How to Move Money From a 401(k) to Another Retirement Account

A 401(k) rollover moves your balance from one retirement account to another without triggering when ready taxes or penalties

A rollover is a transfer of money from your 401(k) to a different retirement account — usually an IRA, a new employer's 401(k), or occasionally a Roth account. The IRS allows this transfer without counting it as a withdrawal, which means you avoid the 10% early withdrawal penalty and the income tax that would normally explore if you straightforward cashed out.

The most common reason to rollover is leaving a job. When you separate from an employer, you have several choices for what to do with that 401(k): leave it where it is, roll it to your new employer's plan if one exists, or roll it to an IRA. Each path has different rules about how much you can contribute elsewhere, what investments are available, and when you can access the money.

The IRS has strict timing and documentation rules for rollovers. If you miss a important date or move the money incorrectly, the transfer becomes a taxable withdrawal. Understanding the two types of rollovers — direct and indirect — and which one fits your situation is the first step.

Key Takeaways

• A direct rollover moves money straight from your old 401(k) plan to a new account without you handling the funds, and it has no tax consequences if done correctly.
• An indirect rollover gives you the money first, and you have 60 days to deposit it into a new retirement account or it becomes taxable income.
• Rolling over to a traditional IRA preserves the pre-tax nature of your 401(k) balance, while rolling to a Roth IRA triggers taxes on the amount converted.
• Your old plan administrator and the receiving institution both need to process paperwork for the rollover to complete, which typically takes one to two weeks.
• If your 401(k) has outstanding loans, you cannot roll over the loan balance, and unpaid loans may be treated as taxable distributions.

Direct rollover: the safest path

A direct rollover means the money never touches your hands. Your old plan administrator sends a check or electronic transfer directly to the new retirement account in your name. Because you never receive the funds, there is no tax withholding and no 60-day important date to worry about.

To start a direct rollover, contact your old employer's plan administrator — usually the company that manages the 401(k), such as Fidelity, Vanguard, or Schwab — and ask for a rollover request form. You will need to provide the name and account number of the receiving institution (your new IRA or new employer's 401(k)). The plan administrator then sends the money directly to that account.

The receiving institution also needs to accept the rollover. Most IRAs and employer plans accept direct rollovers from 401(k)s, but confirm this before you request the transfer. The entire process usually takes one to two weeks, though it can take longer if either institution is slow to process paperwork.

Indirect rollover: you receive the check, then deposit it

An indirect rollover means your old plan sends you a check for your balance. You then deposit that money into a new retirement account yourself. This method works, but it carries more risk because the IRS imposes a strict 60-day window: you must deposit the funds into the new account within 60 calendar days or the entire amount becomes taxable income.

When you receive an indirect rollover check, your old plan is required to withhold 20% for federal income tax. If your balance is $100,000, you will receive a check for $80,000 and the plan withholds $20,000. You still have 60 days to deposit the full $100,000 into the new account to avoid taxes. If you only deposit the $80,000 you received, the $20,000 withheld is treated as a taxable distribution, and you will owe taxes on it plus a potential 10% penalty if you are under 59½.

The 60-day clock starts the day you receive the check, not the day you request the rollover. If you are out of town, on vacation, or the mail is slow, those days still count. Once the 60 days pass, the IRS does not extend the important date except in rare circumstances involving disaster or military service.

Rolling over to a traditional IRA versus a Roth IRA

Where you roll your 401(k) affects how the money is taxed going forward. A traditional IRA rollover keeps your balance in a pre-tax account, just like your 401(k) was. You do not owe taxes on the rollover itself, and the money continues to grow tax-deferred until you withdraw it in retirement.

A Roth IRA rollover — also called a Roth conversion — moves your pre-tax 401(k) balance into a Roth account. This triggers a tax bill in the year you convert. If you roll over $50,000 from a traditional 401(k) to a Roth IRA, you owe income tax on that $50,000 in that tax year. After the conversion, the money grows tax-free and you can withdraw it tax-free in retirement.

