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I'm in a deep trouble at the last TAX minute and desperately need your
advice regarding the distribution of my company's match in my (401)K
account. I have to pay the penalty and tax on this distribution, according to the tax form I received from my old (401)k plan.

Last year I got a new job and tried to transfer my fund from my old 
company (401)k plan to my new company's. There three parts in that (401)k account:

*	My pre-tax contribution
*	My after-tax contribution
*	My old company's match (in its stocks)

According to the administrator of my old (401)k plan, only the pre-tax
portion can be transferred to my new (401)k plan. The after-tax 
contribution will be rollover to my non-deducible IRA. The stocks deposited by my old company can be only distributed to me. I can't keep them in the old plan if I take the pre-tax contribution. As result,
*	the pre-tax portion was transferred to my new (401)k plan
*	the after-tax portion was sent to me although I had instructed them to deposit into my IRA account directly(with the institute name and acc#). I deposit the check into my IRA the next day I got the check.
*	the stock certification from the company match was deposited into the same IRA account on the same day as after-tax distribution For the value of $9889 (stocks), $34.08 tax was withhold by the plan. I deposit $34.08 into the same account. 

While filing my 2000 tax return, I find out the distribution from my old company's match is marked as early distribution(code 1), according to the tax form I got from my old plan. I have to pay the penalty and tax on it. I thought the company match is part of the retirement plan and I wouldn't own any tax or penalty on it as long as I keep it in the qualified plans. Did I missing some thing? Is anything I can do before 4/15/01 to avoid the penalty and the tax. Any advice is greatly appreciated.


Lee
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