Legal Question in Tax Law in Oklahoma

401(k) Loan Question

Last year I took out a loan from my 401(k), and apparently the payroll deduction information was sent by the 401(k) company to the wrong department of my employer. Apparently I missed the 'deadline' for catching this and making up the payments. Now I am being told that the loan will be reported as a distribution (penalty + taxes due for 2007) but I'm also being told that I am required to pay back the loan still.

Are there any legal grounds on which I can challenge either of these (I'm thinking no on the distribution reporting)?

I want to know why I could legally be required to pay the loan back if it's already going to be reported as a distribution?


Asked on 4/13/07, 9:06 am

1 Answer from Attorneys
Kreig Mitchell Law Office of Kreig Mitchell LLC

Re: 401(k) Loan Question

You might be able to request a private letter ruling from the IRS, asking whether they will allow you to treat the funds as a loan rather than a distribution. Your tax attorney can help you with this.

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Answered on 4/13/07, 11:09 am


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