Lost job, defaulted on 401(k) loan, big 1099-R: Any wiggle room for this TP?

#3 02-25-2005, 07:08 AM

"Harlan Lunsford" <hlunsford[at]bellsouth.net> wrote:
- quote -

> David Woods, EA, ChFC, CLU wrote:
> > "robnyberg[at]sbcglobal.net" <robnyberg[at]sbcglobal.net> wrote:

> > > Year before last, 58 yro taxpayer had a good job w/401(k)and
> > > had borrowed substantially on it and was making repayments.
> > > Last year, he lost his job in a company M&A and defaulted on
> > > the loan. Today he has a Target-type job and a 1099-R with
> > > $30K in box 2 and code 2 in Box 7. I'm thinking exception 01
> > > could apply. I'm hoping some of you might have some
> > > experience and other ideas for penalty tax relief or other
> > > relief for this historically tax compliant citizen/taxpayer
> > > and nice person.

> > What penalty? He was 55, he was separated from service from
> > his employer. End of discussion.

> And you get paid for that? (grin

I already sent the invoice for the .1 hours.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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#2 02-24-2005, 08:53 AM

David Woods, EA, ChFC, CLU wrote:
- quote -

> "robnyberg[at]sbcglobal.net" <robnyberg[at]sbcglobal.net> wrote:

> > Year before last, 58 yro taxpayer had a good job w/401(k)and
> > had borrowed substantially on it and was making repayments.
> > Last year, he lost his job in a company M&A and defaulted on
> > the loan. Today he has a Target-type job and a 1099-R with
> > $30K in box 2 and code 2 in Box 7. I'm thinking exception 01
> > could apply. I'm hoping some of you might have some
> > experience and other ideas for penalty tax relief or other
> > relief for this historically tax compliant citizen/taxpayer
> > and nice person.

> What penalty? He was 55, he was separated from service from
> his employer. End of discussion.

And you get paid for that? (grin

ChEAr$,
Harlan Lunsford, EA n LA
Wed 23 Feb 2005

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#1 02-23-2005, 04:14 AM

"robnyberg[at]sbcglobal.net" <robnyberg[at]sbcglobal.net> wrote:

- quote -

> Year before last, 58 yro taxpayer had a good job w/401(k)and
> had borrowed substantially on it and was making repayments.
> Last year, he lost his job in a company M&A and defaulted on
> the loan. Today he has a Target-type job and a 1099-R with
> $30K in box 2 and code 2 in Box 7. I'm thinking exception 01
> could apply. I'm hoping some of you might have some
> experience and other ideas for penalty tax relief or other
> relief for this historically tax compliant citizen/taxpayer
> and nice person.

What penalty? He was 55, he was separated from service from
his employer. End of discussion.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

02-23-2005, 03:17 AM

robnyberg[at]sbcglobal.net wrote:

- quote -

> Year before last, 58 yro taxpayer had a good job w/401(k)and
> had borrowed substantially on it and was making repayments.
> Last year, he lost his job in a company M&A and defaulted on
> the loan. Today he has a Target-type job and a 1099-R with
> $30K in box 2 and code 2 in Box 7. I'm thinking exception 01
> could apply. I'm hoping some of you might have some
> experience and other ideas for penalty tax relief or other
> relief for this historically tax compliant citizen/taxpayer
> and nice person.

The Code 2 in Box 7 means that the distribution qualifies
for an exception to the 10% early withdrawal penalty. I'll
assume that the exception being used is that he had reached
age 55 before his employment was terminated. As the "2" is
already in Box 7, there is nothing more to do other than
reporting the taxable distribution. The penalty does not
apply to the taxable distribution.

--
Alan
http://taxtopics.net

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#-1 02-21-2005, 08:04 AM

Year before last, 58 yro taxpayer had a good job w/401(k)and
had borrowed substantially on it and was making repayments.
Last year, he lost his job in a company M&A and defaulted on
the loan. Today he has a Target-type job and a 1099-R with
$30K in box 2 and code 2 in Box 7. I'm thinking exception 01
could apply. I'm hoping some of you might have some
experience and other ideas for penalty tax relief or other
relief for this historically tax compliant citizen/taxpayer
and nice person.

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

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