Hoosier Banker 49 mean that they will take advantage of this opportunity. In the example above, $10,000 is still a lot a money to come up with for most people, even with the additional time. But it’s also possible to repay a portion of the loan, which then keeps assets in a retirement plan, plus avoids current-year taxation on the repaid amount. How does my client know whether she has a QPLO, and how are repayments reported? When your client gets her Form 1099-R at the beginning of the year, Box 7 will show a code “M” for a QPLO versus a code “L” for a loan that is “deemed” to be a distribution (and is not eligible for rollover treatment). If she repays all or a portion of the loan to an IRA by the deadline, no tax will be owed on that amount; any QPLO amount that is not timely repaid will be included in taxable income for the year in which the QPLO was distributed. Although QPLOs are considered eligible rollover distributions, financial organizations do not report them as rollovers in Box 2 of IRS Form 5498. Instead, the instructions for forms 1099-R and 5498 state that QPLO rollover amounts should be reported in Box 13a (Postponed/late contrib.); in Box 13b, “Year” should be left blank; and the Box 13c “Code” should be “PO.” Anything else I should know about QPLOs? There are lots of details in the QPLO regulations that we haven’t covered here. But the basics are pretty straightforward. As with any other decision that your clients make that have tax implications, they should seek competent advice before committing to a course of action. HB Convert to HB Digital to Enjoy: Bonus links to videos, photos & more Portability by phone/mobile device Early access, averaging two weeks ahead of snail mail SWITCH TO HB DIGITAL Hoosier Banker is available free of charge to all IBA members and associate members. To start your HB Digital subscription – or convert hard copy to digital-only – contact Evan Hoffmeyer at EHoffmeyer@indiana.bank, 317-333-7143.
RkJQdWJsaXNoZXIy MTg3NDExNQ==