How to Roll Over a 401(k) to an IRA: Step by Step

A 401(k) rollover moves an eligible retirement-plan distribution into an IRA or another eligible plan. Tax treatment depends on the source and receiving accounts. A direct rollover of pre-tax money into a traditional IRA generally preserves tax deferral; a Roth conversion can create taxable income.

When you leave a job, your 401(k) (opens in new tab) may remain in the old plan, subject to its terms and mandatory-distribution rules for smaller balances. Your options generally include leaving it there, moving eligible money into a new employer's plan that accepts it, rolling it into an IRA, or taking a distribution. Compare fees, investments, creditor protection, and withdrawal rules first. Cashing out generally means income tax on the taxable portion, plus a 10% additional tax before age 59.5 unless an exception applies. It also removes money from tax-advantaged retirement savings. The right choice depends on your circumstances.

An eligible rollover of pre-tax 401(k) money to a traditional IRA generally preserves tax deferral. The IRS rollover guide (opens in new tab) explains that required minimum distributions, hardship distributions, and certain other payments cannot be rolled over. A direct rollover is generally reportable even when it is not taxable; retain Form 1099-R and the receiving account records. Once it's in the IRA, you can invest in individual stocks, ETFs, bonds, mutual funds, whatever your IRA custodian supports. That's the main reason people move old 401(k)s to IRAs: more control, more options.

For background on how IRAs compare to 401(k)s and other account types, see the retirement accounts explainer.

Step 1: Decide what kind of IRA the money is going into. An eligible rollover of pre-tax 401(k) money into a traditional IRA generally creates no current tax. Moving it into a Roth IRA is a conversion, and the previously untaxed portion becomes taxable that year (see Rolling Into a Roth IRA below). A direct rollover of Roth 401(k) money into a Roth IRA is generally not taxable. Decide this before you fill out any paperwork. It changes everything that comes next.

Step 2: Open the IRA before you start the rollover. The account has to exist before the money shows up. If an investment advisor is going to manage it, sign their advisory agreement and open the account first. Narstar manages Rollover IRAs held at Interactive Brokers. The standard minimum is $3,000 per account, whether taxable or retirement and whether it holds one or several model portfolios. SIMPLE IRA participant accounts have no minimum.

Step 3: Contact your old plan administrator and request a direct rollover. They'll ask for your new custodian's name, your account number, and often a letter saying the new IRA will accept the money. Get that letter from your IRA custodian first so it's ready to go. Some plans let you do this online. Others need a phone call or paperwork by mail. Ask which one on your first call, so you're not stuck waiting on paper.

Step 4: Check the payment instructions. Use the receiving custodian's exact instructions and account number. A check payable to the custodian for the benefit of your IRA can be mailed to you to forward and still be a direct rollover. On the check, this usually reads [Custodian Name] FBO (for the benefit of) [Your Name] IRA. Some checks abbreviate custodian as Cust and name the account type first, for example [Custodian Name] Cust IRA Rollover FBO [Your Name]. A check payable to you personally is generally an indirect rollover, with withholding on the taxable eligible distribution and a usual 60-day deadline.

Step 5: Confirm the money arrived intact. Once the funds post, compare the amount with your final 401(k) statement. A plan may later send a smaller distribution for trailing dividends or contributions. Confirm whether it is eligible for rollover with the plan administrator and receiving custodian. Follow the custodian's payment instructions for eligible amounts. A check payable to you personally can involve withholding and the usual 60-day rollover deadline.

Step 6: Invest the cash. Check whether the money arrived as cash or entered a default investment. In a managed account, confirm when the adviser will invest cleared funds under your agreement. If you manage it yourself, choose investments consistent with your goals and withdrawal needs. Keep cash deliberately, rather than assuming the rollover automatically bought the investments you wanted. Investing can lose money.

A direct rollover sends money straight from your old 401(k) to your IRA custodian. The check is payable to the receiving custodian for the benefit of your account, not to you personally. It can be mailed to you to forward and still be a direct rollover. No mandatory withholding or 60-day rollover deadline applies to that direct payment. This is the method to use.

