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By colin_g
On 01/29/05
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the company i worked for recently went out of business so i was able to cash out my 401k without penalties or fees, but taxes were taken out. now do i have to mention the 401k on my tax return? no w2 or 1099 etc was sent to me on that
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By Stanley-B-
On 02/01/05
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I am not a tax expert, but I was in a similar situation a few years ago. Well, not exactly, but I did have to research this a little bit. My situation was this: a company I was working for decided to establish a profit-sharing/retirement plan which would not be taxable until I withdrew money from it. It was offered by our bank. All is well, but then I tried to figure out whether I needed to declare the fact that the plan/retirement account was established for me (even though I haven't withdrawn any money from it). After spending more than a few minutes on the phone with the bank, the answered I received was NO.
However, that was only the answer while the money was NOT withdrawn. I think once it is withdrawn, it's automatically of interest to the IRS.
I believe the taxes that they've taken out may not be "exact" (they might actually be higher than you'd normally pay), so if that's the case, you may get money back from the IRS by declaring the whole transaction.
To summarize, my GUESS is that yes you have to declare it and to figure that whole thing out, I'd suggest you get some sort of tax planning software to prepare your return. It's not the same as a professional tax preparer, but it's definitely cheaper.
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