401k Calculator & Guide
An indirect 401(k) rollover occurs when your retirement-plan distribution is paid to you first and you then deposit the eligible amount into another retirement plan or IRA within the applicable 60-day period.
In an indirect rollover, the retirement plan distributes the money to you. You then have a limited period to deposit an eligible amount into another eligible retirement plan or IRA.
The old 401(k) sends an eligible distribution to you rather than directly to the receiving retirement account.
Generally, you have 60 days from the date you receive the distribution to complete the rollover.
A taxable eligible distribution paid to you from a 401(k) is generally subject to 20% federal income-tax withholding.
The important difference is that the distribution passes through your hands before reaching the receiving retirement account.
Request an eligible distribution from the former employer plan.
The plan pays the eligible distribution to you and generally withholds 20% of the taxable amount.
Deposit the rollover amount into an eligible plan or IRA within the applicable 60-day period.
The IRS states that an individual generally has 60 days from the date they receive a retirement-plan distribution to roll it over. In certain circumstances, the IRS can waive the deadline or other relief may apply, but a late rollover should not be assumed to be automatically valid.
This is one of the biggest practical differences between an indirect and direct rollover. The 20% is withholding, not necessarily the final amount of tax you owe.
Suppose an eligible taxable distribution of $100,000 is paid directly to you.
The plan generally sends $20,000 to the IRS as federal income-tax withholding and you receive $80,000.
If you want the entire gross distribution rolled over, the $20,000 withheld generally must be replaced with other funds.
In the IRS example, the full distribution is reported as a nontaxable rollover while the $20,000 withheld is reported as taxes paid.
If $80,000 is received and only that $80,000 is rolled over, the $20,000 withheld generally remains taxable. If you are under age 59½, an additional 10% tax may also apply to a taxable amount that is not rolled over unless an exception applies.
Estimate the amount you could receive after a simplified 20% withholding calculation and the additional amount needed to roll over the full gross distribution.
This is an educational illustration using the entered withholding rate. Actual withholding and tax treatment depend on the distribution, account type and applicable rules. The calculator does not determine your final income-tax liability or whether a distribution qualifies for rollover.
Both methods can move eligible retirement-plan assets, but the participant handles the money differently.
| Feature | Indirect rollover | Direct rollover |
|---|---|---|
| Who receives the distribution? | You receive it first. | The receiving plan or IRA receives it directly. |
| 60-day rule | Generally applies. | You do not receive the distribution first. |
| 20% withholding | Generally applies to a taxable eligible distribution paid to you. | Generally does not apply to the amount directly transferred. |
| Replacing withheld funds | May be necessary to roll over the full gross distribution. | No participant withholding amount to replace on the direct transfer. |
| Risk of missing deadline | Yes, because you must complete the rollover within the applicable 60-day period. | No participant-held 60-day period. |
| Who controls the money temporarily? | Participant. | Receiving retirement account. |
The 60-day rollover rule applies to eligible rollover distributions. Certain types of payments are excluded.
RMD amounts generally cannot be rolled over.
Hardship distributions from an employer plan generally are not eligible for rollover.
Certain payments made over life expectancy or a period of 10 years or more generally cannot be rolled over.
Certain corrective distributions of excess contributions or deferrals are excluded from rollover treatment.
A loan treated as a distribution can have special rollover rules, including rules for qualified plan loan offsets.
Nontaxable after-tax amounts may be eligible for rollover, but the tax treatment of basis and earnings needs to be handled correctly.
If you choose an indirect rollover, keep track of the distribution date, withholding and amount that must be deposited.
Request an eligible distribution from the former 401(k) plan.
Record the date you receive the distribution because the 60-day period generally begins from receipt.
Check the distribution statement to determine the amount withheld for federal income taxes.
If you want the full gross amount rolled over, you generally need to replace the withheld amount with other funds.
Deposit the eligible rollover amount into the receiving plan or IRA within the applicable deadline.
The rollover itself can generally preserve tax deferral when an eligible distribution is properly rolled over. The amount you do not roll over can be taxable.
If the full taxable portion is properly rolled over, the taxable amount generally remains tax-deferred.
The taxable amount that is not rolled over generally must be included in income for the year of distribution.
If you are under 59½, a taxable amount that is not rolled over may also be subject to the 10% additional tax unless an exception applies.
The tax treatment can differ when your 401(k) contains designated Roth or after-tax amounts.
Designated Roth account distributions have separate rollover and tax rules from traditional pre-tax 401(k) money.
Roth 401(k) Rollover →Nontaxable after-tax contributions can have different rollover treatment from pre-tax earnings in the account.
After-Tax Guide →Moving traditional pre-tax 401(k) money to a Roth IRA generally involves taxable conversion income.
Roth IRA Guide →Use this checklist to keep the 60-day rollover organized.
Waiting too long can cause the distribution to become taxable unless applicable relief or an exception applies.
If 20% was withheld and you roll over only the amount you received, the withheld amount generally remains taxable.
To defer tax on the full eligible taxable distribution, the withheld amount generally must be replaced from another source.
RMDs, hardship distributions and certain other payments generally are not eligible for rollover.
Traditional, Roth and after-tax amounts can have different rollover and tax consequences.
A new employer plan is not required to accept every type of rollover contribution.
Complete overview of your main 401(k) rollover options.
Learn how direct plan-to-plan and plan-to-IRA transfers work.
Explore options for an old 401(k) after leaving an employer.
Review the options available for a previous employer's plan.
Learn about moving an eligible 401(k) balance to a traditional IRA.
Understand the rollover and conversion tax considerations.
Review how rollover transactions can affect taxable income.
Explore an illustrative rollover calculation.
Compare indirect and direct rollovers, estimate withholding and explore the rest of the 401(k) rollover guide.
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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