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February 14, 2023
Question

If I was terminated by my employer and they automatically cancelled my 401(k) plan do I list this as "Employer Maintained Distributions" on my taxes?

  • February 14, 2023
  • 2 replies
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2 replies

February 14, 2023

If your employer closes your 401k account (usually because of dollar amount in account), you must still rollover to a new 401k or IRS within 60 days to avoid the early withdrawal penalty.

Employee
February 14, 2023

I don't believe so.  What is the code in box 7?

 

Generally, if you are bumped out of the plan after termination, you have 60 days to rollover the funds into a private IRA or a new workplace plan.  If you don't rollover the funds, they are taxable to you plus a 10% penalty if you are under age 55. 

 

As far as I know, "Employer maintained distribution" means something else, like when a plan has to return funds because they failed one of the tests for maintaining an eligible plan (the plan must follow certain rules that you never need to know about, and sometimes those rules affect the amount each employee is allowed to contribute).  That does not sound like the case here. 

March 27, 2025

Its correct but morally its BS if you ask me. Its *MY* money why should I be penalized for taking it back. Retirement is such a scam.