During 2011,Henry,age 35,decided to change jobs.Henry asked his old company to give him a check for the $10,000 balance from his retirement account.Since this was not a direct transfer into a new retirement account,the company withheld 20 percent ($2,000)as federal withholding taxes,thereby giving him a net check for $8,000.In order to avoid paying taxes and penalties on this distribution,Henry:

Question

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Henry must deposit the full $10,000 (including the $2,000 withheld for taxes) into a new retirement account within 60 days to avoid taxes and penalties.

During 2011,Henry,age 35,decided to Change Jobs