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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15742
Experience:  15years with H & R Block. Divisional leader, Instructor
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I borrowed 11.000.00 dollars from my 401k when I worked in

Customer Question

I borrowed 11.000.00 dollars from my 401k when I worked in Walmart. I am now told I have to pay it back by the end of the quarter, or I will default.
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.


Each plan sets down what happens if a loan is taken from a 401k and the need to repay.

A loan that is in default is generally treated as a taxable distribution from the plan of the entire outstanding balance of the loan (a “deemed distribution”).

The plan’s terms will generally specify how the plan handles a default. A plan may provide that a loan does not become a “deemed distribution” until the end of the calendar quarter following the quarter in which the repayment was missed.

The plan rules determine this.

If you go into default then they will issue you a 1099R showing the outstanding amount as a distribution and you will pay tax on that amount when you file your return.

Please do not forget or ignore to give a positive rating (look for the STARS or SMILEY FACES). It adds nothing to your costs but it assists me.

Expert:  Robin D. replied 1 year ago.

Checking to see how you responded