converting a 401k to a tira
My son lost his job and had a 401k acct. The only way they will give him his money is to send him a check . What documentation does he have to have so he will not have to pay taxes on this amount. he is going to put the amount into a tira. thanks
Permalink Submitted by Alan Spross on Thu, 2009-03-26 03:25
If they insist on sending him the check, that still qualifies as a direct rollover if the check is made out to his intended IRA custodian for his benefit. Offering a direct rollover is a legal requirement of the plan, and it will avoid mandatory 20% withholding. He should establish the IRA account first and then correctly fill out the transfer request from the plan. Some larger IRA custodians such as Vanguard and Fidelity will assist in getting this done properly. For more detail on direct rollovers, att’d is the IRS Reg section 401(a)31 that applies:
http://www.taxalmanac.org/index.php/Treasury_Regulations%2C_Subchapter_A…