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.
Was it within 60 days of the distribution? If so, it seems like a rollover to me.
Did she really take a distribution, and receive a 1099R, or did she take a loan ?
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.
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.
There can be a partial Rollover (redeposit).
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