401K Tax Question

Maryland - In November 2000, I took a $3000.00 loan from my 401K account. My financial adviser was supposed to set up an additional payroll deduction to repay the loan. The additional payroll deduction was instituted, but I just recently found out that the deduction is being lumped in with my pre-existing 401K deduction and is not going towards paying back the loan.

I had already filed my 2001 tax return and received my refund when I became aware of this situation. I know that I must pay taxes on the $3000.00, but what should I do since I have already filed?

Just bumping this up, hoping someone can help.

I would suggest you talk to your employer and have him or her go through the procedure of correcting this error. If they can correct it, there will be no tax to you. If not, they should be liable to you for any tax you must pay as a result of their error.

If you do not want to talk to your employer about this, or if the employer does not agree to work on it, then you can contact the IRS, tell them the story, and see if they can allow you to treat the loan as if you had been paying it off quarterly. If not, they will bill you or you can file an amended return to show the income. An amended return is filed on form 1040X, which you can download at the IRS site at: http://www.irs.ustreas.gov/forms_pubs/index.html

Thank you loku!