An eligible taxable 401(k) distribution paid to you personally is generally subject to 20% mandatory federal withholding. You usually have 60 days to roll it over. To defer tax on the full eligible amount, you must replace the withheld portion from other funds. Any taxable amount not rolled over is generally income and may face a 10% additional tax before age 59.5 unless an exception applies. Withholding is a credit on your tax return, not a guaranteed refund. Check the IRS rollover rules (opens in new tab) for exceptions and available deadline relief.

The indirect rollover is legal. But for a standard 401(k)-to-IRA transfer, there's almost no reason to use it. Request a direct rollover. If the plan administrator seems confused, ask them to make the check payable to your IRA custodian rather than to you. That phrasing usually settles it.

Which rule applies depends on the move. Two rollover rules are easy to mix up. The 20% withholding applies to a payout from an employer plan. The once-a-year limit applies to rollovers from one IRA to another. Here is how they line up.

Missing the 60-day deadline can make the money taxable, and a 10% additional tax may apply before age 59.5 unless an exception applies. The IRS can waive the deadline only in limited cases. These rules have exceptions, so read the IRS rollover page on the one-per-year rule (opens in new tab) and talk to a tax professional before you move money.

A traditional 401(k) holds pre-tax money. A Roth IRA holds post-tax money. When you roll the first into the second, you're converting pre-tax dollars to post-tax dollars, and the previously untaxed portion becomes taxable income that year. After-tax contributions require separate treatment. An eligible rollover conversion itself generally avoids the 10% additional tax; later withdrawals can have separate consequences. The taxable amount depends on how much was previously untaxed; ask your plan for the pre-tax, after-tax, and Roth breakdown.

Sometimes it makes sense. It depends on your tax bracket now versus what you expect in retirement, how big the account is, and a few other things that get complicated fast. Converting a large balance in a high-income year can push you into an even higher tax bracket. This isn't a decision to make on the back of a napkin. The IRS publishes the full rules in Publication 590-A (opens in new tab), but most conversions are worth having a CPA check the numbers on first.

An eligible direct rollover from a designated Roth 401(k) account to a Roth IRA generally creates no current tax. Roth IRA withdrawal rules still apply afterward. For non-Roth after-tax contributions, consult the IRS after-tax rollover guidance (opens in new tab) before choosing destinations.

When you leave an employer, the money in the old plan can go four places. Compare all four before you move anything.

• Leave it in the old plan. Avoids a transfer, though existing plan fees continue. Some large employer plans get lower prices than you'd pay in an IRA, and 401(k) money is harder for creditors to reach than IRA money in most states, thanks to a federal law called ERISA. The trade-off is a fixed list of investments and, often, a plan administrator you can't easily reach.
• Move it into a new employer's plan. Available if the new plan accepts incoming rollovers. May preserve employer-plan protections and offer competitive pricing, depending on the plan, and puts your retirement money in one place. The trade-off is the same fixed investment list, plus a waiting period at some employers.
• Roll it to an IRA you manage yourself. Opens up individual stocks, ETFs, bonds, and cash. You pay no advisory fee. The trade-off is that every decision, and every mistake, is yours.
• Roll it to an IRA managed by an adviser. Same investment flexibility, with someone else responsible for the ongoing decisions. You pay an advisory fee on top of whatever the custodian charges. Narstar is one option here, and we are paid when you choose it. See the conflict disclosure below.

Compare the costs and fees of your current account against the one you're considering, what you can invest in with each, whether you can take money out early without a penalty, how required minimum distributions (the withdrawals you're eventually forced to take later in life) work for each, creditor protection, and any company stock you hold. Those are the same things we're required to write down before recommending a rollover to a client.

A few situations worth pausing on before rolling over at all:

• You hold company stock in the plan. A tax rule called net unrealized appreciation (NUA) can sometimes make it cheaper, tax-wise, to move company stock that's grown in value into a regular taxable account instead of rolling it into an IRA. Rolling it over closes off that option for good. Talk to a CPA first if you have company stock in the plan.
• You plan to retire between 55 and 59.5. The Rule of 55 lets you take penalty-free distributions from a 401(k) if you leave the job in or after the calendar year you turn 55. That rule doesn't apply to IRAs. Other IRA exceptions may apply, so compare withdrawal needs before transferring. See the IRS early-distribution exception table (opens in new tab).
• You're starting a new job soon. Some employer plans accept incoming rollovers. If you expect to join a new plan shortly, it may be worth waiting to see what that plan offers before deciding.

