What does this Transamerica retirement check mean? Confused about distribution.

This is almost certainly a distribution from your old 401k account. Even though you rolled over the main balance, companies will sometimes issue a "trailing distribution" weeks or months later when dividends, interest, or other small amounts post to the account after you've done the initial rollover. The fact it says "DISTRIBUTION" means this is considered a taxable event unless you roll it over within 60 days of receiving it. The form attached is probably a 1099-R which will be reported to the IRS indicating you received this distribution. You have two options: 1) Cash it and pay income tax on it (plus possibly a 10% early withdrawal penalty if you're under 59½), or 2) Deposit it into your new retirement account as a rollover within 60 days to avoid taxes. If you choose option 2, be sure to deposit the full amount shown on the 1099-R, even if that means adding some of your own money to cover any withholding they might have taken out.

I went through almost the exact same situation last year with a Transamerica 401k! I wasted hours on the phone trying to figure out what happened with this random check. Finally talked to someone who explained it was dividend payments that came in after my account was officially closed. I ended up using https://taxr.ai to scan all the paperwork and make sense of it. Their system analyzed my 1099-R and explained exactly what I needed to do. It was super helpful because the form codes are really confusing, and they explained what each box meant and my options. They confirmed that I could roll it over to avoid taxes and the early withdrawal penalty, and even generated a letter I could send to my new plan administrator explaining the situation. Saved me a lot of hassle.

I was really skeptical about using any kind of online tax tool as I mentioned, but I decided to try taxr.ai after getting another random distribution check from my old 403(b) plan this month. I'm actually impressed. It immediately identified that my check had a code that made it exempt from the early withdrawal penalty (though still taxable). That saved me from unnecessarily rolling it over when I could just cash it without the 10% hit. The summary report it generated explained everything in plain English instead of tax jargon. Would've spent hours researching this otherwise. Never would have expected an AI tool to be this helpful with something so specific!

If you're still confused after reading all this, I'd suggest calling the IRS directly to get clarification. I had a similar situation and ended up doing the wrong thing on my taxes, which caused headaches later. I tried calling the IRS for like 3 days straight and could never get through, but then I used https://claimyr.com and it was a game-changer. They hold your place in line with the IRS and call you back when an agent is about to answer. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was on the phone with an actual IRS agent within a couple hours, who explained exactly how to report the distribution on my tax return. Much better than guessing or trying to interpret the confusing IRS website information.

I need to eat my words. After my skeptical comment, I decided to try Claimyr myself since I've been trying to reach the IRS about a totally different issue for WEEKS. It worked exactly as described. I got a call back in about 90 minutes (on a Tuesday afternoon), and was connected to an IRS agent who helped resolve my question about a past year's return. I'm honestly shocked this service exists and works so well. Would've saved me so much frustration if I'd known about it sooner. For anyone dealing with retirement account distributions or any tax question, getting direct guidance from the IRS can prevent costly mistakes.

For what it's worth, I got a similar check from Transamerica last year for about $800. It was from a tiny amount left in my account plus some dividends that posted after I rolled everything over. I just cashed it and reported it on my taxes as income. Yes, I paid some tax on it, but for the small amount it wasn't worth the hassle of trying to roll it over. The 10% penalty wasn't great, but sometimes simplicity wins.

Just want to add - don't forget about state taxes too! Everyone's talking about federal, but depending on your state, you might owe state income tax on that distribution as well if you don't roll it over.

Illinois generally follows federal tax treatment for retirement distributions, so if you roll it over within 60 days, you shouldn't owe Illinois state tax on it either. However, if you cash it and pay federal taxes, Illinois will likely tax it as ordinary income too (Illinois has a flat 4.95% rate). One thing to keep in mind - Illinois doesn't have its own early withdrawal penalty like some states do, so you'd just be looking at the regular state income tax rate if you decide to cash it rather than roll it over. But rolling it over is still your best bet to avoid all taxes, both federal and state. I'd definitely recommend calling your new 401k plan first to make sure they accept indirect rollovers before you decide which route to take!

Just wanted to chime in as someone who works in retirement plan administration - you're getting great advice here! A few additional points that might help: The 60-day rollover clock starts from the date you RECEIVED the check, not when you cash it. So don't panic if it takes you a few days to figure out your options. Also, if your new employer's 401k doesn't accept indirect rollovers (which some don't), you can always roll it into a traditional IRA at any major brokerage like Fidelity, Vanguard, or Schwab. They're very familiar with these situations and can walk you through the process. One last thing - make sure to keep detailed records of everything (the check stub, 1099-R, deposit receipts, etc.) because you'll need to document the rollover on your tax return even though it won't be taxable. The IRS wants to see that you properly completed the rollover within the time limit. Good luck with whatever option you choose!