1099-R Code M: Qualified Plan Loan Offset

You left the job (or the plan ended) with a loan outstanding, and the balance was subtracted from your account.

What the IRS instructions say

Official meaning, from the Instructions for Forms 1099-R and 5498 Used for a qualified plan loan offset, generally when a loan balance is offset against the account because of severance from employment or plan termination.

Is it taxable, and does the 10 percent penalty apply?

Taxable like a distribution UNLESS you roll over an equal amount, and for a qualified offset you have until your tax filing deadline (including extensions) for that year, far longer than the usual 60 days. Under 59 and a half without a rollover, the 10 percent additional tax generally applies too (paired code 1M).

Worth knowing: This extended rollover deadline is one of the most missed opportunities on the form: you can 'repay' the offset into an IRA months later and erase the tax.

Combinations you might see

Box 7 can carry two codes. With code M, the pairings mean:

1M / 2M / 4M / 7M: the offset paired with your age or status

If this code looks wrong

The IRS matches Box 7 against your return, so start with the payer: request a corrected 1099-R, which is the IRS's standing instruction for incorrect forms. No corrected copy by the end of February? The IRS can contact the payer for you, and Form 4852 substitutes as a last resort. Remember that an indirect 60-day rollover is correctly coded 1 or 7, because the payer cannot see the redeposit; direct rollovers should show G or H, as our rollover guide explains before the paperwork ever gets cut.

← All 1099-R Box 7 codes

Sources: IRS Instructions for Forms 1099-R and 5498; IRS Tax Topics 558 (early distributions), 413 (rollovers), and 154 (incorrect forms). Verified July 2026.

General educational information, not tax advice. Your distribution's taxation depends on your facts; consult a qualified tax professional. ClearChoiceRadar is not affiliated with the IRS or any government agency.