401(k) Rollover Questions, Answered

There are four: leave it in the former employer’s plan, move it into a new employer’s plan that accepts roll-ins, roll it into an IRA, or cash it out. They differ in taxes, penalties, fees, investment choices, creditor protection, and RMD treatment — our options checker maps which apply to you.

The money moves custodian-to-custodian, or by a check made payable to the new custodian rather than to you. Nothing is withheld, nothing is taxed, and there’s no deadline. A check made out to you personally triggers 20% mandatory withholding and a 60-day redeposit clock.

A direct rollover of pre-tax money to a traditional IRA or another plan is not a taxable event, and it doesn’t count against annual contribution limits. Taxes arise only if money is paid to you and not redeposited in time, or if you convert pre-tax money to Roth.

Typically two to four weeks: a day to open the receiving account, one to three weeks for the old plan administrator to process the transfer, then reinvesting the money when it arrives — it usually lands as cash and sits uninvested until you place it.

Only to indirect IRA-to-IRA rollovers. Rolling a workplace plan to an IRA doesn’t count against it, and direct trustee-to-trustee transfers are always unlimited.

The full amount is taxed at your federal bracket (10–37% for 2026), plus a 10% penalty if you’re under 59½ with no exception, plus Utah’s flat 4.45%. For a worker in the 22% bracket that’s roughly 36.5% — cashing out $50,000 costs about $18,225. Run your own numbers.

No — it’s a prepayment. Your real tax is your marginal rate plus any penalty plus state tax, settled on your return. For many working-age people the true cost exceeds the 20% withheld.

The big ones: leaving your employer in or after the year you turn 55 (the Rule of 55), total and permanent disability, substantially equal periodic payments (SEPP/72(t)), unreimbursed medical expenses above 7.5% of AGI, a QDRO in divorce, and payments to a beneficiary after death.

60 days from the day you receive the funds. You must redeposit the full gross amount — including the 20% that was withheld, out of pocket — to owe nothing; the withholding comes back as a credit at filing. Calculate your exact deadline.

IRS Rev. Proc. 2020-46 lets you self-certify a late rollover for eleven listed reasons — financial-institution error, a misplaced check, serious illness, a death in the family, and others. If a reason fits, the receiving custodian gets a self-certification letter and the rollover can still count.

Leave your employer during or after the calendar year you turn 55 and you can withdraw from that employer’s 401(k) or 403(b) without the 10% penalty. It covers only that plan, and only while the money stays in it — rolling it to an IRA before 59½ permanently forfeits it. Check your dates.

At 73 if you were born 1951–1959, and at 75 if born in 1960 or later. The first RMD can be delayed to April 1 of the following year, at the cost of two taxable RMDs in one year. RMDs can never be rolled over — they come out first.

Roth IRAs have no lifetime RMDs, and beginning in 2024 Roth 401(k)s don’t either. Inherited accounts follow different rules — most non-spouse beneficiaries must empty the account within 10 years.

Usually, for your current employer’s plan only (unless you own more than 5% of the company). IRAs and former employers’ plans get no deferral — which is why some people roll old accounts into a current plan, and why rolling a current plan out to an IRA ends the deferral.

No. An IRA opens the full investment menu, but employer plans hold advantages an IRA gives up: Rule-of-55 access, essentially unlimited ERISA creditor protection, institutional pricing, RMD deferral while working, and NUA treatment for employer stock. It comes down to your actual plan versus the actual IRA.

Your plan’s annual 404(a)(5) fee disclosure lists its real costs; get the proposed IRA’s all-in number in writing. A one-percentage-point difference consumes about 28% of a balance over 35 years by the Department of Labor’s illustration. Compare yours.

Appreciated company stock in a 401(k) can qualify for Net Unrealized Appreciation treatment — the growth taxed at capital-gains rates instead of ordinary rates. Rolling the shares into an IRA permanently eliminates that option. Get tax advice before moving shares.

It generally comes due. An unpaid balance becomes a taxable distribution — penalized under 59½ — unless you contribute the amount to an IRA by your tax-filing deadline, including extensions, for that year.

The converted amount stacks on top of your income and is taxed at your marginal 2026 brackets plus Utah’s 4.45%. Example: a couple with $80,000 of taxable income converting $50,000 pays about $11,145 — 22.3% effective. Estimate yours.

No. Conversions have been irrevocable since the 2017 tax law eliminated recharacterization — which is why the estimate comes before the transaction, never after.

Because tax is marginal, converting just enough each year to fill — but not cross — your current bracket spreads the income at lower rates. It also helps you stay under Medicare IRMAA thresholds ($109,000 single / $218,000 joint for 2026), which are cliffs, not slopes.

A governmental 457(b) has no 10% early-withdrawal penalty after separation at any age. Rolling it into an IRA moves the money into the penalty regime until 59½ — a one-way trade anyone who might retire early should think hard about.

Monthly annuity payments, no. A lump-sum offer, yes — via direct rollover to avoid the 20% withholding. The lump-sum-versus-annuity election is one-time and irrevocable, and usually requires notarized spousal consent if you’re married. The plan-by-plan rules.

Work through the official databases: the DOL Retirement Savings Lost & Found, the plan’s public Form 5500 filing, the DOL Abandoned Plan Search, PBGC, the National Registry of Unclaimed Retirement Benefits, and state unclaimed property. Our seven-step guide links every one. No paid finder service is needed.

Yes, for small balances: under $1,000 can be cashed out automatically (with 20% withheld), and $1,000–$7,000 can be transferred to an IRA the plan chooses — typically conservative and low-yield. Above $7,000 you generally can’t be forced out.

Almost never. Plan assets sit in trust, out of reach of the company’s creditors. The money moved somewhere findable — a successor plan, an abandoned-plan custodian, a force-out IRA, or state unclaimed property.

The initial consultation is no-cost and carries no obligation to move any account. Sometimes the outcome is that staying put is the better choice — we’ll say so.

Recent statements for any account you want reviewed, plus — if you have them — the plan’s 404(a)(5) fee disclosure and Summary Plan Description. Information about your current employer plan, retirement timeline, and other accounts makes the conversation more useful.

Schedule a no-cost consultation or call 435-291-5444. Tell us a little about the account you want to review and we’ll follow up within one business day.