If I choose a direct rollover to an IRA or a new plan, will I receive any kind of confirmation?
You will receive a Form 1099-R from your old plan’s provider indicating that you initiated a direct rollover. There will be no federal income tax withholdings, so your entire balance will be rolled over, and you’ll continue benefiting from the tax advantages. If you roll your money into an IRA, you will receive a Form 5498 and an account confirmation from the IRA trustee or custodian. If you roll your money into a new plan, ask your employer if you will receive confirmation.
What happens if I already took the cash from my account? Can I still roll over to an IRA or to a new plan?
Yes, but you must do so within 60 days of receiving your distribution to keep the tax benefits. This is known as an indirect rollover.
Your employer withheld 20% of the taxable portion of your distribution for federal income taxes. State income taxes may also have been withheld.
If you replace this withholding with your own money, you can roll over the entire amount of your distribution. You’ll get the withholding back from the IRS when you file your taxes.
If you roll over your distribution but don’t replace the withholding, the amount withheld will be considered a distribution subject to taxes and possible penalties.
You can avoid these problems with a direct, or trustee-to-trustee, rollover, in which funds go straight from your old plan’s trustee to an IRA or your new plan’s trustee — not through you.
Do I have to take my retirement plan assets when I change jobs?
Company retirement plan rules can vary, but most follow the same basic guidelines. If your account balance is less than $1,000, your plan might cash you out. If your balance is between $1,000 and $5,000, your plan might roll your balance into an IRA selected by your former employer.
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