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    jeepman44's Avatar
    jeepman44 Posts: 2, Reputation: 1
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    #1

    Mar 5, 2009, 12:24 PM
    401K withdrawal due to ineligibility
    I have to have some of my 401K contributions distributed back to me, since they were incorrectly deducted from my salary by my employer before I was eligible for contributions.
    Apparently my eligible date was Jan 09, but my contributions were started in Oct 08. My hire on date was Aug 13,08.


    They are saying that I have to take a withdrawal ( i.e. - they are paying the contributions back to me that occurred between Oct 09 and Dec 31 08), but cannot give back all that I put in, due to penalty and income tax. I am over 59 1/2 years old, and was so at the date of hire also.
    What is your opinion on the amount that I should receive back? The amount I put in was over $5000.
    Would it be beneficial for me to roll all or part of this into a rollover IRA instead? ( I would have to open the rollover account)
    Your help is greatly appreciated.
    Thank you.

    jeepman44
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
    Expert
    		  
    #2

    Mar 5, 2009, 03:46 PM

    They should refund your contributions back to you, and document it on a 1099-R form. They may indeed have to withhold 20% -you can't avoid that (remember, you never paid tax on this money in the first place). You are NOT subject to the 10% early withdrawal penalty, as this is merely a return of an ineligible conribution.
    jeepman44's Avatar
    jeepman44 Posts: 2, Reputation: 1
    New Member
    		  
    #3

    Mar 6, 2009, 09:04 AM
    Quote Originally Posted by jeepman44 View Post
    I have to have some of my 401K contributions distributed back to me, since they were incorrectly deducted from my salary by my employer before I was eligible for contributions.
    Apparently my eligible date was Jan 09, but my contributions were started in Oct 08. My hire on date was Aug 13,08.


    They are saying that I have to take a withdrawal ( i.e. - they are paying the contributions back to me that occurred between Oct 09 and Dec 31 08), but cannot give back all that I put in, due to penalty and income tax. I am over 59 1/2 years old, and was so at the date of hire also.
    What is your opinion on the amount that I should receive back? The amount I put in was over $5000.
    Would it be beneficial for me to roll all or part of this into a rollover IRA instead? ( I would have to open the rollover account)
    Your help is greatly appreciated.
    Thank you.

    jeepman44

    ebaines

    Thank you for your response. This is exactly what is being done now.
    Jeepman44 :)
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