401(k) Rollover Rules: How to Move Your Money
A 401(k) rollover moves money from a former employer's 401(k) into an IRA or a new employer's plan without taxes or penalties. A direct rollover (trustee-to-trustee) is safest — a 60-day rollover risks mandatory withholding and penalties if you miss the deadline.
When to consider a rollover
When you leave a job, you can leave your 401(k) with your former employer, roll it into an IRA, roll it into a new employer's plan (if accepted), or cash it out (generally the worst option). Rolling into an IRA gives you more investment choices and control. Rolling into a new employer's plan keeps it in the workplace system with potential loan access.
Direct vs indirect rollover
A direct rollover (trustee-to-trustee transfer) moves the money directly from one institution to another. No taxes are withheld, and there's no risk of missing a deadline. An indirect rollover sends the check to you — the plan withholds 20% for taxes, and you must deposit the full amount (including the withheld 20%) into the new account within 60 days. If you miss the deadline or can't make up the 20%, the amount is treated as a distribution.
401(k) to IRA rollover tax consequences
A direct rollover from a pre-tax 401(k) to a Traditional IRA is not a taxable event. Rolling pre-tax 401(k) money into a Roth IRA is a Roth conversion — the amount is included in taxable income for the year. Rolling Roth 401(k) money into a Roth IRA is not taxable if the 5-year rule is met.
Rolling a 403(b) into a 401(k)
You can generally roll a 403(b) into a 401(k) or IRA when you change jobs. The same rollover rules apply. Check with both plan administrators to confirm they accept the transfer.
Frequently asked questions
Should I roll over my 401(k) to an IRA?
It depends. An IRA offers more investment choices and potentially lower fees. A 401(k) may offer loan access, creditor protection, and access to institutional share classes. Compare the fees, investments, and features before deciding.
What are the tax consequences of rolling a 401(k) to a Traditional IRA?
A direct rollover from pre-tax 401(k) to Traditional IRA is not taxable. Rolling to a Roth IRA is a conversion and is taxable.
Sources
Gleefund explains general retirement-account concepts and provides estimates. It does not provide financial, tax, or legal advice. See our disclaimer and methodology. Check the current IRS rules before acting.
Figures current as of 2026-09-25. Found an error? Contact us.