Took out a 401k loan last year but Empower says no 1099 form needed?
So I borrowed some money from my 401k in 2024, around $12,000 to handle some unexpected home repairs. Nothing too crazy, but it helped me avoid putting it all on credit cards with those insane interest rates. When I started doing my taxes this weekend, TurboTax kept asking me to revisit my 1099-R questions. I was expecting to get a 1099 form from Empower (my 401k administrator) for the loan, but when I called them, they said I don't need one for a 401k loan as long as I'm making the payments according to schedule. This seems weird to me because TurboTax keeps flagging it. Do I really not need to report a 401k loan on my taxes? Is Empower correct that I don't get a 1099 for it? I'm confused because TurboTax is acting like something's missing. Anyone deal with this before? I don't want to mess up my taxes but also don't want to report something unnecessarily.
19 comments
Join the conversation
Javier Cruz
You're getting confused between a 401k loan and a 401k withdrawal/distribution. Empower is correct - you don't receive a 1099-R for a 401k loan as long as you're repaying it according to the terms. A 401k loan is essentially borrowing your own money with a promise to pay it back. Since it's not considered a taxable distribution, there's no 1099-R generated. It's treated as a loan arrangement between you and your 401k plan. The TurboTax prompt you're seeing is likely a standard question asking about any retirement distributions you might have received. Since a loan isn't a distribution, you can simply indicate you didn't receive a 1099-R for this purpose. The software is probably just checking to make sure you haven't overlooked any forms.
0 coins
Emma Wilson
•But what happens if you don't pay the loan back? Doesn't it then become a distribution and you'd owe taxes? Also does taking a loan affect how much you can contribute that year?
0 coins
Javier Cruz
•If you fail to repay the loan according to the terms, the outstanding balance would be treated as a distribution at that point. Then yes, it would become taxable and you'd receive a 1099-R for the amount not repaid, plus you'd likely face the 10% early withdrawal penalty if you're under 59½. Taking a loan doesn't affect your annual contribution limits. You can still contribute up to the maximum allowed amount ($23,000 for 2025, plus an additional $7,500 if you're 50 or older). However, some plans might restrict new contributions until the loan is repaid, but that's plan-specific rather than an IRS rule.
0 coins
Malik Thomas
I went through this exact same confusion last year! TurboTax kept asking me about 1099-R forms and I was stressing out. I found this website https://taxr.ai that basically analyzes all your tax docs and situation to make sure you're not missing anything. I uploaded my stuff there and it confirmed I didn't need a 1099-R for my 401k loan. It explained that loans aren't taxable distributions as long as you're making payments. The site helped me understand what TurboTax was actually asking for vs what I actually needed to report. Really gave me peace of mind that I wasn't missing anything!
0 coins
NeonNebula
•How does that work exactly? Does it look at your actual tax forms or does it just ask questions? I'm worried about missing something on my taxes too.
0 coins
Isabella Costa
•Sounds interesting but I'm skeptical. How is this different from just using TurboTax? Don't they also check for missing forms?
0 coins
Malik Thomas
•It actually reviews your tax documents directly. You upload what you have and it analyzes them to identify inconsistencies or missing forms based on what's in your documents. It's more comprehensive than just a Q&A system. TurboTax does check for missing forms, but in my experience it sometimes flags things that aren't actually required, like in this 401k loan situation. The difference is taxr.ai explains WHY something is or isn't needed based on your specific documents rather than just flagging potential issues.
0 coins
NeonNebula
Just wanted to update that I tried the taxr.ai site after reading about it here. It actually really helped with my situation because I also had a similar 401k loan question plus some stock sales I wasn't sure how to report. The document analysis confirmed I didn't need a 1099-R for my 401k loan, but it did catch that I was missing a 1099-B form for some stocks I sold. I would have completely forgotten about those! It's definitely more thorough than just answering the standard questions in tax software.
0 coins
Ravi Malhotra
If you're still worried about the TurboTax prompts, you might want to call the IRS directly to confirm. I know it sounds awful but I've had to do it for a similar situation with retirement account questions. After trying for DAYS to get through normal IRS phone lines, I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed exactly what others are saying here - 401k loans don't generate 1099-R forms unless you default on the loan. Saved me so much stress knowing I heard it directly from the IRS.
0 coins
Freya Christensen
•How does this Claimyr thing work? The IRS phone system is notorious for long wait times... can this really get you through?
0 coins
Omar Farouk
•Yeah right. Sounds like a scam. No way you got through to the IRS in 20 minutes. I tried calling them for weeks last year.
0 coins
Ravi Malhotra
•It basically navigates the IRS phone tree for you and waits on hold in your place. When an agent actually picks up, they call your phone and connect you. So instead of sitting on hold for hours, you just get a call when an actual human is ready to talk. I was super skeptical too! I had tried calling the IRS for 3 days straight with no luck. With Claimyr, I got a call back in 22 minutes with an actual IRS agent on the line. Totally worth it for the peace of mind of getting an official answer straight from the source.
0 coins
Omar Farouk
I have to admit I was wrong about Claimyr. I decided to try it after my accountant messed up something on my taxes and I needed to talk to the IRS urgently. I got through in about 15 minutes when I had been trying for days on my own. The IRS agent I spoke with confirmed what everyone here is saying - 401k loans aren't reported on your taxes unless you default. If you're making payments as agreed, there's no 1099-R needed. You only get a 1099-R if you fail to repay according to the terms, then it becomes a distribution.
0 coins
Chloe Davis
You might want to double-check if you received any OTHER distributions from your retirement accounts. Sometimes people take a loan AND a hardship withdrawal in the same year and confuse the two. A withdrawal would generate a 1099-R. Also, did you roll over any accounts or change jobs? Those transactions can trigger 1099-R forms even if they aren't taxable events.
0 coins
Natasha Orlova
•I did actually change jobs in November but my 401k stayed with Empower. I didn't roll anything over - just kept it where it was. Would that still trigger a 1099-R?
0 coins
Chloe Davis
•No, if you left your 401k with Empower and didn't take any distributions, there shouldn't be a 1099-R generated just from changing jobs. A 1099-R is only issued when money actually leaves the retirement system or moves between different types of accounts (like rolling from a 401k to an IRA). The TurboTax alert is likely just a standard checkpoint to make sure you've entered all your forms. Since you've confirmed with Empower that no 1099-R was issued for your loan, you can confidently proceed with your tax return without it.
0 coins
AstroAlpha
I'm a little confused... I took out a 401k loan in 2023 and I swear I got some kind of form for my taxes?? But maybe I'm mixing it up with somethin else?
0 coins
Diego Chavez
•You might have gotten a 1099-R if you didn't repay the loan according to the terms. Or maybe you took a hardship withdrawal rather than a loan? Those are different and withdrawals definitely generate a 1099-R.
0 coins
Harper Hill
Empower is absolutely correct! You don't need a 1099-R for a 401k loan as long as you're making the required payments on schedule. A loan from your 401k isn't considered a taxable distribution - you're essentially borrowing your own money and paying it back with interest (which goes back into your account). The TurboTax prompts you're seeing are standard questions that appear for everyone to make sure they haven't missed any retirement account distributions. Since a 401k loan isn't a distribution, you can safely answer that you didn't receive a 1099-R related to this transaction. Just keep making your loan payments as agreed and you won't have any tax implications. The only time you'd get a 1099-R is if you default on the loan or fail to repay it according to the terms - then the outstanding balance would be treated as a taxable distribution.
0 coins