401(k) Loan and Distribution

[erchess]

In 2008 taxpayer under age 50 takes out loan from 401(k) and during 08 makes all the scheduled loan repayments on time. In January of 09 taxpayer cashed out 401(k). There were no payments made in 09. Not sure if cashing out was before or after due date of January payment. (Does that matter for 08 or 09?) Taxpayer separated from service before cashing out pension but given age my understanding is that 's irrelevant for tax purposes.

Are there any tax consequences for 08? We know that the taxpayer will have a premature distribution for 09.

[Bert73]

Loan Payments

In 2008 taxpayer under age 50 takes out loan from 401(k) and during 08 makes all the scheduled loan repayments on time. In January of 09 taxpayer cashed out 401(k). There were no payments made in 09. Not sure if cashing out was before or after due date of January payment. (Does that matter for 08 or 09?) Taxpayer separated from service before cashing out pension but given age my understanding is that 's irrelevant for tax purposes.

Are there any tax consequences for 08? We know that the taxpayer will have a premature distribution for 09.

Since the t/p paid on his loan in all of 2008 his loan would not of defaulted until after lack of payment for 3months(most are done this way, not all). So if t/p would have not cashed in all of the 401K, he would of had a distribution for 2009 for the loan.