I recently resigned from a company where I contributed to a retirement savings plan. In the mail after my employment was terminated, I received a check for the entire amount of the savings.

Is there a time limit to when I need to roll this money into an IRA so I do not have to pay taxes?
And if I decided to keep part of the money and not roll it over, would I add this as income and pay appropriate tax for my bracket, plus 10% penalty on JUST the amount I decided to declare?

I am 38, engaged and wanted to use part of the money for the wedding coming up in October.

Thank you!
Susan

My advice is to roll the entire amount to an IRA. You have 60 days to do this, so don't waste time. - if you fail to meet the deadline the entire amount is considered a distribution. You are correct that if you don't roll the entire amount over the portion you keep will be taxed as ordinary income and will also be subject to the 10% early withdrawal penalty.

One question - are you absolutely sure that your old employer didn't withhold 20% for taxes? If they did, that 20% is considered a distribution UNLESS you add that amount back into the rollover account.