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Level 1

My husband just received a bill from the IRS for a penalty withdrawal of a retirement account. He never withdrew the funds they didn't roll over after job change. Help?

We are being penalized/ charged for not being aware that this money did not automatically roll into another account plus we were never notified of these funds.
4 Replies
Level 20

My husband just received a bill from the IRS for a penalty withdrawal of a retirement account. He never withdrew the funds they didn't roll over after job change. Help?

Then what happened to the money?   The only way  that the IRS would bill you is if a 1099-R was issued and it was not reported on your tax return.   Even if a rollover, the IRS can assume that you took the money if it was not reported.

 

You should have some records that show where the money is.  Once you find out what happened and get the records, call the IRS in the number in the letter and talk to them about it.

 

 

Level 20

My husband just received a bill from the IRS for a penalty withdrawal of a retirement account. He never withdrew the funds they didn't roll over after job change. Help?

Did you have any loans against it? Did you get a copy of the 1099R?  Ask the old plan about it.

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Level 20

My husband just received a bill from the IRS for a penalty withdrawal of a retirement account. He never withdrew the funds they didn't roll over after job change. Help?

Many company plans will automatically roll a 401(k) into a Traditional IRA at a financial institution if you do not make other arrangements - they usually notify the employee of this when they leave the job.  If they did that then they would have issued a 1099-R.   Ask the company plan administrator.

Level 20

My husband just received a bill from the IRS for a penalty withdrawal of a retirement account. He never withdrew the funds they didn't roll over after job change. Help?

Whether or not the plan allows the funds to stay in the plan, automatically rolls the money over to an IRA or simply makes a distribution of the balance in the plan generally depends on the amount of the balance in the plan.  If either a rollover to an IRA (which would be a direct rollover) or a regular distribution is made, the plan must issue a Form 1099-R.  The IRS apparently received a copy of this Form 1099-R from the plan, so apparently either a rollover or regular distribution happened in this case.  It's possible that lack of a proper mailing address resulted in the Form 1099-R and the funds (either a rollover or a check) going missing.  If the funds were rolled over to an IRA, the IRA custodian would have issued a Form 5498 from the IRA acknowledging receipt of the rollover contribution.

 

You might check your Wage and Income Transcript for the year in question.  It would show the Form 1099-R and, if there was a rollover to an IRA, the Form 5498.  (If a rollover was initiated near the end of the year but was not completed until the following year, it would be the following year's Form 5498 that would show the rollover contribution.)

 

https://www.irs.gov/individuals/get-transcript