How Can I Roll A 401(K) Into an IRA?

Your 401(k) may be subject to taxes or penalties when you get a new job – if you don’t make the right moves. Learn about consolidating and rolling your 401(k) balance into a new 401(k) plan or IRA.

By Richard Barrington

Last updated: March 15, 2023

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Ask the expert Q: I have a 401(k) that needs to be rolled over from a previous employer. Can this be rolled into CDs while still remaining in an IRA account?

If your new employer does not offer a 401(k) plan, or you are not wild about the plan they do offer, you can have your 401(k) balance rolled over into an IRA.

If you do this within 60 days of leaving the 401(k) plan, you can avoid tax consequences. The best way to do an IRA rollover out of a 401(k) plan is to instruct the plan sponsor to distribute your balance directly to the trustee of your new IRA rather than to send the money directly to you.

As with rollovers to a new 401(k), when making a rollover into an IRA, pay attention to whether the money is coming from a traditional or Roth 401(k). For tax purposes, it is important that the money transfers into the corresponding type of 401(k).

About Author

Richard Barrington

Richard Barrington has been a Senior Financial Analyst for MoneyRates. He has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications. Richard has over 30 years of experience in financial services. He has earned the Chartered Financial Analyst (CFA) designation from the Association of Investment Management and Research (now the “CFA Institute”).