Understanding your options
Roll it over within 60 days
If you decide to take your distribution in cash — less the 20% withholding — you will still have 60 days to roll it over to an IRA or another qualified plan. However, in order to roll over the maximum allowed, you will have to make up the 20% out of your own pocket. The amount withheld will be applied as a credit toward your tax for the year when you file your tax return.
If you choose not to include the 20% in your rollover, that amount will be subject to ordinary income tax plus an additional 10% penalty if you are under age 59½.
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