Can you roll an IRA into a 401(k) without penalty?

Yes, as long as your employer plan accepts rollovers and the funds are pre-tax.

What’s the difference between a transfer and a rollover?

A transfer usually refers to IRA-to-IRA moves, while a rollover is moving between different account types (like 401(k) to IRA).

Is it better to keep money in a 401(k) or move it to an IRA?

It depends. IRAs offer more flexibility, but 401(k) s often have stronger protections and sometimes lower-cost investment options.

How many rollovers can you do per year?

The IRS allows one IRA-to-IRA rollover per year. However, direct rollovers from a 401(k) to IRA (or IRA to 401k) don’t count against this limit.

What happens if I miss the 60-day rollover rule?

The IRS will treat it as a taxable distribution, possibly with a 10% penalty if you’re under 59½.

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Rollover 401k: How to Transfer IRA to 401k — Step-by-Step Timeline

September 26, 2025

5 min Read

Written by Joe Evans

Edited by GOBankingRates Staff

Wooden block with the number 401K with some money around.

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Moving your retirement savings around can feel intimidating, but it doesn’t have to be. A rollover 401(k) lets you transfer money between accounts — like rolling over a 401(k) into an IRA or, in some cases, rolling an IRA back into a 401(k) — without triggering taxes or penalties if you follow the rules.

For many retirees and pre-retirees, knowing when to choose a rollover IRA to 401(k) or a rollover 401(k) to IRA can make a big difference in investment options, fees and even creditor protection. This guide breaks down the 401(k) rollover rules, explains the 60-day rollover rule and gives you step-by-step instructions to help you make the smartest move for your retirement.

Here’s a simple rollover 401(k) timeline you can follow:

Before the Rollover: Prep Work

According to the Investment Company Institute, Americans hold over $8.9 trillion in 401(k) assets as of 2024, making it one of the most important tools for retirement. However, surveys indicate that approximately 30% of individuals who attempt rollovers make errors with the IRS’s 60-day rule, which can result in tax and penalty costs. A structured checklist ensures you don’t become part of that statistic.

Think of this stage as getting your ducks in a row.

Contact your current plan administrator to confirm if a rollover is allowed.
Decide whether you’ll use a direct rollover (money goes straight from one account to another) or an indirect rollover (money comes to you first — riskier because of the 60-day deadline).
Review your vested balance, fees and investment options.
Compare the new plan’s benefits. For example, some 401(k) plans have access to low-cost institutional funds that aren’t available in most IRAs.

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Why this matters: The IRS reports that missing the 60-day deadline is one of the top reasons people pay unexpected taxes on their retirement funds. Getting clarity up front helps you avoid costly mistakes.

During the Rollover: Action Phase

This is the “money in motion” step — where timing is everything.

Initiate the transfer with both custodians. Ask if they offer electronic transfers, which are faster and safer than checks.
If you’re doing an indirect rollover, deposit funds into the new account within 60 days — otherwise the IRS treats it as a taxable withdrawal.
Track your paperwork. You’ll receive a 1099-R form from your old plan and a 5498 form from the new custodian, both of which are needed at tax time.
Double-check contribution limits and rules if you’re rolling into a workplace plan.

Pro tip: According to Fidelity, over 90% of rollovers are now done via direct transfers, which dramatically reduces the risk of error.

After the Rollover: Follow-Up

The final step is making sure your money is working for you in the new account.

Confirm the rollover is complete by checking balances in your new account.
Rebalance your portfolio so it aligns with your long-term goals — many people forget this step and end up sitting in cash.
Keep your tax forms handy to avoid surprises during filing season.
Consider consolidating multiple retirement accounts if you’ve switched jobs several times. The Department of Labor estimates the average American holds 12 jobs over a lifetime, which can leave retirement savings scattered across old plans.

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Final Take to GO: Which Rollover Is Right for You?

A rollover 401(k) can keep your retirement savings working hard without triggering taxes or penalties. Rolling a 401(k) into an IRA is best if you want flexibility and control. Rolling an IRA into a 401(k) works better if you value creditor protection or want to maximize strategies like a backdoor Roth.

Before making a decision, weigh the 401(k) rollover rules, your long-term tax strategy and the investment options available in your employer plan.

For many people, talking with a financial advisor and using tools like the GoBankingRates Retirement Calculator can help them decide the best path forward.

FAQs About Rollovers

Here are the answers to some of the most frequently asked questions about retirement account rollovers and how they work:

Can you roll an IRA into a 401(k) without penalty?
- Yes, as long as your employer plan accepts rollovers and the funds are pre-tax.
What’s the difference between a transfer and a rollover?
- A transfer usually refers to IRA-to-IRA moves, while a rollover is moving between different account types (like 401(k) to IRA).
Is it better to keep money in a 401(k) or move it to an IRA?
- It depends. IRAs offer more flexibility, but 401(k) s often have stronger protections and sometimes lower-cost investment options.
How many rollovers can you do per year?
- The IRS allows one IRA-to-IRA rollover per year. However, direct rollovers from a 401(k) to IRA (or IRA to 401k) don’t count against this limit.
What happens if I miss the 60-day rollover rule?
- The IRS will treat it as a taxable distribution, possibly with a 10% penalty if you’re under 59½.

Information is accurate as of Sept. 26, 2025.

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