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    Obicon's Avatar
    Obicon Posts: 1, Reputation: 1
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    #1

    Feb 14, 2010, 02:44 PM
    When I got my 401k distribution check did they take out the 10% penalty
    When I rolled over my 401k to my new employer I let a loan default, did they take out the 10% penalty when I got my distribution check or do I still owe someone?
    jakester's Avatar
    jakester Posts: 582, Reputation: 165
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    #2

    Feb 24, 2010, 12:47 PM

    Well, if the rollover amount is 90% of what you thought you were rolling over, then they took out the 10%. How much were you expected to rollover and what is actually in your rollover account now?
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #3

    Feb 24, 2010, 03:33 PM

    The 10% would NOT have been withheld. Did you receive a 1099-R from the 401(k) plan? On it you should see the amunt of the withdrawal (the loan that defaulted). The amount of tax withheld I'm guessing is $0 - since this was a loan - but again check the 1099-R.

    You will need to include the withdrawal as income on your tax return (line 16 - "pensions and annuities"), and show the 10% penalty on line 58 ("additional tax on IRAs, other qualified retirement plans, etc").
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