This article covers the mechanics. For guidance on whether a rollover makes sense in your specific situation, consult a tax or financial professional.

The timing depends on account approval, your plan's processing rules, and how payment is delivered. Open and verify the receiving IRA first, then ask both institutions for their estimated timing. A paper check, signature requirements, or incomplete forms can extend the process. Track the payment and confirm receipt instead of relying on a standard two-to-four-week promise.

A plan may sell holdings and send a rollover as cash, while other transfers may permit securities to move. Confirm what your plan and receiving custodian allow. If holdings are sold, markets can move in either direction before reinvestment. Check what arrives and choose investments or cash deliberately according to your goals.

Taking a distribution without checking the tax consequences. The taxable portion generally creates income tax, with a possible 10% additional tax before age 59.5 unless an exception applies. Money not rolled over loses its retirement-account tax treatment. Compare your needs, alternatives, and the tax consequences before choosing a distribution.

Confusing delivery with payment. A custodian-payable check mailed to you to forward can still be a direct rollover. A check payable to you personally is generally an indirect rollover, with 20% withholding on the taxable eligible distribution and a usual 60-day deadline. Confirm the exact payee and deposit instructions before the plan issues payment.

Assuming the rollover selected your investments. Check whether the receiving account holds cash, uses an automatic sweep, or entered another default investment. Confirm what will happen under your account or advisory agreement, then decide whether it fits your goals. Do not assume the transfer itself bought the investments you intended. Investments and some cash-sweep products carry risks.

If you hold employer stock in the 401(k), look at that separately before starting the rollover. A tax rule called net unrealized appreciation (NUA) can sometimes make it cheaper to move that stock into a regular taxable account instead of rolling it into the IRA. Rolling it in wipes out that option for good. This gets into tax territory, so talk to a CPA first if you have company stock in the plan.

Assuming the IRA is automatically the better deal. It often offers more investment choices. But some large 401(k) plans get lower prices than you could get in an IRA, and employer plans usually offer stronger federal protection from creditors than IRAs, where protection depends on the state. A rollover is a decision, not something to do automatically.

On March 18, 2026, the Department of Labor announced (opens in new tab) removal of the vacated 2024 Retirement Security Rule and related exemption amendments, restoring the prior five-part test for fiduciary investment advice under federal retirement law. This does not mean every rollover recommendation falls outside fiduciary rules. See the DOL fiduciary-rule explainer for the distinction.

Here's what that means in practice: when a broker or insurance agent recommends rolling over your 401(k), that recommendation isn't automatically held to a fiduciary standard under federal retirement law. Covered retail brokerage rollover recommendations are subject to Regulation Best Interest, including care, disclosure, and conflict requirements. Insurance agents follow state insurance rules. Investment advisers have separate fiduciary obligations under applicable federal or state securities law within their advisory relationships. Those obligations are distinct from the DOL retirement-law standard. See what fiduciary duty requires.

Before acting on anyone's rollover recommendation, ask two questions: are you a fiduciary with respect to this recommendation, and how are you paid if I follow it? The answers tell you whose interest the advice was built to serve.

If you roll a 401(k) into a Rollover IRA at Interactive Brokers, we can manage it as one or more of our four model portfolios. The account stays in your name at IBKR. We can trade securities in the account. IBKR deducts our advisory fee, and we may move cash between your own IBKR accounts in the same registration only on your written instruction. We cannot send your assets to third parties or withdraw them for our own benefit. Once the money is in the account and you've signed our advisory agreement, we match it to one or more of our model portfolios (Income, Trend, Growth, or Speculative), as long as the fit is right for you and IBKR allows it in that account, based on your goals and how long you plan to invest. One retirement account can hold more than one of these portfolios. Taxable accounts can also hold several portfolios. Multi-portfolio taxable accounts and all retirement accounts use the uniform rate on the whole account, including cash. All investing carries risk, including the possible loss of principal.

