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iguesswhatevs OP t1_jad42v7 wrote

Reply to comment by nothlit in Just got my check from former employer closing my 401k account by iguesswhatevs

Read my edit and see what you think

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nothlit t1_jad4kyc wrote

> Edit: what if I just put it into my personal Roth IRA since the taxes have already been taken?

20% is the default withholding. You may end up owing tax at a higher or lower rate than 20% based on how much overall income you have this year. You can make more than one deposit as part of a rollover. You could deposit this check and then also deposit a second check to make up the missing 20%. As long as you indicate that both deposits are part of a rollover, it’s fine. If you only deposit this check but not the missing 20%, then the missing 20% will be further subject to an early withdrawal penalty when you file your taxes.

> And then select 2022 rolll over instead of 2023 contributions? Can I do that?

You don’t have to select a year for a rollover

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iguesswhatevs OP t1_jad5r3r wrote

Wait so I’m being taxed on the 20% that has already been taxed?? I don’t understand that. The 21% is just federal taxes withheld from me

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nothlit t1_jad701d wrote

If you are under age 59.5, any money that leaves a retirement account and does not enter another retirement account is subject to the 10% early withdrawal penalty.

Withholding is just a prepaid estimate of tax. Your actual tax may be higher or lower, depending on other factors.

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iguesswhatevs OP t1_jad7e8c wrote

So what you’re saying is that 21% federal income tax PLUS 10% withdrawal fee?

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nothlit t1_jad8c8k wrote

You would pay 10% additional tax on the amount that was withheld and not rolled over

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