401k distribution sent to me upon resingation

Forum|Forum|2 years ago
January 29, 2024
2 replies
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Good day,

I resigned from a job in Nov 2023. I didn’t realize I had been automatically registered with a 401k account. In January 2024 I just received a check of @$153 marked as a 401k distribution. How do I handle the taxes on this and is there a penalty tax on this as I am not retirement age.

thanks for any help

Other

Bsch4477

Level 15

Tax and penalty would apply but the amounts would be minimal. If you don’t already have an IRA to rollover that amount you probably can’t start a new one with that little amount. .

fanfare

Level 15

Many custodians will take a small amount to open an IRA.

However, you have to be careful about fees.

For example, T. Rowe Price would charge you $20 per year per fund.

Fidelity Investments says there is no account fee.

There may be a large close-the-account fee if you decide to move elsewhere.

@Beloved555

Mike9241

Level 15

The 60-day rollover rule allows you to transfer funds from one tax-advantaged retirement plan or account to another without incurring any tax or penalty, provided you follow the rule. The rule requires you to deposit all your funds into a new individual retirement account (IRA), 401(k), or another qualified retirement account within 60 days of the distribution

The distribution date would be the date.on the check. since you are not of retirement age there would be an early withdrawal penalty plus the income taxes.