Submitted By: someone
Answered: February 24, 2017 8:00 am

I received a lump-sum distribution from my 401(k) and want to put it into my IRA. Can I do it?

If the distribution was a required minimum distribution, it cannot be rolled over to an IRA (the proceeds can be used to fund an IRA if you are eligible to make an IRA contribution for the year). If the distribution was not an RMD, it can be rolled over within 60 days. The 205 withholding on the distribution is a tax credit on your return that is effectively recouped when you file the return. However, if you want to make a full rollover to the IRA, you’ll have to come up with the 20% that was withheld and add it to the 80% you received.

Tax Glossary

Private letter ruling

A written determination issued to a taxpayer by the IRS that interprets and applies the tax laws to the taxpayer’s specific set of facts. A letter ruling advises the taxpayer regarding the tax treatment that can be expected from the IRS in the circumstances specified by the ruling. It may not be used or cited as precedent by another taxpayer.

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