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by FASSI1 on February 9th, 2007

FASSI1

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I was laid off and a check was issued to me for my entire 401k amount without the taxes or penalties being taken out. If i cash the check, will i be penalized? when will be the tax taken out? will it be for 2008?

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Answers. 1 helpful answer below.

  • by - retroglide - on February 10th, 2007

    - retroglide -

    Since both 401k Plans and IRAs are considered tax qualified by the IRS, certain regulations govern them if the funds are to keep their special tax deferred status. When you remove your funds from a 401k plan, within 60 days the money must be placed into an account that is also tax qualified or you can lose your tax benefit and be subject to IRS penalties. A trustee to trustee transfer is when the assets from an account are transferred directly into your IRA Rollover account. This is where 401k Rollovers are used.

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