Roth conversions make sense for some people — those in a lower tax bracket than they expect to be in retirement, or those who want to reduce required minimum distributions later. But they require you to have cash on hand to pay the tax bill, because the tax is not withheld automatically from the rollover. Consult a tax professional before converting to a Roth, because the tax impact depends on your income, filing status, and other retirement accounts you own.

Rolling over to a new employer's 401(k)

If you change jobs and your new employer offers a 401(k), you can roll your old 401(k) balance directly into the new plan. This keeps all your retirement savings in one place and may simplify record-keeping.

Not all employer plans accept rollovers, so check your new plan's summary before requesting the transfer. If the new plan does accept rollovers, contact the plan administrator and provide your old plan's information. The process is the same as a direct rollover to an IRA: the old plan sends the money directly to the new plan, and no taxes are withheld.

One advantage of rolling into a new 401(k) is that you may be able to borrow against the balance later if the plan allows loans. IRAs do not allow loans. On the other hand, 401(k)s typically offer fewer investment choices than IRAs, and employer plans may charge higher fees. Compare the investment options and costs of both accounts before deciding where to roll over.

What happens to 401(k) loans during a rollover

If you have an outstanding loan against your 401(k), you cannot roll over the loan balance itself. The loan remains with your old plan, and you must continue making payments to it even after you leave the job.

If you do not repay the loan by the important date set by your plan — usually 60 to 90 days after you separate from the employer — the unpaid balance is treated as a taxable distribution. You will owe income tax on the full loan amount, plus a 10% penalty if you are under 59½. You can only roll over the portion of your 401(k) balance that is not tied up in the loan.

Before you request a rollover, ask your plan administrator whether you have any outstanding loans and what the repayment important date is. If you do have a loan, you may want to repay it in full before leaving the job, or coordinate the repayment timeline with your rollover.

Timing and documentation you need

Start the rollover process as soon as you know you are leaving your job or want to move your money. Request the rollover form from your old plan administrator and have the account number of your receiving institution ready. If you are doing a direct rollover, the two institutions handle most of the paperwork between themselves.

Keep copies of all rollover paperwork: the rollover request form, confirmation from the old plan that the money was sent, and confirmation from the new institution that the money was received. These documents are your proof that the rollover occurred correctly, which matters if the IRS ever questions the transaction.

If you do an indirect rollover and receive a check, deposit it as soon as possible and do not spend any of it. The 60-day clock is unforgiving, and there is no way to extend it except in cases of disaster or military service. Once the money is in the new account, the rollover is complete and the funds are no longer at risk of being taxed.

Frequently Asked Questions

Can I rollover a 401(k) while I am still employed?

Yes, if your plan allows in-service rollovers. Some employer plans permit you to roll over your balance to an IRA while you are still working there, though not all do. Contact your plan administrator to ask whether in-service rollovers are permitted. If they are, you can do a direct rollover to an IRA without leaving your job.

What if I miss the 60-day important date on an indirect rollover?

The missed amount becomes taxable income in that tax year, and you owe a 10% penalty if you are under 59½. The IRS rarely extends the 60-day important date except in cases of disaster, military service, or serious error by the financial institution. If you miss the important date, consult a tax professional about whether you can file for relief.

Do I owe taxes when I do a direct rollover?

No. A direct rollover from a traditional 401(k) to a traditional IRA or another 401(k) has no tax consequences. The money moves directly between accounts and is not counted as income. If you roll over to a Roth IRA, you do owe taxes on the amount converted, but that is a Roth conversion, not a standard rollover.

Can I rollover my 401(k) if I am retired?

Yes. There is no age limit on rollovers. You can roll over your 401(k) to an IRA at any age, though if you are over 73 and have already started taking required minimum distributions, the rules are more complex. Consult a tax professional before rolling over after you have begun distributions.

What if my old employer went out of business?

Contact the plan administrator listed on your most recent 401(k) statement. If the company is gone, the plan administrator should still be able to process a rollover. If you cannot locate the administrator, contact the Department of Labor's Employee Benefits Security Administration, which maintains records of abandoned plans.