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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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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.
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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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Were there payments after the company was bought out?
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Yes
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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.
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OK. Thanks