How long to roll 401K distribution

Forum|Forum|6 years ago
February 1, 2020
5 replies
43 views

I am helping my 25 year old friend do his 2019 taxes and he got a 1099-R. He tells me that his former employer closed out his 401K and sent him a check unsolicited for the full amount (only about $200) He did not realize using the money would be a taxable event with penalty. Is it too late for him to open a rollover IRA with the amount of the disbursement in order to avoid taxes and penalty? He received the disbursement moree than 60 days ago.

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Best answer by dmertz

Too late. To conform to section 402(f) of the tax code, unless your friend waived the requirement the employer would have provided your friend with an explanation of the options, including the option to roll over the distribution and the fact that taking the distribution in cash would result in a taxable distribution and early-distribution penalty.

xmasbaby0

Level 15

Too late then. He had 60 days to roll it over. Now it will be taxed. The 1099R must be entered on his tax return.

To enter your retirement income, Go to Federal> Wages and Income>Retirement Plans and Social Security>IRA 401 k) Pension Plan Withdrawals to enter your 1099R.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**