Old 401k and taxes; figuring out options and how much I may have screwed myself

Submitted by unthused t3_11ddqn9 in personalfinance

Roughly ~7 months ago my previous employer closed; I had worked there for nearly 20 years so that was pretty much the entirety of my adult job experience. Prior to closing, I made sure I had access to my 401k plan and that it was in my name, was reassured that I wouldn't lose anything as it was mine and not owned by the business, etc.

Started new job, got some mail from Voya who hosted the account and just tossed it in with my financial stuff to deal with later, since I was confident I had nothing to worry about and didn't need to actively intervene or do anything with it.

Then yesterday I get a 1099 in the mail from Voya listing the entire balance of my 401k plan.

I did not close it or cash out, I literally haven't touched the account. Have not gone through all my old mail yet. I have no idea what the normal process is when changing jobs since this is my first time, and I was under the impression the account would persist without my needing to do anything. I sure as hell do not have anywhere close to the money to pay for whatever taxes on it might be.

So before I have a mild panic attack (too late), what is my best course of action? Did closure of the company turn it into a normal savings account that is now taxable? Can I use funds from the account to pay the tax burden? (I absolutely can't afford it otherwise, so fingers crossed.)

I can't even ask the person who was responsible for these things anymore as they don't exist.

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plowt-kirn t1_ja7zokj wrote

> Have not gone through all my old mail yet.

I'm a bit befuddled that you posted to Reddit rather than actually finding what you received from Voya.

If the plan was closed, it's entirely possible they sent you a check with the entire contents of the 401(k). In that case you had 60 days to roll it into another plan, such as an IRA. If you failed to do that, you may very well be out of luck and on the hook for the taxes.

But for goodness sake go open that paperwork and see precisely what they did.

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Missus_Aitch_99 t1_ja7zpx8 wrote

Dude, you’re old enough to have worked for two decades. It’s time to start opening and READING your mail. I know it’s mostly J. Crew catalogs, but there is also some important stuff in there (like a paper check representing the entirety of your retirement account balance).

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Stock-Freedom t1_ja7zfjd wrote

Call Voya and see what they did. If they cut you a check, you need to endorse it and send it to the new provider.

It would be abnormal to convert that account. By default, it’s left with the provider except for very small balances.

Also read the mail you were sent. You’ll need to inform the IRS that you are rolling over this amount to either an IRA or your new 401k.

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unthused OP t1_ja82ji1 wrote

Will do, I found it grabbing the mail on my way out the door so I haven't had a chance to do much else yet or see what they sent me previously.

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Stock-Freedom t1_ja82rd3 wrote

This should be a wake up call to take care of adult responsibilities… like reading your mail. Good luck.

Edit: ONE YEAR AGO you posted asking what to do. The top comment literally told you to take care of your 401k and you ignored it.

My long term employer is likely closing their doors in a couple months; is there anything I should do to prepare/make sure I have all my employment history and loose ends covered? https://reddit.com/r/personalfinance/comments/rcopt3/my_long_term_employer_is_likely_closing_their/

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SpiritualCatch6757 t1_ja7zouy wrote

What does the 1099 say? Is it a 1099-R? Talk to Voya. Why have a panic attack without all the information?

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bros402 t1_ja80dw9 wrote

So... you've been working for 2 decades and you didn't open a financial document from the company who MANAGED YOUR RETIREMENT PLAN because you thought you didn't have to do anything?

Worst case scenario: That letter contained a check for the balance of your 401(k). You had 60 days to roll it over into something like a traditional IRA - now you owe 10% of the balance of your 401(k) in taxes.

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BLolo99 t1_ja85yrx wrote

10% penalty on top of the normal taxes due…so more like 30% is worst case

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DaemonTargaryen2024 t1_ja83csj wrote

What is in box 7 of the 1099-R?

How long ago did the transaction occur?

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unthused OP t1_ja83w7b wrote

Will check as soon as I'm able. The company closed in May of last year; presumably any transaction relating to the account would have occurred in that timeframe.

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lucky_ducker t1_ja89910 wrote

If your account was < $1000 they likely cut you a check and you had 60 days to roll it over to an IRA.

If your account > $1000 but < $5000, they already moved it to an IRA.

If your account > $5000 they are generally required to leave it alone, unless the entire plan was terminated for some reason.

How much was the "entire amount" on the 1099?

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unthused OP t1_ja8aj3m wrote

Balance is/was roughly ~$75,000.

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lucky_ducker t1_ja8e63c wrote

So, if the 1099 shows a distribution of that amount, it either:

- got moved to an IRA account, or

- got moved to an entirely new 401(k) provider, which is the most likely.

It's on you to stay on top of important mail, and this includes notifying vendors of a new address, and using the USPS change-of-address kit to both forward your mail and notify senders. A lot of important mail is sent in such a way that the sender is notified if you have a change-of-address on file.

I get mail addressed to some guy at my address several times a year from Empower, a 401(k) administrator. He's got money out there that he has evidently completely lost track of.

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unthused OP t1_ja8h7tx wrote

As far as I know it's still with the same provider (Voya). So if it was moved to an IRA, which is evidently taxable, do I have access to those funds to pay the tax burden? I definitely cannot remotely afford it otherwise, so fingers crossed.

100% aware that this is on me, I had a lot going on at the time (it was my family's business that closed) so between having to put together a resume and job search for the first time while severely stressed out, it got put aside and forgotten about.

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lucky_ducker t1_ja8jmca wrote

>So if it was moved to an IRA, which is evidently taxable, do I have access to those funds to pay the tax burden?

A direct transfer from 401(k) to IRA - or 401(k) to a different 401(k) - is not a taxable event at all.

A 1099 showing a distribution does not imply that it was a taxable event. You do need to figure out where the funds ended up, in case the IRS wants to know.

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plowt-kirn t1_ja9g9gj wrote

You're missing an important detail in the original post. His company closed and the plan was likely terminated.

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