Failing to make timely repayments of a plan loan leads to taxable income for a 51-year-old retirement plan participant. He took a loan from his account and agreed to pay it back via payroll deductions. He started making the payments, but then temporarily stopped for seven months before resuming paying off the loan. The plan administrator classified the debt as in default and gave him a 1099-R reporting the loan balance as a taxable distribution. The Tax Court affirmed that the administrator acted correctly. The taxpayer owes tax on the deemed payout and owes the 10% penalty for early distributions (McEnroe, TC Summ. Op. 2019-21). Tapping an IRA before age 59½ to help buy a first home may be penalty-free… But early withdrawals from 401(k) plans don’t get the same treatment. A woman under age 55 took $6,700 from her 401(k) to help with the down payment on a first home. The funds are taxable, and she owes the 10% levy on early payouts. The Tax Court confirmed that the first-home-purchase exception applies only to IRAs and not to workplace retirement plans (Soltani-Amadi, TC Summ. Op. 2019-19).