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

    Jun 24, 2006, 04:02 PM
    401K roll-over question
    I requested that my 401k from my former employer be sent to my 401k at my new employer. The old 401k company mailed the check to me although I had given explicit instructions to send the check to the new 401k company. The check is made payable to "New 401k company FBO 'my name'.

    Can this check be re-routed to the new 401k without incurring the penalties\wthholding tax? (i.e. Is this still considered a direct roll-over?) :confused:
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #2

    Jun 24, 2006, 04:26 PM
    Yes, as long as the payee is the new company, just being it in and hand it over to the administrator. Even if the funds were sent to you, as long as they were turned over to the new plan within the legal time frame (I forget what that is) it would still be considered a rollover. It doesn't have to be direct.
    fredg's Avatar
    fredg Posts: 4,928, Reputation: 674
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    #3

    Jun 25, 2006, 08:49 AM
    Hi,
    Please talk with your new employer's Plan Administrator. It might be your Human Resources person, or another.
    They will be able to possibly straighten this out for you. Since the check was made out to how you said, possibly it will not count as a "direct payment" to you. Please ask them.
    Any "roll-over" is usually handled by the new employer, not you directly. Or, if into an IRA, handled by the institution getting the roll-over. Sounds like your old company Plan Administrator people didn't know what they were doing!
    Best of luck.
    talaniman's Avatar
    talaniman Posts: 54,244, Reputation: 10853
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    #4

    Jun 25, 2006, 11:38 AM
    My plan had a sixty day window to deposit the funds into another account and they sent the funds directly to me .I would contact the plan administrator for clarification and get that check rolled over pronto!
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #5

    Jun 25, 2006, 11:38 AM
    Quote Originally Posted by Fredg
    Hi,
    Please talk with your new employer's Plan Administrator. It might be your Human Resources person, or another.
    They will be able to possibly straighten this out for you. Since the check was made out to how you said, possibly it will not count as a "direct payment" to you. Please ask them.
    Any "roll-over" is usually handled by the new employer, not you directly. Or, if into an IRA, handled by the institution getting the roll-over. Sounds like your old company Plan Administrator people didn't know what they were doing!
    Best of luck.
    Yes, DO consult your new employer's Plan Administrator. When you do, you will find that Fred's advice was not accurate.

    I spent several years administering 401K plans. While it is better to do a direct transfer rollover its not absolutely necessary. You have 60 days to rollover the full amount of the distribution into an qualified plan. In other words the money could have been issued directly to you with the 20% withholding. If you deposit the gross proceeds (adding back the 20%), then you have no tax liability. But that's not the case with you.

    It is not uncommon to issue the check as you described. Your old Plan Admin was following accepted and legal procedures. FBO means For Benefit Of. As I said, all you need to do is deliver the check to your Plan Administrator. They will accept the check and deposit it in their 401K for you.

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