When can Miles expect his distribution to be fully taxable?

The scenario where Miles' distribution would be fully taxable is when it is taken without regard to an outstanding loan. In retirement accounts like a 401(k), if a participant takes a distribution and they have an outstanding loan against the account, that loan can complicate the tax implications of the distribution. When a loan is not being repaid or there is an outstanding balance at the time of distribution, the distribution is often treated as a taxable event because it represents the amount that has not been returned to the account. This is important for understanding the tax liability associated with 401(k) plans, as the Internal Revenue Service taxes distributions as ordinary income.

Additionally, the other scenarios would affect the taxability in different ways. For example, a hardship distribution may allow for a withdrawal but could still result in tax implications dependent on the situation and specific qualifications. Simply having a balance in a 401(k) does not inherently mean a distribution will be taxable—taxability would depend on how and why the distribution is taken. Filing for an extension relates to the timing for tax filing and does not directly affect the taxability of distributions from retirement accounts.