Depositing 401K disbursement into an IRA

[jawckey]

I have a 401K account with TRow Price and an IRA with Fidelity. For some reason TRow Price sent me a disbursement check t out of my 401K account though I am still within the contribution limits for the year 2025. I am actually happy to get that money because the options in TRow Price 401K portfolio sucks and I could put this money into IRA and can manage it more freely. I am still within the 60 day transfer period too.

I know that if the organizations themselves roll over the 401K directly into IRA automatically without any disbursements, there would not be any tax implications as well as no additional paper filing during filing the taxes. Even if I manually roll over this 401K disbursement check too into IRA within 60 days there would not be any tax implications. But if I do it manually, will there be any special paper/form to be filled during filing taxes or it would be like automatic one between organizations too?

Appreciate if you could clarify.

regards

[Bsch4477]

When you report your 1099-R for the 401 withdrawal you will have the opportunity to tell the program that it was reinvested in a retirement account within the sixty day period. 

[dmertz · Accepted solution]

You need to find out why this distribution was made because it might not be eligible for rollover.  If the distribution is eligible for rollover, the plan is required to have given you an explanation of your rollover options at least 30 days prior to making the distribution (unless you waived that requirement) and is required to have withheld at least 20% of the distribution for federal taxes.  If neither of these was done, it's possible that the distribution is a corrective distribution due to the plan having failed ADP or ACP testing, in which case the distribution is not eligible for rollover.

Indirect rollovers are reported no differently on your tax return than are direct rollovers, although the questions that TurboTax asks in each case are slightly different based on the code in box 7 of the Form 1099-R that you will be receiving.  If the code in box 7 indicates that the distribution is a corrective distribution that is not eligible for rollover, TurboTax will prevent you from reporting the distribution as having been rolled over.

[VolvoGirl]

If you find out you can’t roll it over to the IRA,  maybe you can use the money to make a new contribution to an IRA if you are eligible to contribute.