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Investing/Strategies / Retirement Investing
|Subject: Re: No-Direct 401K Rollover||Date: 8/7/2001 8:19 PM|
|Author: zjin1||Number: 31207 of 76594|
I found the following from another newsgroup. Guess a Rollover IRA is an option for me and will allow me to transfer to 401K in the future.
The issue is usually that if the 401K is distributed directly to you,
are withheld from the disbursement and there is usually no way to get
that back until you file your taxes for the year. You can still set up
rollover IRA, but to fully roll over the full amount, you have to come
with the amount that was withheld (but you'll get it back with your tax
refund next year). If you just rollover the amount that was distributed
you, the amount withheld and sent to the IRS by your previous employer
is considered a disbursement to you and you will owe taxes and penalty
at least that much (unfair as it may seem).
It is thus usually better to arrange that the 401k distribution be sent
to an IRA custodian, in which case no withholding takes place. But it
indeed, probably too late for that now.
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