Federal tax law gives laid-off workers with 401(k) loans until their tax return due date to roll over the offset amount, and that deadline could be as late as October.
Workers must fund the rollover with outside money like severance or savings, since the original loan proceeds were spent years earlier.
The extended deadline only applies to offsets from job separation, not missed-payment 'deemed distributions,' which are taxable and cannot be rolled over.
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A worker in her late 50s gets the layoff call and remembers the outstanding 401(k) loan she took two years ago. Somewhere in her memory sits a warning: repay it within 60 days or the IRS treats the balance as a taxable distribution, plus a possible 10% penalty. She is 58, so the penalty exposure feels real. The panic is understandable. It is also largely based on an outdated version of the rule.

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