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February 28, 2020
Question

I received a 401k rollover check made payable to another institution for deposit. The check also had my name on. Due to some unforeseen medical issues I had to cash the check and use it, therefore my

  • February 28, 2020
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I have already reached out to the check issued and they said there is nothing they can do.

1 reply

Employee
February 28, 2020

If it was less than 60 days, you could replace the money in the original account to cancel the withdrawal.  After that, this is a taxable distribution to you.  It is also subject to the 10% penalty on early withdrawal.  One of the exceptions to that penalty is if you use the money to pay for medical expenses that are more than the 7.5% floor for itemizing medical expense deductions.  You should enter all your medical expenses, even if you don't plan to itemize.  Then re-check the 1099-R interview and make sure you check the box for the medical exception when the program asks if you used the money for any purpose that allows the penalty exception.  Even if the penalty is excepted, you will still owe regular income tax on the money.