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I thought I remembered that, in the process of rolling over from 401K to IRA, the owner could have access to the money for 60 days or less. In reading your posted messages, I'm thinking I'm totally wrong. If we take ownership (just temporarily) of the cash, will it be taxed?
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Greetings, Grundy911, and welcome. You asked:

<<I thought I remembered that, in the process of rolling over from 401K to IRA, the owner could have access to the money for 60 days or less. In reading your posted messages, I'm thinking I'm totally wrong. If we take ownership (just temporarily) of the cash, will it be taxed?>>

You may take that money free of tax and penalty provided you get it into an IRA no later than 60 days after you receive it from the plan. The problem, though, is if you get the funds, then by law 20% of the plan proceeds must be withheld against your potential tax bill for the year. That means you only get 80% of what's in the plan.

If by the time 60 days goes by you only put what you received into an IRA, then the IRS will call the 20% withheld for taxes a distribution to you. You will be taxed on that 20% and assessed an additional 10% on that sum as a penalty for early withhdrawal (assuming you are younger than age 59 1/2). The only way to avoid those taxes and possible penalty is to replace the missing 20% out of other assets when you make your deposit into the IRA. That means you won't see that 20% again until you file your tax return for the year to get the refund.

So, if you can live with either taxes and a possible penalty or with doing without the 20% until you file your taxes for the year, then you can use that money from your 401k for about 60 days before it goes into an IRA.

Regards..Pixy
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