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.

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Tax Glossary

At-risk rules

Rules limiting loss deductions to cash investments and personal liability notes. An exception for real estate treats certain nonrecourse commercial loans as amounts “at risk.”

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