A taxable account with one model portfolio pays 0.60% annually for Income, 1.00% for Trend, 1.20% for Growth, or 1.60% for Speculative. A taxable account with two or more model portfolios pays 1.00% on the whole account, including cash. Traditional, Roth, Rollover, SEP, SIMPLE, and inherited IRA accounts all use the uniform 1.00% annual IRA rate on the whole account, regardless of model portfolio mix. Fees are billed quarterly in arrears. At a $50,000 average daily balance, a Rollover IRA pays $500 a year, billed in $125 quarterly installments. Actual fees depend on your account value each quarter, as described in Form ADV. There's no setup fee and no rollover processing fee. Interactive Brokers may charge its own separate fees.

To be clear: we don't handle the rollover paperwork itself. Contacting your old plan and setting up the transfer is between you, your old plan, and IBKR. What we do is manage the portfolio once the money arrives. Haven't picked an adviser yet? The guide to finding a fee-only adviser covers what to check before you sign anything. Whoever you pick, ask how they get paid and what it takes to leave. If you want to know what the account would look like once it's set up, the contact form below is the place to start.

Our conflict of interest, stated plainly. We get paid a fee on the money we manage. If you roll retirement money into an IRA we manage, we get paid. If you leave it in your old plan, move it to a new employer's plan, or roll it into an IRA somewhere else, we don't. That's a real financial reason for us to suggest a rollover, so weigh our advice with that in mind. We don't bring up rollovers ourselves. We give rollover advice only when you ask for it. Before we ever recommend a rollover to a client, we write down a real comparison between your existing account and the proposed IRA. You're never required to roll over your money or to work with us. This conflict is written up in our Form ADV.

How long does a 401(k) rollover take?

There is no universal completion time. Ask the plan administrator for processing and delivery estimates, and the receiving custodian for deposit requirements. Missing forms, mailed checks, or additional verification can delay the transfer. Confirm both the main payment and any later residual payment arrive.

Do I pay taxes on a 401(k) rollover?

An eligible direct rollover of pre-tax 401(k) money to a traditional IRA generally creates no current income tax. Moving it to a Roth IRA generally makes the previously untaxed portion taxable. After-tax contributions require separate treatment. An indirect rollover can create taxes or additional tax if the rules are not met. Consult a tax professional about your account.

Can I roll over a 401(k) from my current employer?

Usually not while you still work there, unless your plan allows what's called an in-service distribution. Some plans allow this after age 59.5. Everything else in this article is about plans from jobs you've already left. Check your plan documents or ask the administrator directly.

What happens to my employer match?

The part that's vested (fully yours) rolls over along with everything else. Anything not yet vested goes back to the plan when you leave, based on whatever schedule your plan sets. Your final statement shows how much was vested.

Does Narstar handle the rollover paperwork?

No. That part is between you, your old plan, and IBKR. Once the money arrives, we manage the portfolio under one of our four model portfolios. The section above explains what that looks like.

Can I roll over my 401(k) into an existing IRA?

An existing traditional IRA can generally receive an eligible 401(k) rollover if the custodian accepts it. Confirm the account and instructions first. Sending pre-tax 401(k) money to an existing Roth IRA is generally a taxable conversion of the previously untaxed portion. After-tax contributions and designated Roth money require different treatment.

When can I roll over my 401(k) to an IRA?

Leaving the employer commonly makes a distribution available, subject to plan terms. Some plans permit in-service distributions while you still work there. Once a distribution is paid to you personally, the usual rollover deadline is 60 days. Direct rollovers avoid that deadline. Check the plan's rules and any distribution notices rather than assuming the money can remain there indefinitely.

Can I roll over part of my 401(k) to an IRA?

You can generally roll over all or part of an eligible distribution. Whether you can withdraw only part of the account and leave the rest depends on the plan's distribution rules. Ask the administrator what is allowed. Required minimum distributions, hardship distributions, and certain other payments cannot be rolled over.

Can I roll a profit-sharing plan or 403(b) into an IRA?

Generally yes. The IRS rollover chart (opens in new tab) counts profit-sharing, 401(k), money purchase, and defined benefit plans as qualified plans. It lists pre-tax money from those plans, and from 403(b) plans, as eligible to roll into a traditional IRA. Rolling pre-tax money into a Roth IRA is allowed, but the amount is included in your income, so talk to a tax professional first. Only eligible distributions qualify, and the plan's rules and federal law decide when you can take one.