401k Distribution - partial payback

[sharpcougar]

Ok guys - I have not seen this before...

Client took out $88k 401k distribution in 2021. She did it because she thought she would need the funds due to surgery she had and a purchase of a house in Florida (she was planning to move there).

She changed her mind about moving and ended up paying back $67k in the same year she took the distribution. Did you guys see this before?

As always -appreciate your insights.

[TaxGuyBill]

Was it within 60 days of the distribution?  If so, it seems like a rollover to me.

[Just-Lisa-Now-]

If she paid it back within 60 days, rollover, if not, taxable event and she probably needs to get it back out of there.

[Terry53029]

Did she really take a distribution, and receive a 1099R, or did she take a loan ?

[qbteachmt]

I am assuming you already put this on extension. That will also provide for corrective distribution by the due date of the return, which might also be a bit of a loss (since the market has been down from year end), so it might not hurt too badly if this isn't qualified as Rollover.

[K-Tax]

Doesn't the 60 day rule only apply if the taxpayer returns the entire amount in full including any tax withheld?

Was it a loan or an actual distribution on 1099R? Makes a big difference.

[qbteachmt]

There can be a partial Rollover (redeposit).