Werewolfdad t1_jad39k1 wrote on February 28, 2023 at 3:58 PM

>Many of you said I can roll it over into another 401k to avoid the taxes but how do I do that if the taxes have already been taken out?

You deposit the full amount it should be and claim the withheld taxes on your tax return as a refund

iguesswhatevs OP t1_jad3qfe wrote on February 28, 2023 at 4:01 PM

What do you mean deposit it should be? I can deposit, say, $1000 if there’s only $790 on the check.

Since I already paid taxes on it, what if I just put into my personal Roth IRA and select 2022 roll over?

Werewolfdad t1_jad3var wrote on February 28, 2023 at 4:02 PM

> What do you mean deposit it should be? I can deposit, say, $1000 if there’s only $790 on the check

You write a check for $1000 to the IRA custodian as an indirect rollover

>Since I already paid taxes on it, what if I just put into my personal Roth IRA and select 2022 roll over?

Then you still pay penalties on the amount withheld

iguesswhatevs OP t1_jad6cn6 wrote on February 28, 2023 at 4:18 PM

I’m so confused. So you’re saying that, say I have $1000 and I pay $210 or 21% in federal taxes, I still have MORE penalties to pay?

Becuase my check basically shows the $790. And if I already paid my taxes then what else do I still owe?

Werewolfdad t1_jad6hsd wrote on February 28, 2023 at 4:19 PM

Yes. If you don't rollover/convert the full balance ($1000), you pay penalties on whatever amount was withheld. In this case, its $21, but still, that's $21 you don't need to give away

iguesswhatevs OP t1_jad71oc wrote on February 28, 2023 at 4:23 PM

Wait so $21 on top of the $210 or a total of $231 and where did you get that number?

Werewolfdad t1_jad76nq wrote on February 28, 2023 at 4:24 PM

Depends on your income. You could owe more than 21% in just taxes depending on your state. But if you don't "make up" the $210 in your rollover, you will owe a penalty on that $210

Redtm17 t1_jadaf9j wrote on February 28, 2023 at 4:45 PM

I had this same thing happen to me and it sucks, but you need to come up with your own money to make everything whole from a tax deferred standpoint. It would all work out in the end, but it's an annoying cash flow issue. There were some articles online that explained it thoroughly.