So I left my job at Philly 911 after 4 years, and they sent me a 1099-R

[leeleses]

The 1099-R says there's 7900 in the account.

It says code 1 early distribution.

Box 4 says they will take 20% taxes if I do nothing they take $1580!

So that leaves $7900 - 1580 = 6320.

If I do nothing does Philly send me a check, or do I get $6320 as a refund?

Exactly how would I rollover the whole amount to somewhere to avoid paying the 20%

Can I open some kind of new IRA account somewhere to roll it over to?

Or do I somehow roll it over to Baltimore City, my new employer?

Thank  you!

[AnnetteB6 · Accepted solution]

You may or may not have some options.  It all depends on when the distribution from the retirement account was made and when you receive it.  

The 20% of the distribution was sent to the Federal government for income tax on your $7900 distribution.  The $7900 will be included on your tax return as income unless you are able to roll the money over into another retirement plan or a Traditional IRA.  Since it is considered an early distribution, you will also incur a 10% penalty for early distribution on your tax return.

The pension plan administrator should have issued you a check for the remainder of the $7900 that was not withheld for taxes.  You need to contact them to find out the status of the payment and when you will receive it.

As for rolling over the entire amount, you have 60 days from the time you receive the distribution to roll it over to another plan or an IRA.  Since taxes were withheld already, the only way you can rollover the entire amount would be to provide $1580 from your own funds and deposit that money into the new account as well.  Then, when you report the distribution and rollover on your tax return, the $1580 that was withheld for taxes can potentially be refunded to you (depending on the rest of your tax return).

The distribution can be rolled into either a Traditional IRA or a Roth IRA.  Putting it in a Roth IRA would make it taxable to you because of the differences between those types of accounts.  

Some employer plans will accept rollovers from other employer plans.  You would need to consult your new employer to see if that is an option for you.  

No matter which option you choose, time is of the essence and may have already expired.  Your first task should be to contact the pension plan administrator and verify whether the distribution has been issued to you or not.

To learn more about rollovers, take a look at the following information from the IRS:

Rollovers of Retirement Plan and IRA Distributions

[leeleses]

Thank you SO much for this Annette, I was reading some of this in TT after I made this post, but you explained it much more clearly!  I really appreciate the time it took to explain all of that!