401(k) distribution/tax question?

Question

In situations where you've taken a full withdrawal from a 401(k) plan and had the check made payable to you, the plan administrator withholds 20% and that is sent to the IRS as a tax payment.

In the tax form relating to these distributions, it says that if you make up the 20% from another source and rollover the full amount, you MAY receive that 20% back as a tax refund.

Unfortunately, it doesn't clarify what they mean by "may." I'm assuming it means that if you owe any taxes, that money would be deducted from the 20%. But if you break even or are due a refund, you would get the 20% back.

Is that correct? Or does "may" indicate some other evil IRS reasoning?

Answer 1

It means just what it says. The 20% is just more withholdings like the withholdings on your W-2. If your total withholdings (from all W-2s and 1099s) exceed your tax liability you get a refund.

Answer 2

I believe that your assumption is correct.

There is no evil IRS reason.

There would not be enough room to list all the disclaimers if they used the word "will". It is easier just to use "may".