When attending an informal meeting or pursuing mediation, you may represent yourself or you can be represented by an attorney, certified public accountant or individual enrolled to practice before IRS.

If you and IRS appeals officer cannot reach agreement, or if you prefer not to appeal within IRS, in most cases you may take your disagreement to federal court. Usually, it is worth having a go at mediation before committing to an expensive and time-consuming court process.

If early distribution from an employer’s plan is paid directly to you, your plan administrator will normally withhold income tax at a 20 percent rate. If you roll over distribution to a new plan, you must replace that 20 percent of funds that were withheld and deposit that amount in new plan or you will owe taxes on that amount. To avoid inconvenience of this withholding, you can have your old plan’s administrator transfer rollover amount directly to new plan or a traditional IRA.

All early distributions must be reported to IRS. You will report tax-free rollovers on lines 15a and 16a of Form 1040 along with any taxable distributions, but you will enter on line 15b or 16b only taxable amounts you don’t roll over.

Early distributions from retirement plans can involve complex tax issues. Make sure you understand issues or get competent tax advice.

Richard Chapo is CEO of Business Tax Recovery - Obtaining tax refunds for small businesses for overpaid taxes. Discovery tax strategies and deductions in our tax articles section.