How to Move Your 401(k) to a New Employer's Plan

You have three main ways to move your 401(k) when you change jobs

When you leave a job, your 401(k) stays with your former employer's plan unless you move it. You can roll the money into your new employer's 401(k), move it to an Individual Retirement Account (IRA), or leave it where it is. Each path has different rules about taxes, investment choices, and fees. The choice depends on your new employer's plan quality, how much money you have, and whether you want to keep managing the account yourself or let your new employer handle it.

The most common move is a direct rollover, where the money transfers straight from one plan to another without you touching it. This avoids taxes and penalties. If you take the money yourself first, you have 60 days to deposit it somewhere or you owe income tax and a 10% penalty on the full amount (unless you are 55 or older and leaving that job).

Key Takeaways

A direct rollover moves money from your old 401(k) to your new employer's plan or an IRA without you handling the cash, avoiding taxes and penalties.
If you take the money yourself, you must deposit it within 60 days or owe income tax plus a 10% penalty on the entire amount.
Your new employer's plan may not accept rollovers, so confirm this before you leave your old job.
Rolling into an IRA gives you more investment choices but may cost more in fees than staying in an employer plan.
Leaving money in your old plan is allowed but limits your options and may trigger higher fees once you are no longer an employee.

Direct rollover to your new employer's 401(k)

A direct rollover is the simplest path if your new employer's plan accepts them. Contact your new employer's benefits office or human resources department and ask whether the 401(k) plan accepts rollovers from outside plans. Not all do. If it does, they will give you the plan's name and the address or wire instructions for the receiving institution.

Then contact your old employer's plan administrator (usually listed on your 401(k) statements or the plan's website). Tell them you want a direct rollover to your new plan and provide the receiving institution's details. The administrator will send the money directly to the new plan. You never see the check or handle the cash. This means no tax withholding, no 60-day important date, and no penalties. The money lands in your new 401(k) and continues growing tax-deferred.

The entire process typically takes two to four weeks. During that time, your money sits in a holding account and does not earn returns. Ask your old plan administrator for a timeline specific to your situation. Once the money arrives at your new plan, you can choose how to invest it according to that plan's fund options.

Rolling over to an IRA instead

If your new employer's plan does not accept rollovers, or if you prefer more control over your investments, you can roll the money into a Traditional IRA. This is also a direct rollover — the money goes straight from your old plan to the IRA custodian (a bank, brokerage, or investment firm). You choose the IRA custodian, so you have flexibility in where the money lands.

An IRA rollover gives you access to thousands of investment options — individual stocks, bonds, mutual funds, and exchange-traded funds — compared to the limited menu in most 401(k) plans. However, IRAs often charge higher fees than employer plans, especially if you hold individual stocks or use a financial advisor. Compare the fee structure of your new employer's plan against the IRA custodian's fees before deciding.

One important rule: if you ever roll money from a Traditional IRA back into a 401(k) later, the IRS counts all your Traditional IRAs together when calculating taxes on any non-deductible contributions. This can create a tax problem if you have other IRAs with after-tax money in them. Discuss this with a tax professional if you have multiple IRAs or a complex situation.

Leaving money in your old employer's plan

You can leave your 401(k) with your former employer indefinitely, as long as the account balance is above the plan's minimum (often $1,000 to $5,000). You keep the same investments and the same fee structure you had while employed. This is sometimes called a "left-behind account" or "orphan account."

The downside is that you lose access to your employer's customer service once you are no longer an employee. Some plans charge higher fees to former employees or restrict which funds you can invest in. You also cannot make new contributions to the old plan, and you cannot take a loan against it. If you change jobs again, you would need to move this money at that time.

Leaving money behind makes sense only if your old plan has very low fees and excellent investment options, and you do not plan to consolidate your retirement accounts. For most people, rolling the money to the new employer's plan or an IRA is cleaner.

The 60-day rule if you take the money yourself

If your old plan sends you a check instead of doing a direct rollover, you have 60 calendar days to deposit that money into a 401(k) or IRA. If you miss the important date, the entire amount becomes taxable income for that year, and you owe a 10% early withdrawal penalty on top (unless you are 55 or older and separated from service at that employer).

The plan administrator will withhold 20% of the money for federal taxes before sending you the check. So if your balance is $50,000, you receive $40,000 and the plan sends $10,000 to the IRS. You have 60 days to deposit the full $50,000 into a new account. If you only deposit the $40,000 you received, you owe taxes on the missing $10,000 as if you withdrew it.

This is why a direct rollover is strongly preferred — it avoids the withholding, the 60-day clock, and the risk of accidentally triggering a taxable event. Request a direct rollover in writing and keep a copy of your request. If the plan refuses or delays, ask why in writing and escalate to the plan administrator's compliance department.

Timing and what to do before you leave your job

Start the rollover process before your last day at your old job, if possible. Request a statement showing your current balance and the plan administrator's contact information. Ask whether the plan accepts direct rollovers and what information the receiving institution will need.

Once you have accepted an offer from your new employer, contact their benefits office and confirm that the 401(k) plan accepts rollovers. Get the plan name, the custodian's name, and the wire or mailing address. Some plans require a form from the new employer confirming you are a new employee.

After your last day, contact your old plan administrator and initiate the direct rollover. Do not wait — the sooner you start, the sooner the money is invested in your new plan. If there are any delays or questions, follow up in writing and keep records of all communication.

Roth conversions and after-tax money

If your old 401(k) contains after-tax contributions (money you contributed with dollars you already paid income tax on), rolling that money to an IRA can trigger a tax bill. The IRS treats rollovers of after-tax money as a taxable event unless you follow specific rules. Some newer 401(k) plans allow "in-plan Roth conversions," which let you convert after-tax money to Roth without leaving the plan.

Before rolling over a large balance or an account with after-tax contributions, speak with a tax professional. They can calculate whether a conversion makes sense and help you avoid unexpected tax bills. This is especially important if you are doing a rollover in the same year you made after-tax contributions.

Frequently Asked Questions

What happens to my 401(k) if I do not move it?

Your money stays in your old employer's plan. You keep the same investments and can withdraw money following the plan's rules, but you lose access to employer customer service and may face higher fees for former employees. You cannot make new contributions. If your balance is below the plan's minimum (often $1,000), the plan may force you to move it or cash it out.

Can I roll a 401(k) into a Roth IRA?

Yes, but it is treated as a conversion. You owe income tax on the entire amount rolled over in the year you do it. A direct rollover to a Traditional IRA avoids this tax hit. Consult a tax professional before converting to Roth, especially if the balance is large.

What if my new employer does not have a 401(k)?

Roll the money into a Traditional IRA. You have the same 60-day window if you take the money yourself, or you can request a direct rollover to an IRA custodian. An IRA is a good long-term home for retirement savings and gives you full control over investments.

Do I have to roll over my entire 401(k)?

No. You can roll over part of it and leave the rest in your old plan, or take a partial distribution. However, partial rollovers are more complicated and may trigger withholding on the amount you do not roll. A direct rollover of the full balance is simpler and avoids this risk.

How long does a direct rollover take?

Usually two to four weeks from the time you submit the request. The old plan administrator processes the request, the money is wired or mailed to the new custodian, and the new custodian deposits it into your account. Ask your old plan administrator for a specific timeline when you submit the request.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.