Because the funds were distributed to you instead of being a direct rollover, the 401(k) plan was required by law to withhold 20% of the distribution for federal taxes. In order to avoid a penalty, you would have had to contribute $236 to the IRA. If you only contributed $186, there will be a penalty on the part of the distribution that was withheld for tax. In your scenario, $50 was withheld, so there will be a $5.00 penalty. The entire $236 is subject ordinary income tax.
