loan from 401K

I have a client, age 61, who is retiring and does not plan to repay a $31,000 loan from his 401K. He is planning to have me do a rollover of the current balance.

I understand that the loan will be taxable , but how else does not repaying it affect the rollover, if at all? Will it still be a qualified rollover even tho it’s a partial amount minus the loan?

Thank you.



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