What other rules apply to a 401(k) rollover?
1) The rollover must be made within 60 days of taking the distribution from a 401(k) or another qualified plan. If the rollover doesn’t happen, the entire distribution becomes taxable. 2) If the distribution is paid first to the employee before being rolled over, an amount of 20% must be withheld. In order to rollover the entire distribution and avoid current taxes, the employee will have to make up the 20% withholding from his/her personal funds.
1) The rollover must be made within 60 days of taking the distribution from a 401(k) or another qualified plan. If the rollover doesn’t happen, the entire distribution becomes taxable. 2) If the distribution is paid first to the employee before being rolled over, an amount of 20% must be withheld. In order to rollover the entire distribution and avoid current taxes, the employee will have to make up the 20% withholding from his/her personal funds. Click Here.
