I withdrew from 401K and selected to have state and federal taxes pulled from amount I withdrew - am I required to pay back over three years? I have a different 401K now

[aubreyworrell12]

Both state and federal taxes have been paid on amount pulled. I don't work for that employer who I had the 401K under. Why would I have to pay this back

[macuser_22]

If it was a COVID related distribution  then paying it back to avoid tax is an OPTION.    You can pay all the tax in 2020 or elect to pay it in 3 equal parts over 3 years.

[aubreyworrell12]

Can I avoid paying it back all together? I do not want to put this money back into the 401k. I'd rather pay extra tax on it.

[macuser_22]

Of course.  Paying it back is a OPTION to reduce tax.   

Many people cannot pay it back, but Congress gave them that option.