4 years ago
March 10, 2022
2 replies
23 views

what is the best way to report an 401k distribution that the client repaid 30 days later. 1099 says $416,666 and the client repaid $220,000. within 30 days of the distribution.

ProSeries Professional

This topic has been closed for replies.

Best answer by JRC

Report the full amount of distribution Box 1 416666.00

Box 2a taxable 416666.00

Box 7 Use the proper distribution Code Either Normal or if Early Distribution.

On Page 2> Box B2 Report the amount of partial rollover amount 220000.00

Have all the proper documents in your hands to verify the Rollover amounts, dates of distribution and Date of Rollover Contribution.

Also make sure you receive the Form 5498 IRA stating the Rollover Contribution.

Documents needed for when the IRS or State comes a calling!!!!

qbteachmt

Level 15

What sort of distribution was this? Was that received by submitting a hardship request? And that was not a loan repayment, but trying to be a rollover? Have you confirmed that is a qualified rollover?

Don't yell at us; we're volunteers

R

RichardS77Author

Level 4

No it was not a hardship. Just a normal distribution. the 1099 shows it as a code 7 normal distribution.

JRCAnswer

Level 7

Report the full amount of distribution Box 1 416666.00

Box 2a taxable 416666.00

Box 7 Use the proper distribution Code Either Normal or if Early Distribution.

On Page 2> Box B2 Report the amount of partial rollover amount 220000.00

Have all the proper documents in your hands to verify the Rollover amounts, dates of distribution and Date of Rollover Contribution.

Also make sure you receive the Form 5498 IRA stating the Rollover Contribution.

Documents needed for when the IRS or State comes a calling!!!!

qbteachmt

Level 15

It's not a repayment; it's a rollover.

There is no Form 5498 for 401(k) activity. They should be able to prove the rollover is to the same plan, for a qualified date, and the amount rolled minus what was held out by the person and withheld as taxes. And this assumes all of the withdrawal would have been taxable, to be a qualified rollover.

401(k) rules are different than IRA rules. A hardship distribution would not qualify for this activity.

Don't yell at us; we're volunteers

Sign up

Login with SSO

Let's get you signed in

Login with SSO