Retirement Accounts
An investor receives a $50,000 distribution from their employer's 401(k) and wants to roll it into an IRA. If they take possession of the funds, the employer must withhold:
Distributions from employer plans that are not direct trustee-to-trustee transfers are subject to 20% mandatory federal tax withholding. To complete the rollover tax-free, the investor must deposit the full $50,000 withi
Complete Analysis & Legal Rationale
Distributions from employer plans that are not direct trustee-to-trustee transfers are subject to 20% mandatory federal tax withholding. To complete the rollover tax-free, the investor must deposit the full $50,000 within 60 days, making up the $10,000 withheld from other sources.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.