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401k Rollover to IRA

How to move a 401(k) to an IRA without tax: direct vs indirect rollovers, the 20% withholding and 60-day rules, and a calculator showing the tax and penalty on anything you don't roll over.

Updated November 4, 2026. Free, no sign-up; everything runs in your browser and nothing you type is stored.

401k rollover to IRA: tax check

401(k) amount distributed ($)How the money movesAmount I deposit in the IRA within 60 days ($, indirect)Age when paidYour income tax rate (%)

Cost of this rollover

–

–Withheld by the plan (20%)

–Amount rolled over

–Amount taxed as income

–Income tax on it

–10% additional tax

–To avoid any tax you'd need

401k rollover to IRA: direct vs indirect

In a direct rollover, your 401(k) plan pays the money straight to your IRA, and no tax is withheld. In an indirect rollover, the plan pays you, and it must withhold 20% for federal tax even if you plan to roll it all over. You then have 60 days to deposit the money in an IRA, and to roll over the full amount you have to replace the withheld 20% from other money (IRS).

Example: a $50,000 401(k) check paid to you arrives as $40,000 after 20% withholding. If you deposit only the $40,000, the missing $10,000 counts as a distribution: taxed as income ($2,200 at 22%) and, if you're under 59½, generally hit with a 10% additional tax ($1,000) unless an exception applies. The $10,000 withheld is credited against your tax when you file. Deposit the full $50,000 (adding $10,000 of your own) and nothing is taxed. A direct rollover avoids the problem entirely.

Rules to know before you roll over

60 days from the date you receive the distribution to complete an indirect rollover.
One IRA-to-IRA rollover per 12 months. The limit doesn't apply to trustee-to-trustee transfers or to rollovers from a 401(k) to an IRA (IRS).
Roth 401(k) money goes to a Roth IRA; pre-tax money to a traditional IRA (or to a Roth IRA as a taxable conversion).
Check before you move: some people lose features by leaving a 401(k), such as penalty-free withdrawals if you leave your job in or after the year you turn 55, or company stock with special tax treatment.
Pre-tax money in a traditional IRA counts in the pro-rata rule if you later do a backdoor Roth IRA.

Should you roll over your 401k or leave it?

A rollover can give you more investment choices and one place to manage your money. Leaving it (or moving it to a new employer's plan) can make sense if the plan has low-cost funds, you may need the age-55 rule, or you want to keep the IRA empty for backdoor Roth contributions. Compare fees and options before you decide.

Common questions

How long do I have to roll over a 401(k) to an IRA?

60 days from the day you receive the distribution; a direct rollover avoids the deadline.

Why was 20% withheld from my 401(k) rollover check?

Plans must withhold 20% when they pay you instead of the IRA; replace it from other money within 60 days to avoid tax on it.

Is a 401(k) to IRA rollover taxable?

Not if it's done directly or completed in full within 60 days; amounts not rolled over are taxable.

Does the one-rollover-per-year rule apply to 401(k)s?

No. It applies to IRA-to-IRA rollovers, not plan-to-IRA rollovers or trustee-to-trustee transfers.

Sources

More retirement calculators: Social Security Quick Calculator · Solo 401k Calculator 2026 vs SEP IRA & SIMPLE IRA · 403b Plan · 457 Account

General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.