From: "Dave Dodson" 
Newsgroups: misc.invest.financial-plan
Subject: Re: 401k rollover question
Date: 21 Sep 2005 16:50:33 GMT
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>That is right when it comes to taxes.  But the mere fact that
>you are sent a check can trigger the need for withholding.  While
>you do get that money back when you file for income taxes, you
>have to pay that money out of pocket when you do the roll-over.
>If you fail to do that, the difference is then treated as taxable
>income and a premature withdrawl, so you get both taxes and a
>penalty.

If the company is making the check out to the new custodian, there is
no legal requirement for them to take out the 20% withholding, whether
they mail the check to you or to the custodian. I know, because I have
conducted a rollover that way... the company made the check out to
Fidelity for the whole amount of the 401(k) account and mailed it to
me. I attached it to a Fidelity account application and mailed it to
Fidelity. 

Dave