Failed to send 401K cheque to new employer within 60 days. Now what? (pay, taxes) - Personal Finance -debt, loans, credit cards, banks, insurance... - City-Data Forum

musman · 12-15-2013, 05:19 PM

So basically it was not my fault. Bank sent my cheque to my old address. My apartment complex and bank were failed to mention that the chq was on the way. After 2 months of sitting in apartment complex I received the email from management to pick my package. To my surprised it was chq sent date 2 months back.
What options do I have to escape a penalty hit? Should I just cash it out and use it as an income since I will be paying taxes on it and penalty no matter what.
or should I just put it back in my new employers 401K.

mathjak107 · 12-15-2013, 05:24 PM

At this point you have no options but why did you not have them send it direct to the new custodian? This is the danger of taking possesion yourself.

musman · 12-15-2013, 05:26 PM

Quote:

Originally Posted by mathjak107

At this point you have no options but why did you not have them send it direct to the new custodian? This is the danger of taking possesion yourself.

I didn't anticipate that situation. I am usually very careful dealing with money.

musman · 12-15-2013, 05:28 PM

How much will I get penalize btw?

mathjak107 · 12-15-2013, 05:33 PM

If under 59-1/2 it is 10% penalty plus all taxes. I believe after 60 days you can no longer put it back in.

In 2001 the irs got the ability to waive the 60 day rule in certain cases . You could call them and see if you qualify.

flyonpa · 12-15-2013, 05:55 PM

Q: Can he pretend that he never got the check?

Tell the bank the check was never received, and ask them to cancel it, redeposit,then reissue it to the new Check?

mathjak107 · 12-16-2013, 03:15 AM

he can try . they always warn you though the burdeon of making sure you complete the transaction in 60 days falls all on your shoulders if you do not do a direct transfer.

at one time the answer would have been sorry you blew it but that changed in 2001 when an act gave the kinder irs the ability to waive the 60 days.

anything is worth a shot today.

Suncc49 · 12-16-2013, 06:46 AM

When you rollover a 401k always go bank to bank, never have the check made out to yourself. Are we talking about alot of taxes here?

musman · 12-16-2013, 11:00 AM

I called IRS and they say that I cant put it in my 401K. I will have to cash out the cheq. 10% penalty and taxes. It sucks.

Best way is to go by bank to bank. I wll have to pay someone else's negligence.

mathjak107 · 12-16-2013, 11:04 AM

I figured as much but you had to try .