Can I defer reporting income from a 401k?

Q: If I have withdrawn my entire 401K as a lump sum will I need to pay taxes on it this year, or can I defer reporting that income until next year? - Jeff, Boston

The following answer was provided by Mark Misselbeck, CPA, Levine Katz Nannis & Solomon PC, Needham.

A: Unless you took the distribution close to 12/31/03 - so that you are still within 60 days of the date of distribution, you will need to report the distribution on your 2003 return. If you are still within 60 days of the distribution date (or there is some circumstance beyond your control that prevented you from rolling over the distribution), you may roll over the distributed amount to an IRA. A "conduit" IRA would be best - one set up to specifically take in the 401(k) assets, without commingling them with other IRA monies that you may have - since this will permit you to roll the funds into another pension plan (if that plan will take a rollover).