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I have a check from my previous employer's 401(k) plan which I have intended to roll-over into my new employer's 401(k) plan. It's not much - just the first 10 months worth of contributions from my first job out of college. As an interesting side note, my former employer was Enron. Fortunately, they cut the check when the stock was still in the 40s (50% of my contributions went to Enron stock). Unfortunately, my husband still works for Enron and has seen his 401(k) drop by 60% by my last estimate in the past couple of quarters. Back to the issue at hand, the only reason I haven't officially completed the roll-over of my 401(k) (I've been at the new company for 6 months now) is that Enron's (now former) Retirement Plan Manager hasn't issued me the "Letter of Favorable Termination" required by my new employer. While patiently awaiting the arrival of that letter, I started regretting how much we contributed to our 401(k) that first year. Let me explain this statement - my husband could find out any day now that he might be laid off from Enron, granted he survived cuts in Enron Broadband IT from over 200 people to less than 50. We just started our emergency fund about a month ago with a goal of putting back $10000 in one year. My shoulda-coulda-woulda is that we "shoulda" concentrated more on the emergency fund thing a year ago than our 401(k). But hind-sight is 20/20, right?
Getting to my question, should we take the tax/penalty hit and just deposit the 401(k) check into our emergency fund? I'm concerned now that it's been so long that I might have to still pay the taxes/penalties even if I do roll-over the 401(k).
Thanks for any advice anyone can offer.
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I suspect you would be best off to deposit that check in a rollover IRA account. However, I believe you have 90 days from when that check was issued to do that. After that you may be looking at penalties anyway, and transfer may not be allowed.

For details get a copy of the IRS publication on IRA accounts and read the fine print. You'll find it on line (Adobe format) on the IRS site. I think its something like Publication 590.

Best of luck to you.
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The time period for avoiding the 10% penalty is 60 days.

Bill
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