401k rollover to an IRA after I cashed the check

[Jayzoo]

Last week I withdrew all of my 401k from an old employer, they withheld 20% for taxes.  Now I want to put that money into an IRA. How much do I need to put into IRA to avoid penalties?

For example the 401k had 20k in it, they gave me check for 16k after 20% withholding. Do I need to now put 20k into IRA or 16K?

This is all within the 60 days limit period allowed to rollover.

[IreneS · Accepted solution]

A 10% additional tax will apply if you withdraw money from your qualified retirement plan or IRA before you reach age 59-1/2 (and don't roll it over).

To avoid the additional tax, you will have to roll over the entire amount ($20,000) from your 401k into an IRA.

In the future you can avoid having taxes withheld by having a direct rollover where the old institution sends the funds directly to the new institution.

[arvila]

How do you apply to get 20% withheld back? Who, how, and when does the 20% withheld get returned?  (assuming you rollover entire amount)

[fanfare]

The IRS has the money now. ask them (on your next tax return).

In addition to the 10% penalty tax there is the regular tax on the 20% that was withdrawnt, if you don't roll that back in.

[re2boys]

The withholding would be entered on your next federal income tax return and used to calculate your refund or balance due.

[ronmuhl]

If the 401k was totally rolled over into an IRA (over 72 years old, and I received a 1099-R, how do I declare this in Turbotax?

[AnnetteB6]

Enter your Form 1099-R and be sure to answer all of the follow-up questions.  If the distribution code on the Form 1099-R did not indicate a direct rollover, then you should be asked what you did with the money from the distribution.  The questions will ask specifically about putting it into a Roth account and if you indicate 'no' to the Roth questions then it is assumed that it went to a Traditional IRA instead.

Use the following steps to get started:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “1099-R” and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to 1099-R”
• Click on the blue “Jump to 1099-R” link

@ronmuhl