How to Move Your 401(k) to Your New Employer's Plan

You can move your old 401(k) to your new employer's plan, but the process depends on what your old employer allows and what your new employer offers

When you change jobs, you have several choices for the money in your old 401(k). One option is to roll it into your new employer's 401(k) plan — this means moving the money directly from one plan to another without touching it yourself. This keeps your savings in one place and often simplifies your record-keeping. However, not every employer's plan accepts rollovers, and your old plan may have restrictions on when you can move the money.

The most common path is a direct rollover, where the money moves straight from your old plan's administrator to your new plan's administrator. No check comes to you, and you avoid taxes and penalties. This is different from a indirect rollover, where you receive a check and deposit it yourself — this route has strict timing rules and tax withholding that can cost you money if you miss a important date.

Key Takeaways

• A direct rollover moves money straight from your old plan to your new employer's plan without you handling the money, and no taxes are withheld.
• Your new employer's plan must accept rollovers, and your old plan must allow you to take a distribution — both are optional features that not all plans offer.
• You must complete the rollover within 60 days if you receive a check yourself, or the IRS treats the money as a distribution and taxes it as income.
• If your old plan has outstanding loans, you cannot roll over the loan balance, and you may have to repay it when ready or face taxes and penalties.
• Leaving the money in your old plan is also an option if the balance is above $5,000 and the plan allows it, and this avoids rollover important date entirely.

Check whether your new employer's plan accepts rollovers

Not all 401(k) plans accept money from other plans. Your new employer's plan document and summary plan description will state whether rollovers are permitted. You can find this information by asking your new employer's benefits department or human resources office — they handle 401(k) questions and can tell you in one conversation whether your plan accepts rollovers and what paperwork you need to provide.

If your new plan does not accept rollovers, you have other options: you can leave the money in your old employer's plan (if your balance is $5,000 or more and the plan allows it), roll it into an individual retirement account (IRA), or take a distribution. Each choice has different tax and investment consequences, so understanding your alternatives matters before you decide.

Confirm your old plan allows distributions

Your old employer's 401(k) plan must permit you to take a distribution after you leave. Most plans do, but some restrict when you can withdraw money. For example, some plans require you to wait until you reach a certain age, separate from service, or experience a hardship. Your old plan's summary plan description explains these rules, and you can request it from your old employer's benefits department or the plan administrator (the company that manages the account day-to-day).

If your old plan has an outstanding loan against your 401(k) balance, you cannot roll over the loan itself. You will have to repay it according to the loan terms, or the IRS will treat the unpaid balance as a distribution, which triggers income tax and possibly a 10 percent early withdrawal penalty if you are under 59½. Contact your old plan administrator to understand what loans exist and what your repayment options are.

Initiate a direct rollover with your old plan administrator

A direct rollover is the safest route because the money never passes through your hands. Contact your old plan administrator — this is usually a financial services company like Fidelity, Vanguard, Schwab, or your old employer's payroll provider. Tell them you want to roll over your balance to your new employer's 401(k) plan. They will ask for your new plan's name, address, and account number (your new employer's benefits department provides this).

The old plan administrator will prepare a check made out to your new plan's custodian, not to you. This check goes directly to your new plan, and you do not see it. The entire process typically takes one to three weeks, depending on how quickly both administrators process the paperwork. You can ask your old plan administrator for a tracking number or confirmation once the money has been sent.

Provide your new plan with the rollover documentation

Once your old plan sends the money, your new plan's administrator will receive it and credit it to your account. You may need to sign additional paperwork to authorize the deposit, or your new employer's benefits department may handle this automatically. Ask your new employer's benefits team what documents they need from you and whether you have to take any action on your end.

Keep copies of all correspondence from both your old and new plan administrators. Save the confirmation that your old plan sent the rollover, the receipt showing your new plan received it, and any account statements showing the deposit. These documents are your proof that the rollover happened correctly, and you will need them if questions arise later or if you need to file taxes.

Understand the 60-day rule if you receive a check

If you receive a check from your old plan instead of having the money sent directly, you have 60 calendar days to deposit it into your new plan. This is called an indirect rollover. If you miss this important date, the IRS treats the money as a distribution, which means you owe income tax on the full amount plus a 10 percent early withdrawal penalty if you are under 59½. The penalty applies even if you deposit the money after 60 days.

When you receive a check, your old plan administrator is required to withhold 20 percent for federal income tax. If you roll over only the amount you receive after withholding, you will owe taxes on the 20 percent that was withheld when you file your return. To avoid this, you can deposit the full amount (including the withheld portion from your own pocket) within 60 days, and the withholding will be treated as a tax payment rather than a taxable distribution. Mark your calendar with the 60-day important date and do not delay.

Know your alternatives if rollover is not possible

If your new employer's plan does not accept rollovers, you have three other options. First, you can leave the money in your old employer's plan if your balance is $5,000 or more and the plan permits it. This avoids any important date and lets your money continue to grow tax-deferred, though you will have to manage two separate accounts. Second, you can roll the money into a traditional IRA, which accepts rollovers from any 401(k) and offers more investment choices than most employer plans. Third, you can take a distribution and pay taxes on it when ready — this is rarely the best choice unless you need the money for a genuine expense.

Each option has different rules about when you can withdraw money, what investments are available, and what fees you pay. An IRA rollover, for example, gives you more control over investments but may have higher fees than your employer plan. Leaving money in your old plan is straightforward but means you cannot consolidate your retirement savings. Discuss these options with your new employer's benefits department and consider whether you want to speak with a tax professional or financial advisor before deciding.

Frequently Asked Questions

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

The IRS treats the money as a distribution, not a rollover. You owe income tax on the full amount, and if you are under 59½, you owe a 10 percent early withdrawal penalty on top of that. The penalty applies even if you deposit the money into your new plan after the 60 days have passed. This is why a direct rollover is safer — there is no important date because the money never comes to you.

Can I roll over my 401(k) if I still have a loan outstanding?

You cannot roll over the loan balance itself. You must repay the loan according to its terms, or the IRS treats the unpaid balance as a distribution subject to income tax and possibly a 10 percent penalty. You can roll over the remaining balance in your account. Contact your old plan administrator to find out what loans exist and what your repayment options are before you start the rollover process.

Do I have to roll over my 401(k) to my new employer's plan?

No. You can leave the money in your old plan (if your balance is $5,000 or more), roll it into an IRA, or take a distribution. Each option has different tax consequences and rules about when you can withdraw the money. A direct rollover to your new plan is often the simplest choice, but it is not required.

How long does a direct rollover take?

Most direct rollovers take one to three weeks from the time you contact your old plan administrator. The timeline depends on how quickly both administrators process the paperwork and transfer the funds. Ask your old plan administrator for a confirmation number and expected completion date when you start the process.

Will I owe taxes on a direct rollover?

No. A direct rollover is not a taxable event because the money moves directly between plans and you never receive it. You will owe taxes only when you withdraw the money in retirement. An indirect rollover (where you receive a check) is also not taxable if you deposit it within 60 days, but your old plan will withhold 20 percent for federal income tax, which you can recover when you file your return.