I recently found got the letter in the mail and it's not much but there were no instructions with it. Just the amount of the check and a break down of any deductions.
No one I know, knows what to do with this. I've read on this subreddit and elsewhere that basically cashing it would be a headache when it comes to filing and there being a penalty. If I hypothetically did cash it would the 10% penalty have to be paid when I cash it or when and how?
After eading through suggestions, different websites on the topic and even the IRS's own website I feel completely lost and overwhelmed. A lot of terms are thrown around and people say do one thing and others say do another without really explaining the differences or what the different types of IRAs mean or who to go through.
I'm in my early 20s and I'm completely lost and overwhelmed because my current financial situation is not well and even though the money from my 401k check isn't much it'd still go a very long way. But I don't want to cash it if it'll prove a future headache because I don't how I'd file my taxes for it or when does the penalty have to get paid and if it comes out of the check or anything. I really just need as much information and help as possible so thank you to anyone taking the time to help!
Edit #1, with additional information:
The amount is $627.55.
(copy & pasted from one of my comments below) The details I have summarized are: Safe Harbor Match and Employee Before Tax equalling my Total Withdrawal Amount. There's an Administrative Fee taken out and a line after listing the Total Available to All Receivers (Total Withdrawal Amount-Administrative Fee), Receiver's Share of Proceeds - Internal Revenue Service Withholding finally equalling my Check Amount. Then that a Tax Form will be mailed to me by January 31st.
Edit #2, the math and better broken down:
Safe Harbor Match: 404.72
Employee Before Tax: 404.72
Total Withdrawal Amount: $809.44
Administrative Fee: -25.00
Total Available to All Recovers: $784.44
Receiver's Share of Proceeds: $784.44
Internal Revenue Service Withholding: -156.89
Check Amount: $627.55
Submitted November 19, 2023 at 12:10AM by Pkmn_Lovar https://ift.tt/Hv8pDAt
