How do I roll over a 401(k)?

To roll over a 401(k), choose a destination account (new employer plan or IRA), request a direct rollover from your plan administrator so funds move institution-to-institution, and complete the process within 60 days if you receive a check. A direct rollover avoids mandatory 20% withholding.

When you leave a job, you can usually move your 401(k) balance into another tax-advantaged account without owing income tax or penalties — this is a rollover. The IRS describes the mechanics in IRS Publication 575 (Pension and Annuity Income) and the IRS Rollover Chart. The key distinction is between a direct rollover and an indirect (60-day) rollover — and it matters for whether any tax is withheld.

Direct rollover vs. indirect rollover

Direct rollover: The funds move directly from your old plan to the new account (employer plan or IRA) — no check is issued to you. No withholding, no taxes, no penalties. This is the preferred method.
Indirect (60-day) rollover: Your plan sends a check made out to you. Your employer is required to withhold 20% for federal taxes. You then have 60 days to deposit the full original amount (including the withheld 20%, which you must make up from other funds) into the new account to complete the rollover. If you miss the 60-day window, the distributed amount becomes taxable income, and if you're under 59½, a 10% early-withdrawal penalty applies.
One-rollover-per-year rule: The IRS limits IRA-to-IRA indirect rollovers to once per 12-month period (applies per person, not per account). Direct rollovers are not subject to this limit.

Step-by-step: completing a direct rollover

1. Choose your destination. Options: roll into your new employer's 401(k) (if the plan accepts rollovers), or open/use an existing traditional IRA. Rolling a pre-tax 401(k) into a Roth IRA is allowed but triggers a taxable conversion — the amount rolled in is counted as ordinary income. 2. Contact your old plan administrator. Request a direct rollover and provide the receiving institution's name, address, and account number. The administrator will either send a check made payable to the new institution (not you) or wire the funds. 3. Confirm receipt. Verify the funds arrived in your new account, then invest them per your retirement strategy.

What happens if you miss the 60-day window

If an indirect rollover isn't completed within 60 days, the IRS treats the distribution as taxable income for the year. The 10% early-withdrawal penalty also applies if you're under age 59½. The IRS may waive the deadline in cases of hardship or error — see the IRS 60-day rollover waiver rules for self-certification — but the safest approach is always a direct rollover.

IRS rollover facts

In a direct rollover, the plan makes payment directly to the IRA or the plan — no 20% mandatory withholding applies because the money never reaches the participant. — IRS — Rollovers of Retirement Plan and IRA Distributions
If you receive a distribution from a retirement plan and don't roll it over within 60 days, it is included in your gross income and may be subject to the 10% early distribution tax. — IRS — Rollovers of Retirement Plan and IRA Distributions
You may roll over a distribution from a 401(k) to a traditional IRA, another employer's qualified plan, a 403(b) plan, or a governmental 457(b) plan — the IRS Rollover Chart details eligible rollover paths. — IRS Rollover Chart

Key takeaways

A direct rollover moves funds institution-to-institution — no withholding, no taxes, no penalties. Always prefer this method.
An indirect rollover sends a check to you with 20% withheld; you have 60 days to deposit the full original amount to avoid tax and penalties.
Rolling a pre-tax 401(k) into a Roth IRA is a taxable conversion — the rollover amount is counted as ordinary income in that year.
Missing the 60-day window makes the distribution taxable income, plus a 10% penalty if you're under 59½.
Consult a financial or tax professional before rolling over — especially if considering a Roth conversion, since the tax hit can be significant.