401K penalization ...again?

When I left my old job, my new job didn t allow me to enroll in a 401 K plan until I had been there for a certain time.

Since so much time has gone passed, my old 401K released my funds; I didnt request it. It was only around $230 but they took out $45 in federal taxes.

Is it possible for me to now move these funds in my new jobs 401k and get my $45 federal taxes back? Or if not, if I cash it, when I get penalized again when I do my taxes next year?

8 Answers

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  • Mark M
    Lv 7
    5 months ago

    Your 230 has already been added to your wages and reported to the IRS.

    In the future, If your new employer will not take roll over, open a IRA at the bank and have them send the money direct.

  • 5 months ago

    If you're really so interested in your 401k, why don't you have $23,000 in it?? Two hundred & thirty bucks and $45 in taxes doesn't seem a lot to get too worked up about. LOL - Are you sure you're not trolling here??

  • 5 months ago

    You can put the FULL amount into an IRA within 60 days of the check being issued and avoid tax penalty.

    EVERYONE that CAN have a 401(k) CAN open an IRA.

  • Judy
    Lv 7
    5 months ago

    not if it's been over 60 days. It'ts too late. You won't get penalized again though. You'll have to show it on your tax return, but the $45 will be applied to what you owe.

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  • nt
    Lv 6
    5 months ago

    For that tiny amount, i would not worry about it. Unless its been within 60 days, then open a no fee IRA somewhere.

  • 5 months ago

    The penalty is only 10% ($23 if you had $230 in the 401K). The rest is part of the tax that you will owe when you do your taxes next year.

    If you cash it, then when you do your taxes next year, you get taxed on the $230, plus there is the 10% penalty, but you get credit for what was withheld, so you owe whatever the tax on $230 is, MINUS $22 (you owe the tax plus $23 penalty minus $45 already taken).

    For a certain amount of time after the money went out of the 401K, you can put it into an IRA to avoid the tax and penalty. You have to put the entire amount that had been in the 401K (both what was paid to you and what was withheld for tax) into the IRA. If you do this in time, then you get back the $45 when you do your taxes next year.

    You may or may not have the option to put it into the new employers 401K, depending on their rules. If they allow it, then the same tax rules apply as if you were putting it into an IRA.

  • 5 months ago

    I couldnt open up an IRA so like I said, I didnt request it.

    • tiescore
      Lv 6
      5 months agoReport

      I know of multiple places you can open an IRA with $1.

  • Anonymous
    5 months ago

    "I didnt request it" It was in the agreement you signed when you opened the 401k. You had plenty of opportunity to rollover your 401k to an IRA without any tax consequences when you left your job. You chose not to.

    No, you cannot now transfer those funds to your new 401k, nor will you be relieved of the taxes or penalty for the distribution.

    ETA: "I couldnt open up an IRA" Totally wrong. An IRA is something you do on your own. It is not an employer-sponsored retirement account. Not being eligible for your new employer's 401k has NOTHING to do with you rolling over your 401k to an IRA.

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