Reported 2 days ago
After rolling over a 401(k) into an IRA, a reader faced a $1,500 penalty due to mandatory tax withholding. Despite completing the rollover within the required 60-day period, the withheld amount was considered taxable income, resulting in both taxes and penalties. To avoid such issues in the future, it's recommended to opt for direct rollovers, which bypass withholding and simplify the process.
Source: YAHOO