Expert: Allen - 8/6/2004

Question
Several years ago my husband put fourty dollars (we think, certainly was not much more than that) into a 401k.  He switched jobs and we never thought anything more about it.
We were contacted recently that is has a whopping 36 bucks in it and asked what we wanted done with it.
My question is, are we in trouble because we never mentioned that 401k on our taxes, we never got any paperwork or anything.
Thanks.

Answer
Don't worry. You're not in trouble. The money would have been reported as a 401k contribution on the W-2 that the company filed with the IRS.
If your husband asks the old company to send the money to him, you will have to pay income tax on the money. You'll have to report the distribution on your 1040 for 2004. If he is under age 59 1/2, you will also have to pay a 10% penalty tax.
Alternatively, if he has an IRA or his current employer has a 401k plan, he can ask the old company to send the money to the IRA or new plan. No taxes would be due if it's transferred.