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Author: zjin1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: No-Direct 401K Rollover Date: 8/7/2001 8:19 PM
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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.


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The issue is usually that if the 401K is distributed directly to you,
then taxes
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
a
rollover IRA, but to fully roll over the full amount, you have to come
up
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
to
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
on
at least that much (unfair as it may seem).

It is thus usually better to arrange that the 401k distribution be sent
directly
to an IRA custodian, in which case no withholding takes place. But it
is,
indeed, probably too late for that now.

-bret
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