How can I rollover a forced distribution from a 401K to an existing rollover IRA and recoup the withholding upon filing this year's return?

[Anonymous]

Coincidentally, I initiated an IRA distribution-based 60-day rollover this same year. The IRS specifies limits to rollovers of this variety to one annually.  I seemingly had no control over the forced distribution, and just want to reinvest the proceeds of it without incurring taxes.  I do not qualify for a traditional IRA.

[VolvoGirl]

I don't know all of that but if you do roll it over be sure to add the withholding back into it from your own money to make it up.  Or the withholding will become a distribution by itself and taxable.

[dmertz]

Distributions from a 401(k) are not subject to the one-rollover-per-year rule.  The one-rollover-per-year rule only applies to 60-day rollovers of distributions from an IRA to another IRA of the same type (traditional or Roth).

As long as it has been less than 60 days since you received the distribution from the 401(k), you can roll the distribution over to a traditional IRA and continue to defer the taxes.  To complete the rollover of the entire distribution, as VolvoGirl said, you must substitute other funds to make up for the portion that was withheld for taxes.  The amount withheld for taxes will be combined with all of your other withholding from other sources as a credit against your overall tax liability and you will receive a refund of any overpayment of withholding.