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This is too late for you, but someone else searching this board may be interested in the answer.

My ex-employer just sent me a check for my 401K there.

Many stock-based investments had gone down after Spring 2000 and especially late 2001 and early 2002. 401(k) plans are not legally required to keep accounts of former employees if the balance drops below $5,000.

If you receive a check from a 401(k) provider from a former employer, find out if they withheld 20% (this is going to be more painful if they did). If you deposit the funds within 60 days in a "Rollover IRA" (a Traditional IRA funded by qualified funds), there are no taxes and the funds retain their "tax deferred" status. Now about 20% withholding: if the former employer's 401(k) provider did withhold that 20%, you will have to make up that 20% in depositing the funds into the Rollover IRA or otherwise that 20% withholding will be deemed an unqualified withdrawal (you will owe income taxes plus 10% penalty, plus state income taxes and state penalties if applicable, on that 20% that was withheld).

If the funds are not deposited in a Rollover IRA or the current employer's qualified plan within 60 days, the whole amount would be deemed an unqualified distribution on day 61 and one would have to pay income taxes and 10% federal penalties (plus any state income taxes and penalties) on the whole amount.

If one doesn't meet one of the "safe harbor" provisions for under-withholding, one may also have under-withholding penalties when one files one's federal income taxes.
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