401K Rollover

Submitted by Kevin O'Hearn on Fri, 2018-08-24 16:28

Client made a distribution out of her Principal 401k for around $55,000. She would like to do a 60 day rollover into an IRA but she had withheld around $25,000 in taxes from that distribution. If she wants to rollover the full distribution amount including taxes is that possible? Thank you.



Submitted by David Mertz on Fri, 2018-08-24 17:50

  • Yes.  Completing the rollover of the entire amount means rolling over an amount equal to the gross amount distributed from the 401(k).  She’ll need to come up with the $25,000 from another source to be able to complete the roll over that portion.  She’ll later get back any excess tax withholding with the filing of her 2018 tax return.  She could reduce the withholding on other income for the rest of 2018 to help avoid having an excessively large refund.
  • Be aware that if any of the distribution from the 401(k) was an RMD, the amount that was an RMD is an amount that is not eligible for rollover.

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