401(k) After Leaving a Job: Rollover Rules

Ask what the old and new plans allow

You may be able to leave money in the old plan, move it to a new employer's plan, roll it to an IRA, or take a distribution. Plan rules and balances matter. Compare fees, services, withdrawal rules, and protections with a qualified professional. No destination is automatically best for everyone.

The check's payee matters

A direct rollover of eligible money to another retirement plan or IRA generally avoids mandatory withholding. If an eligible taxable employer-plan distribution is paid to you, 20% generally must be withheld. A later rollover generally has a 60-day deadline. Rolling over the whole gross amount requires replacing the withheld amount from other funds.

A rollover and a conversion aren't identical

Moving untaxed money to a Roth IRA generally creates taxable income. Cashing out can also create income tax and an additional early-distribution tax unless an exception applies. Required minimum distributions aren't eligible for rollover. An outstanding plan loan can introduce separate deadlines and tax rules.

Your records checklist

1. Request the plan's distribution and rollover notice.
2. Separate pretax, Roth, and other after-tax amounts.
3. Confirm the receiving institution's exact payment instructions.
4. Keep the transaction records and year-end tax forms.

Common questions

Does the withheld 20% count as money I rolled over?

Not automatically. To roll over the entire gross distribution, you generally must replace that withheld amount within the rollover deadline.

Can every retirement payment be rolled over?

No. Required minimum distributions and certain other payments are ineligible. Confirm before requesting the transaction.

Sources and current instructions

Check the tax year and any later updates before acting. These are the primary sources used for this guide.

• IRS: Leaving employment
• IRS: Rollovers of retirement distributions