To finance moving expenses I borrowed from my 401K and then defaulted on the repayment. I have my 1099-R. I'm having trouble reporting this via the IRS' Free File Fillable Forms service. I filled in the Gross Distribution amount on 1040 line 16a, and filed in the Taxable Amount (100% of the distribution amount) on line 16b, and put in the 10% penalty on line 58. I'm not required to complete Form 5329. The problem is that my efiled return is rejected with the following error code:

Error Code 0121, F1040-044 or F1040A-040: On Form 1040, Pensions Annuities Received (Line 16a) must not equal Taxable Amount (Line 16b). On Form 1040A, Pensions Annuities Received (Line 12a) must not equal Taxable Amount (Line 12b).

Since no taxes were taken out of my distribution (because it was a loan to begin with), of course my line 16a (total received) is equal to my line 16b (total taxable). What am I missing here?

From the instructions for Form 1040, "Fully Taxable Pensions and Annuities":

"If your pension or annuitty is fully taxable, enter the total pension or annuity payments (from form(s) 1099-R, box 1) on line 16b; do not make an entry on line 16a." [emphasis added]

So try leaving line 16a blank and see if that works.

That worked, thank you so much! It was driving me crazy. I must have read the instructions 6 times but obviously not well enough! :-)

Glad to help!