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Retirement Planning/Can 410K distribution reverse?


Dear Mr. Daniel,

I got a 401K distribution check with 20% tax withhold from Schwab by mistake and trying to reverse the distribution. The original attention is just rollover the 401K balance to an IRA account. I was told by Schwab this distribution is not reversible after they distribute the check. I need an advise what option I have? I am not 59 1/2 yet.
1. Can I deposit the check to an Roth account? consider I do a conversion to Roth for the 401K account so I pay the necessary tax now including the 20% already been withhold to IRA.
2. Deposit the check to an IRA account so at least I don't get tax on the 80%. Can I out of pocket deposit the 20% to the IRA account and get the 20% tax withhold back after file tax return?




This ultimately a question your tax advisor needs to give you because of your overall income and tax situation.

Yes it is true once it gets into the grubby hands of the Treasury Department there is no retrieving it.  It is the ultimate blackhole!

During your visit with your tax person I would suggest that option 1 might be your best solution long term and your tax hit might even be less.  Again, without knowing your overall situation it is hard for me to give specific advice.

I will say this as hard advice though if you don't have a tax advisor then find one that understands tax planning not just a form filler.  The letters CPA does not guarantee competence.  

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Daniel Cordoba


I am able to effectively and reliably answer questions that are related to self-directed IRAs, funding a business with an IRA or 401k and business exit strategies. I cannot answer questions that are considered to be direct investment advice or speculation on return on investment. I will not and cannot answer questions that are related to securities. I will not and cannot answer questions that require specific legal advice.


My overall expertise, media information and experience can be viewed on my personal page I have been in the self-directed IRA advisory business since 2000; which is an eternity for our industry. I have been quoted, featured or referenced to by many of the major media such as ABC World news, Kiplingers, Forbes, Wall Street Journal and many other media outlets.

Author: From Wall Street To Main Street, Your Guide to Self-Directed Investing ISBN 978-0-615-22308-7 Author: From Wall Street to Main Street, How to Determine the Self-Directed IRA or Self-Directed 401k(k)Plan that Fits Your Needs ISBN 978-0-557-17478-2

BA Business Management, University of Phoenix 1985

Awards and Honors
2009, FIVE STAR Wealth Manager Client Satisfaction, Crescendo Business Services/Texas Monthly Magazine 2009, 2010 Best of Local Business Award, US Local Business Association

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Unable to do so contractually.

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