I retired last month, and I think I made a mistake when I elected to withdraw my 401(k) money. When I received the check, it had 20% withholding taken from it. I had planned to open an IRA and transfer the total into it. My brokers said that if I opened a new IRA and deposited the total amount of the withdrawal by making up the tax withheld, I can claim the withheld taxes and recover the money when I file my taxes. Is this true?
Your broker is right. You won't be hit with a penalty or tax bill as long as you deposit the money into an IRA within 60 days. In that case, you can recover the taxes that had been withheld when you file your tax return.
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