<prompt> Human: My buddy just switched jobs and set up a new 401k but his old provider sent him a check for 1700 now my question is how will he be taxed for this in the future? Can he use the money he wants to.  <response>: If he spends it, it will be taxed as taxable income along with an extra 10 penalty. Needs to rollover within 60days but also note that 20 has probably been withheld for tax reasons and he will have to provide that missing 20 himself---but will receive the 20 withheld at tax time to cover it: 