I'm looking for confirmation on the new 2018 1099-R distribution code 'M' for reporting loan offsets from qualified retirement plans:
If a participant receives a cash distribution that includes a loan offset, we now issue two 1099Rs: one for the actual cash received that would reflect withholding on that portion (distribution code of 1 (assuming non-Roth, under age 55), and a second one to report the loan offset with any applicable tax w/h applicable on that portion (same assumptions, distribution code M1). Prior to this new code coming out, we reported this scenario all on one 1099R. Is my understanding correct?
If the cash was from a Roth account and the outstanding loan balance was also from the Roth account, we don't include code M since only 2 codes are allowed. Roth loan offsets would continue to use codes B1 using the age example above. Correct?
Do we have to go back and correct 2018 1099Rs on loan offsets processed prior to this new code coming out?
Thanks!
