How can you prevent 401(k) 20% withholding for IRA rollover?
I have a client that wants to rollover 401(k) to IRA without the plan administrator withholding 20% when they get the distribution. I have heard that there is a way to accomplish this. Any suggestions? I realize there is a 60 day window to get this done.
Permalink Submitted by Alan Spross on Tue, 2009-05-19 21:01
Request that the transfer be completed as a direct rollover rather than a distribution. There is no mandatory withholding with a direct rollover. For an indirect rollover where the employee receives a check made out to the employee, there is no way around the 20% withholding for the taxable portion.