dmertz
Level 15

Retirement tax questions

Because the balance was below $5,000, the plan was required to close your account.  Before doing so they would have informed you of your options to roll the funds over to another retirement account like an IRA.  Failing to respond with instructions to roll the funds over would have resulted in the plan making a distribution paid to you.  You then could have still rolled the funds over, but you would have had to replace the portion withheld for taxes by substituting other funds to be able to complete the rollover of the entire gross amount.