Jump to content

QPLO reporting


Recommended Posts

With the final regulations published Jan 6th, I want to make sure I am understanding these new requirements.

A plan loan offset that occurs in a DC plan solely due to either termination of the plan; or, termination of employment AND an offset that occurs within 12 months after the employee's termination date (NOT 12 months after employee takes the distribution) is a QPLO.

Example:  Participant terminates employment on 2/22/2021. Participant elects to take a distribution of the account balance in August.  Total account balance is $50,000.  Of this balance, there is an outstanding loan in the amount of $10,000.  Participant receives a check in the amount of $40,000 as the $10K loan balance was offset.

To report this distribution in January 2022, a 1099-R is issued reporting the $40,000 as a lump sum distribution (code 7, 1, or 2 depending upon the situation) in Box 7.  A second 1099-R is issued to report the $10,000 QPLO using code M in box 7.

For 1099-R purposes from the plan it doesn't matter if the former participant does a rollover of the $40,000 within the 60-day period, and also does not matter if the participant funds and rolls over the $10,000 amount before their tax filing deadline for 2021.  

Correct?

Thanks in advance for your help!

Link to comment
Share on other sites

I believe that sounds correct though the QPLO (Qualified Plan Loan Offset) 1099-R code would be M1, M2, or M7 depending on the situation.

Is code M3, M4 loan off set on disability/death an option? I hadn't really considered those before but I imagine people with outstanding loan die or become disabled from time to time as well.

Link to comment
Share on other sites

  • 3 months later...

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...