401k Calculator & Guide
Learn how a traditional 401(k) can be moved into a Roth IRA, why the transaction is generally taxable, how direct rollovers work, and how withholding and the 60-day rule can affect the process.
A 401(k) to Roth IRA rollover moves eligible retirement-plan money from an employer-sponsored plan into a Roth IRA. When the original money is traditional pre-tax 401(k) money, the transaction generally follows Roth conversion rules.
The starting account generally contains contributions and earnings that have not yet been taxed as ordinary income.
Moving previously untaxed traditional 401(k) money into a Roth IRA generally creates taxable income for the conversion year.
The money enters a Roth IRA and is subject to the Roth IRA's applicable distribution and tax rules.
The transaction is commonly described as a 401(k) to Roth IRA rollover, but when traditional pre-tax 401(k) money moves to a Roth IRA, the tax treatment is generally that of a Roth conversion. The previously untaxed amount generally becomes part of taxable income for that year.
Generally, the taxable portion of a traditional 401(k) distribution rolled into a Roth IRA is included in gross income for the year of the rollover.
Previously untaxed retirement money
Roth account with separate tax rules
The previously untaxed portion generally becomes taxable income when converted to a Roth IRA.
A traditional 401(k) to traditional IRA rollover generally preserves tax deferral. Moving the same traditional money to a Roth IRA generally does not.
IRS guidance states the 10% additional tax on early distributions does not apply to amounts properly rolled into a Roth IRA.
A direct rollover can simplify the transaction and avoid mandatory 20% withholding on the amount transferred directly to the Roth IRA.
Confirm your balance, vested amount, account type and distribution eligibility.
Make sure the receiving Roth IRA is established before requesting the transfer.
Identify the amount of traditional pre-tax money that may become taxable during the conversion year.
Ask the plan administrator to send the eligible amount directly to the Roth IRA.
Retain the 401(k) distribution statement and Roth IRA rollover documentation.
The IRS generally requires 20% federal withholding when an eligible taxable retirement-plan distribution is paid to you instead of being transferred directly.
The plan sends the eligible distribution directly to the Roth IRA. Mandatory 20% withholding generally does not apply to the amount transferred directly.
If an eligible taxable distribution is paid to you, 20% federal withholding generally applies. To roll over the full gross amount, you generally need to replace the withheld amount from other funds.
The 20% withholding is a payment toward federal income tax. Your actual tax liability from the conversion depends on your taxable income and applicable tax circumstances. State taxes and estimated tax considerations may also matter.
This simplified example shows the account movement and taxable amount concept. It does not calculate an individual's actual tax.
| Scenario | Destination | General Treatment |
|---|---|---|
| $100,000 traditional 401(k) | Traditional IRA | Generally tax-deferred if the eligible amount is properly rolled over |
| $100,000 traditional 401(k) | Roth IRA | Generally $100,000 of previously untaxed money becomes taxable income |
| $100,000 traditional 401(k) | Cash distribution | Taxable amount generally enters income; additional tax may apply depending on circumstances |
If $100,000 is converted, that does not mean $100,000 is paid in federal tax. The $100,000 is generally added to taxable income, subject to applicable rules. Your actual tax depends on the rest of your tax return and applicable tax rates.
A rollover does not necessarily have to move the entire eligible balance. However, accounts containing different types of money require careful handling.
An eligible partial distribution can potentially be converted, with the taxable portion generally included in income.
Some people evaluate conversions across different tax years rather than converting the entire balance at once.
A full conversion moves the eligible balance to the Roth IRA but can create a larger taxable amount in the conversion year.
A larger conversion can increase taxable income for the year. Consider the interaction with your other income, deductions, credits, withholding and estimated-tax obligations.
A 401(k) may contain both pre-tax and after-tax amounts. IRS rules provide specific ways certain amounts can be allocated between traditional and Roth destinations.
Pre-tax amounts can generally be rolled to a traditional IRA or another eligible pre-tax retirement plan.
Certain after-tax contributions can be directed to a Roth IRA under applicable rollover rules.
Earnings associated with after-tax contributions are generally treated as pre-tax amounts for rollover purposes.
Under applicable IRS rules, a distribution containing both pre-tax and after-tax amounts can potentially be allocated so that pre-tax amounts go to a traditional IRA and after-tax amounts go to a Roth IRA. The exact transaction must follow the applicable allocation rules.
A 401(k) to Roth IRA conversion does not simply transfer every Roth holding-period rule from the old employer plan.
The five-taxable-year period used for determining whether a Roth IRA distribution satisfies the applicable qualification rules is tied to Roth IRA history.
If you already own a Roth IRA, its history can be relevant when evaluating the timing of future Roth IRA distributions.
Retain documentation showing the conversion amount and year, especially when multiple Roth accounts or conversions are involved.
The amount converted can affect the amount of taxable income recognized in the conversion year.
| Approach | Amount Converted | General Consideration |
|---|---|---|
| Full conversion | Entire eligible balance | Larger taxable amount may be recognized in one year |
| Partial conversion | Selected eligible amount | Can spread taxable income across different years |
| No conversion | Remain in traditional account | Tax generally remains deferred until taxable distributions |
Traditional pre-tax 401(k) money generally becomes taxable when converted to a Roth IRA.
A distribution paid to you generally has mandatory 20% federal withholding, while a direct rollover generally avoids it.
The conversion amount generally increases taxable income for the year, so the tax impact should be considered before proceeding.
Mixed pre-tax and after-tax balances can require special rollover allocation treatment.
The Roth IRA five-taxable-year rules can be relevant to future qualified distributions.
Keep records of the distribution, rollover and conversion amount for tax reporting and future reference.
Explore the complete rollover options and rules.
Learn about traditional IRA and Roth IRA destinations.
Learn how designated Roth 401(k) money can move to a Roth IRA.
Understand taxable and nontaxable rollover situations.
See how direct retirement-account transfers work.
Understand the 60-day rollover process and withholding.
Explore an illustrative rollover and withholding scenario.
Learn how designated Roth 401(k) accounts work.
Explore the rollover calculator and related 401(k) guides before moving retirement funds into a Roth IRA.
Clear guides, useful calculators and practical retirement resources to help you understand your 401(k), contributions, employer matching, Roth options, rollovers and long-term savings.
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