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1099-R with Distribution code 1M

ChiHoang
Level 4

I have a client with 1099-R distribution of $29K, and distribution code 1M.  He's under 591/2 years old.  Is this distribution taxable even though he told me it's a loan ? If it's not, how do I make it happen in ProSeries Basic ?

Thanks 

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6 Comments 6
dkh
Level 15

Looks like your client had a taken a loan out of his retirement account through his employer.  Client no longer works for that employer would be my understanding of why 1099-R code 1M is issued which makes the distribution (loan) taxable.

 

ChiHoang
Level 4

He still works at the same place but his company was bought out by other company. He's been paying off every week about 1/2 of the loan so far. 

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dkh
Level 15

Were there payments after the company was bought out?

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ChiHoang
Level 4

Yes

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sjrcpa
Level 15

Something doesn't sound right. He should check with the Plan Administrator about the loan. If he made the scheduled payments there should not be a 1099-R for a loan default.

The more I know, the more I don't know.
ChiHoang
Level 4

OK. Thanks

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