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I'm assuming the "pension payout" you got was from a 401k, a qualified plan. If this is true, you are right, you can get back the 20% tax that was taken by rolling the money into a traditional IRA within 60 days of the date the check was cut. Over 60 days, you can't roll it and the tax, plus a 10% penalty if you are under 59 1/2, will accrue.
After you have this money in a traditional IRA, if your adjusted gross income is in the range that makes you eligible for a Roth, you can consider the conversion. However, the initial rollover has to be to a traditional IRA. So what you must do is select a custodian, do the paper work, and send the check plus the withheld 20%.
To get your refund you'll file early in 2001 as soon as you have your paperwork!
Best wishes, Chris
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