401k Calculator & Guide
A direct 401(k) rollover moves an eligible retirement-plan distribution directly to another qualified retirement plan or IRA. Learn how the process works, how withholding differs from a 60-day rollover and what to check before requesting the transfer.
A direct rollover occurs when an eligible distribution from a retirement plan is transferred directly to another eligible retirement plan or IRA instead of being paid to you first.
Your former employer's plan distributes eligible assets directly to the receiving retirement account.
The retirement money is not paid to you as a normal cash distribution before reaching the receiving account.
Depending on the type of money and receiving plan, the rollover can move to an eligible employer plan or IRA.
The key difference is that the eligible retirement distribution travels directly to the receiving account rather than being paid to you first.
Contact the plan administrator and request an eligible distribution through direct rollover.
The money is transferred directly to the new employer plan or eligible IRA according to its rollover instructions.
The receiving account must be an eligible destination for the type of distribution being rolled over. A receiving employer plan is not required to accept rollover contributions.
Your new employer's plan may accept eligible rollover contributions. Check its plan rules before initiating the transfer.
Changing Jobs Guide →An eligible traditional 401(k) distribution can generally be rolled directly into a traditional IRA.
401(k) to IRA →A direct rollover of traditional 401(k) money to a Roth IRA is generally treated as a Roth conversion and may create taxable income.
Roth IRA Rollover →Both can move eligible retirement-plan distributions, but the money is handled differently before reaching the receiving account.
| Feature | Direct rollover | 60-day rollover |
|---|---|---|
| Who receives the distribution? | Receiving retirement plan or IRA | You receive the distribution first |
| 20% federal withholding | Generally no withholding on the amount directly transferred | Generally 20% withholding applies to taxable eligible distributions paid to you |
| 60-day deadline | No participant-held distribution period | Generally must deposit the eligible amount within 60 days |
| Replacing withholding | Not applicable to the directly transferred amount | Other funds may be needed to roll over the full gross amount |
| Handling | Plan-to-plan or plan-to-IRA transfer | Distribution to participant followed by rollover |
A qualifying direct rollover generally does not create current taxable income when traditional retirement-plan money is transferred to another eligible traditional retirement account.
A qualifying rollover of traditional pre-tax money generally remains tax-deferred.
If the new plan accepts the rollover and the transaction qualifies, the transferred amount generally remains tax-deferred.
Traditional pre-tax money transferred directly to a Roth IRA is generally included in taxable income as a Roth conversion.
A qualifying direct rollover generally defers tax on traditional retirement money. Tax can generally become due later when the money is distributed from the receiving traditional retirement account. A direct rollover to a Roth IRA is different because the conversion generally creates taxable income.
Federal withholding generally applies when an eligible taxable retirement-plan distribution is paid to you. It generally does not apply to the amount transferred directly to another eligible plan or IRA.
$100,000 eligible distribution is transferred directly to the receiving retirement account.
A $100,000 eligible taxable distribution paid to you generally has $20,000 withheld for federal income taxes.
If you want the entire $100,000 distribution rolled over in the 60-day method, the $20,000 withheld generally has to be replaced with other funds.
The $100,000 example uses the federal 20% mandatory withholding rule for an eligible taxable plan distribution paid to the participant. Actual tax liability can differ from withholding, and not every distribution is an eligible rollover distribution.
Not every payment from a 401(k) is an eligible rollover distribution. Ask the plan administrator which portion of your distribution is eligible.
| Distribution type | General rollover treatment |
|---|---|
| Most eligible lump-sum distributions | Generally eligible for rollover, subject to the applicable rules. |
| Required minimum distributions | Generally not eligible for rollover. |
| Hardship distributions | Generally not eligible for rollover. |
| Certain corrective distributions | Generally excluded from rollover eligibility. |
| Certain periodic payments | Some payments made over a specified period or life expectancy are generally not eligible. |
| Loan treated as distribution | Certain deemed distributions are generally not eligible for rollover; qualified plan loan offsets can have different rules. |
The exact paperwork varies by plan, but the process generally follows these steps.
Confirm your current account balance, vested balance and the types of contributions held in the account.
Confirm the receiving 401(k), traditional IRA or other eligible destination accepts the type of rollover you want to make.
Contact the old plan administrator and the receiving institution for their exact transfer instructions.
Select the direct rollover option rather than requesting the eligible distribution to be paid to you.
Verify that the receiving account received the assets and retain the rollover documentation.
Confirm these details before requesting the transfer.
A check paid to you can turn the transaction into a distribution subject to the rules for participant-paid rollovers.
A new employer plan is not required to accept rollover contributions. Confirm acceptance before initiating the transfer.
Traditional, designated Roth and after-tax amounts can have different tax and rollover treatment.
An outstanding loan can create special distribution consequences when employment ends.
Keep rollover confirmations and tax forms so the transaction can be documented when preparing your tax return.
Certain RMDs, hardship distributions and other payments generally cannot be rolled over.
Designated Roth account distributions have different tax characteristics from traditional pre-tax 401(k) money.
Roth 401(k) Rollover →Nontaxable after-tax amounts may be eligible for rollover, but taxable earnings and account basis require careful handling.
After-Tax Guide →Directly moving traditional 401(k) money to a Roth IRA can avoid participant-paid withholding, but the taxable conversion amount generally enters income.
Roth IRA Rollover →Complete guide to 401(k) rollover options and rules.
Learn what to do with an old 401(k) after leaving an employer.
Explore options for retirement money from a previous employer.
Learn how to transfer an eligible 401(k) to a traditional IRA.
Understand direct Roth IRA rollovers and conversion taxes.
Compare the 60-day rollover method with a direct transfer.
Explore rollover tax treatment and taxable distributions.
Explore an illustrative rollover and withholding scenario.
Explore your rollover destination, compare direct and 60-day rollovers, and use the calculator for an illustrative scenario.
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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