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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7097
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I requested a withdrawal of my 401K funds in order to roll

Customer Question

I requested a withdrawal of my 401K funds in order to roll them over into my IRA accounts. However, I said to make the check payable to me because I thought
I had 30 days to roll it over before taxes would be taken out. But, I was mistaken and the
check arrived with the federal taxes already deducted and filed with the IRS. Is there anything that can be done? Thank you.
Submitted: 7 months ago.
Category: Tax
Expert:  Stephen G. replied 7 months ago.

Hello, my name is***** goal is to give you a complete & accurate answer. I am working on your request now & I will respond as soon as possible.

Expert:  Stephen G. replied 7 months ago.

Well, actually you have 60 days to roll the 401K funds into an IRA.

However, in order to avoid the taxes completely, you will have to use your own funds from another source in order to be able to rollover the entire amount, including the taxes that were withheld. So you would need to add the amount of the tax that was withheld (using other funds) to the amount you received in the form of the check, and deposit the total into your IRA withing the 60 day period. It would be best to do that right away.

If you are able to do that, then you will receive a refund of the taxes that were withheld from the 401K proceeds, when you file your income tax return for 2016.

The only other possibility would be to contact the Company representative responsible for administration of the 401-K and see if you return the check, would they consider reversing the tax that was withheld and sending the entire withdrawal amount, including the taxes that were withheld directly to the IRA Trustee. This is called a "Trustee to Trustee" transfer, and that would eliminate the problem and there would be no reporting of the withdrawal on your tax return for 2016.

Let me know if you have any questions.

It's midnight here on the East Coast, so I'm signing off for the night, but I'll be back in the morning if you need further assistance or have additional follow-up questions.

Steve G.