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Earlier in the year (07/03/217) I closed out an "old" employer sponsored 401K by rolling over to an existing personal Rollover IRA ($12,619.90).

Now, on 12/07/2017, there was a "contribution" (or some sort of dividend or some other financial action that I don't know the name of) for the funds from the 401K, and I was issued a check on 12/12/2017 for $0.45. The check was issued in my name.

Here are what I assume my options are:

  1. Shred the check, let the check expire after 180 days, forget this ever happened.
  2. Contact the issuing 401K management company, and ask them to cancel the payment.
  3. Deposit the check in my personal checking account. Include this in my federal tax filing at the end of the year. Make H&R Block Online get mad at me.
  4. Mail the check to the IRA management company, somehow endorsing the check over (FBO: Me).

Here is some extra information I have on the check:

  • Distribution Type: Lump Sum
  • Creation Date: 12/12/2017
  • Tax Reporting State: CA
  • Tax Year: 2017
  • Tax Form: 1099R
  • IRS Code: 1
  • Gross Amount: $0.45
  • Total Taxable Amount: $0.45
  • Total Non-Taxable Amount: $0.00
  • Net Unrealized Appreciation: $0.00
  • Ordinary Income: $0.45
  • Amount Eligible for Rollover: $0.45
  • Amount Rolled Over: $0.00
  • Net Amount of Check: $0.45
  • Deduction Amount: $0.00

I'm ignoring the fact that a US postage stamp costs $0.49 right now. Also, I am motivated to have a clean ledger. Somewhere, someone has to look at this check on their books and see that it isn't cashed, so I'm not a fan of option #1.

What can I do with this $0.45 check?

  • 3
    If you don't use whole dollars instead of cents when filing taxes, $0.45 rounds down to 0, so would not generally have any effect on your taxes anyway. – user102008 Dec 21 '17 at 1:27
  • Fair point. That addresses my problem. But let's say it is $1.45 to keep the conversation going. What could be done with a 401K check as small as that? – Bruno L. Dec 21 '17 at 19:52
  • oops I meant "If you use whole dollars" – user102008 Dec 21 '17 at 20:37
2

If you are within 60 days of the disbursement then you can send the funds to a new IRA as a rollover.

The important part is that you must send the amount of the withdrawal from the account, not the amount of the check.

If you had $1000 and they kept a 10% penalty and a 20% withholding for taxes, you would still have to send $1000 to the new IRA even though the old IRA only sent you $700 ($1000 -10% -20%). You would recoup the $300 when you file taxes.

I don't know from your information whether $0.45 is the after penalty amount or not? I thought 401k custodians were required to withhold penalties so does that mean the original amount was $0.49? Did they withhold 20% for taxes? Do they only withhold if it is over a certain dollar amount?

I'm sure you can do this as a rollover, but I'm not sure there is enough information in your question to know how much you should send to the Rollover IRA. Any way I look at it, it's less than $1.00 though.

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