Please clarify - what rollover are you referring to? Did you roll an old 401(k) to a new 401(k), and now want to take a distribution form that new 401(k)? Or are trying to roll an existing 401(k) to an IRA, and want to make sure no taxes are withheld?

In general taxes will be withheld whenever you take a distribution from a 401(k). So if you want to do a rollover to an IRA (or another 401(k)) you should do it as a direct transer from custodian to custodian and NOT have the old 401(k) send you a check. Otherwise you not only have taxes withheld but will face a 10% penalty if you don't fund the full amount of the withdrawal as a rollover - which means you have to come up with cash to make up for the taxes that were withheld.

I guess I wasn't very clear. I had taken a loan on my 401k and then lost my job so didn't pay anything back. Then later I rolled over the balance in the 401k to a bank into a CD. I took out part of that roll over before I put it in a CD and since I've taken two withdrawals from the CD. And, did not have them withhold any taxes from the withdrawals as I needed the money. I am over 59-1/2. So, will the employer add the interest to the loan amount and send me a 1099 at year end. And, then will I have to pay 20% tax on all this money total of about 64,000. My w-2 wages will be about 45,000. I won't be penalized for not having tax withheld will I? Can't I just pay the taxes when I file my return in April l2011?

Is the CD in an IRA account?

First, you should have paid taxes on the loan when you lost your job, as it would have been converted from a loan to a withdrawal. You should receive a 1099-R from the plan administrator to document this withdrawal.

Next, when you rolled the remainder to the CD if it had been a direct rolllover to an IRA account it would have been tax (and penalty) free, wiyth no additional 1099-R implications. But it sounds like you withdrew everything from the 401(k) in cash, which should have caused them to withhold 20% (I'm surprised they didn't). And yes - this will get added to your 1099-R as additoinal income to you. Then you kept some of the remainder, and finally invested what was left into the CD. Do I have that right?

If the CD is in an IRA account, you owe taxes only on the amount of the 401(k) that you did not put into that IRA - assuming that you put it into the IRA within 60 dryas of the withdrawal from the 401(k). Since the 401(k) plan administartor has no way of knowing what you used the money for, they will issue a 1099-R that says all of it is taxable. So you will have to file a form 5329 with your tax return to document why some of the distribution is not taxable. However, if the CD is not in an IRA, then the entire amount of your 401(k) withdrawal is indeed taxable.

You may be penalized for having under-paid taxes unless you fall into one of the exceptions, such as if the amount you have paid for taxes during the year 2010 is at least as much as as your entire tax bill was for 2009. The penalty is actually just a rather modest interest charge, but ine you'd like to avoid if possible. I suggest submitting an estimated tax form to cover your withdrawals.

Amt. Of taxes paid during 2010 meaning withheld fed.taxes from paychecks? And amt. of entire tax bill for 2009-meaning? As I received a large refund in 2009.

Add up your withholding for 2010plus any estimated tax payments made this year, and compare it to your total tax due from your 2009 form 1040 (the amount from line 60, "Your Total Tax"). If it's at least as much, you're fine. If it's less, then you may have an interest charge unless that amount is at least 90% of your total tax bill for 2010.