Filed Taxes Before Receiving 1099-R for Profit Sharing Plan Loan - Amend Now or Wait?

You're in a similar situation to folks who file early and then get a corrected W-2 or 1099 after the fact. Unlike the DMV where you can just walk in with new info (and wait 6 hours), the IRS makes you jump through specific hoops. The standard protocol is to wait until your original return is fully processed and you've received your refund before filing an amendment with Form 1040-X. The reason is that trying to amend before processing is complete can create duplicate records in their system, which is about as helpful as trying to fix a paper jam by adding more paper. If your 1099-R shows a taxable distribution that you didn't report, you'll need to include that on your amendment. If it was a qualified loan that isn't taxable, you might not need to amend at all. What does box 7 on your 1099-R show?

I went through this exact scenario last year. What a headache, right? Why does the IRS expect us to file by April when some companies can't even get their forms out until February or March? In my case, I had borrowed from my 403(b) and didn't get the 1099-R until weeks after filing. I called the IRS and they advised waiting until my original return was processed. But here's the important question: is your loan actually taxable? Mine wasn't since it was a qualified loan that I was repaying according to the terms. Check box 1 on your 1099-R - does it show a taxable amount? And what distribution code is in box 7? If it's code "L" (for loan), and you're repaying according to the terms, you might not need to amend at all. Have you contacted your plan administrator to confirm how this should be reported?

Trying to reach the IRS about amending returns is like trying to find water in the desert - theoretically possible but practically exhausting. After getting a late 1099 last year, I spent 3 weeks trying to get through to an agent to ask about the amendment process. Finally used Claimyr (https://www.claimyr.com) and got connected to an IRS agent in about 15 minutes. The agent confirmed I needed to wait until my original return was processed before submitting the amendment, and explained exactly which forms I needed. Saved me weeks of redial hell and uncertainty. The IRS website says you can now e-file amendments, but I found the process confusing and wanted to make sure I was doing it right, especially with retirement account distributions which can get complicated.

The IRS is very clear about this. Wait until your original return is fully processed. Then file Form 1040-X to amend. You can now e-file amendments for 2019 and later tax years. Keep all documentation showing why you're amending. If your 1099-R shows a taxable distribution, you'll owe additional tax plus possibly interest from the original due date. Don't delay once your return is processed.

Be careful about the timing here. I had a client who tried to amend before their original return was processed and it created a huge mess. According to Internal Revenue Manual 21.6.1, amendments filed before original return processing are often suspended or rejected by automated systems, creating additional delays. Also, be aware that if the 1099-R shows a taxable distribution and you owe additional tax, the IRS will charge interest from the original due date of the return (typically April 15th), not from when you received the form. Section 6601 of the Internal Revenue Code is pretty unforgiving about this. I've seen penalties accumulate quickly when people wait too long to amend.

Have you checked if you even need to amend? The IRS website (https://www.irs.gov/taxtopics/tc502) has specific guidance on retirement plan loans. Did you take a qualified loan that you're repaying according to the terms? Or did you default on payments making it a deemed distribution?

Did your 1099-R show a taxable amount in Box 1? And what's the distribution code in Box 7? This makes a huge difference in whether you need to amend.