Company was bought out by another, I did have a loan with the previous company, but I never asked for a cash out/disbursement, and I am now confused about 1099-R

Forum|Forum|2 years ago
January 26, 2024
1 reply
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I have since determined, after reading some other posts, that the 1099-R form still needs to be entered because obviously the IRS received it too. Reading those other posts, I saw that the suggestion was to enter a note on the screen saying that I did not ask for a disbursement, and that I wanted to keep it with them. But I don't see that option at all. In fact, I read that forum post before I went to do it myself, and I was never asked that.

Is there a way for me to fill that out?

My understanding is that the company (the retirement one, not my former employer) automatically decided to list it as a distribution. (I also thought I had already paid off my load from my 401k but that's a whole different story)

Anyway, if I want to keep my 401k with them, that shouldnt be taxable, right? If correct, then how do I tell Turbotax then?

TurboTax Free Edition Online

Best answer by Opus 17

7 is L

box 1 and 2a have amounts and match (id rather not put them here) and 2B is not checked

Code L is a deemed distribution because you left the company with an outstanding 401k loan balance. Since the loan can only be repaid via payroll deductions, if you leave with an outstanding balance, you have 60 days to payoff the loan by sending money to the 401k plan, otherwise the balance is considered a taxable distribution to you.

If this is the case, you may have other options. If you think you fully repaid the loan, you will have to prove it to the 401k custodian and get them to issue a corrected 1099-R.

Opus 17

Employee

Sorry, but I don’t understand your question at all. Why do you have a 1099-R, what was the distribution?

If you have a deemed distribution because you left your employer with an outstanding 401(k) loan, that is one procedure. If the 401(k) administrator closed your account involuntarily and sent you all the remaining funds, that is a different set of rules. (In particular, you had 60 days to roll over the funds into a private IRA or into a different workplace plan. If you didn’t, I think the money is still taxable to you with a penalty. Even if the withdrawal was involuntary, you had the option of rolling it over.)

davyjones1978Author

"Sorry, but I don’t understand your question at all. Why do you have a 1099-R, what was the distribution?" - your guess is as good as mine? I left my old company (well, we were bought out), and I checked the company's web site (retirement company, Corebridge) - and all my stuff is still there. I was never sent any funds.

So if I don't take action after 60 days, it will stay where it is, no?

"If you have a deemed distribution because you left your employer with an outstanding 401(k) loan, that is one procedure." - forgive my ignorance, but what does this mean? If I left the employer with an outstanding 401k loan, is that a deemed distribution? What is a deemed distribution?

But anyway, to circle back, I guess that's where my confusion is. I received a 1099 R for a distribution.....that never happened.

Opus 17

Employee

@davyjones1978 wrote:

But anyway, to circle back, I guess that's where my confusion is. I received a 1099 R for a distribution.....that never happened.

You need to call the 401k trustee, not your former employer.

What is the code in box 7? What is the amount in box 1, box 2a, and is box 2b checked?