We employ classical molecular dynamic simulations to study and compare the formation of microstructures together with the development of magnetic disorder in a single-crystalline Fe block during nanoindentation of the Fe (001) surface. Therefore we used the magnetic interaction potentials of Dudarev and Derlet [J.Phys.: Condens. Matter 17, 7097 (2005)] and Chiesa et al. [ J.Phys.: Condens. Matter 23, 206001 (2011)] in three different parameterizations; these allow us to extract information about the local magnetic moments from the molecular-dynamic simulation. Our simulations are performed at low temperature; the simulation cell is assumed to consist of a single ferromagnetic domain. Material hardness as well as the density of dislocations generated coincide satisfactorily with previous studies using conventional potentials. We observe the generation of both b = ½ <111> and b = <100> dislocations, which contribute to the plastic deformation. Besides dislocations, the induced microstructure features twins and vacancies. The local magnetic moments change considerably due to the strain field induced. These changes are, however, quite localized and quickly decay away from the highly strained regions of dislocation cores.