Thank you for your question, and thanks for using JustAnswer.com. How are you today?
To avoid the 20% withholding on the distribution, you would have the prior employer send the funds directly to the new plan.
Instead of receiving the funds, and then placing it in the new account within 60 days you can do a direct rollover. You will never touch the money, and no tax forms will be generated.
This will eliminate the problem of having the tax withheld, because as you said he wouldn't be able to place those funds back in the account because of the rules on how much you can contribute to an IRA
What happens is the employer sends the funds directly to the company holding the IRA.
Do you have any questions about this matter?
Is there anything else I can assist you with today?
If not, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today
I have another question, unrelated to the above question. Can a non-member of an Indiana LLC be authorized by a proxy to vote at meeting of members?