How to Transfer a 401(k) to a New Job
Written by
Andrew Lisa
Edited by
Nupur Gambhir
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
When you change jobs, you don’t have to leave your 401(k) behind. You can transfer it to your new employer’s plan — a move that keeps your retirement savings in one place, avoids unnecessary fees and helps your investments keep growing. The process is usually straightforward, but there are important rules to follow and mistakes to avoid.
This guide walks you through how to transfer a 401(k) to a new job, outlines your key options, and explains what to do after the rollover to make sure your nest egg continues to grow without disruption.
What Happens to Your 401(k) When You Leave a Job
When you leave a job, your 401(k) doesn’t vanish — it stays with your former employer until you decide what to do with it. You’ll typically have four options to choose from:
- Leave it where it is. If you’re happy with your current plan’s performance and fees, you can often keep your money invested there.
- Roll it over into an IRA. Rolling over an IRA can give you more control over your investments and potentially lower fees, depending on the provider.
- Transfer it to your new employer’s 401(k). This helps you consolidate your retirement savings, but make sure to compare fees, fund choices and plan rules first.
- Cash it out. This move should be a last resort — you’ll owe income taxes and may face a 10% early withdrawal penalty if you’re under 59½.
Your Options for Transferring a 401(k)
Choosing the Best Way to Handle Your Old 401(k)
Each of the four main strategies for managing an old 401(k) fits a different financial situation and set of priorities:
- Leave it with your old employer. If your balance is above the plan’s minimum (usually between $5,000 and $7,000), you can leave your money where it is and let it keep growing tax-deferred. This works well if you like the plan’s performance and low fees. However, you won’t be able to contribute further, and juggling multiple accounts can make retirement planning more complicated.
- Roll it over into an IRA. A self-directed individual retirement account (IRA) often offers more investment choices and potentially lower fees than an employer plan. It’s a good option if you want flexibility and control over your portfolio.
- Transfer it to your new employer’s 401(k). If your new plan has strong investment options and low costs, consolidating your old 401(k) into your new one can simplify your finances and keep your savings growing tax-deferred.
- Cash it out. This should be a last resort. Cashing out triggers immediate taxes and penalties — the IRS withholds 20% for taxes and adds a 10% early withdrawal penalty if you’re under 59½. For example, cashing out a $25,000 balance in the 22% tax bracket could leave you with only about $17,000 after penalties and taxes, not to mention lost future growth.ees between your old 401(k), new 401(k) and an IRA before transferring funds.
Smart move
Before deciding, compare your old and new plans’ fees, fund choices, and flexibility. A financial advisor can help you identify which rollover strategy best fits your long-term retirement goals.
Step-by-Step Guide to Rolling Over Your 401(k)
If you decide to move your old 401(k) into your new employer’s plan, the process is straightforward — but timing and accuracy matter. Follow these key steps to ensure a smooth transfer:
| Step | What to Do | Why It Matters |
|---|---|---|
| 1. Confirm rollover eligibility | Check whether your new employer’s 401(k) plan accepts rollovers — most do, but not all. | Ensures you know your options before starting the transfer. |
| 2. Request a rollover form | Contact your former plan administrator for the required paperwork or online instructions. | This initiates the process and provides the official transfer details. |
| 3. Choose your rollover type | A direct rollover is safest — funds move directly between plan custodians, and you avoid taxes and penalties. An indirect rollover gives you a check, which you must deposit into the new plan within 60 days. | If you miss the 60-day window on an indirect rollover, it’s treated as a taxable withdrawal. The IRS also withholds 20% upfront, so most people prefer the direct method. |
| 4. Confirm transfer details | Work with your new plan provider to verify where the funds should be sent. | Avoids processing errors or delays that could hold up your investment. |
| 5. Follow up on completion | Once submitted, check that your funds were received and properly deposited. | Ensures your balance continues to grow and your rollover is fully complete. |
401(k) Rollover Mistakes to Avoid
Transferring a 401(k) is straightforward, but small errors can create big setbacks. Avoid these common mistakes when moving your retirement savings:
- Missing the 60-day deadline. For indirect rollovers, you must deposit the funds into your new plan within 60 days to avoid taxes and penalties.
- Triggering tax withholding. If you receive the money directly instead of choosing a direct rollover, your plan will automatically withhold 20% for taxes — even if you plan to reinvest it.
- Forgetting to update beneficiaries. Once your new account is open, review and update your beneficiary designations so your funds are properly distributed in the future.
- Cashing out without understanding the impact. Withdrawing your balance can cost you up to 30% in taxes and penalties and set back your long-term growth.
How Long a 401(k) Rollover Takes
Most direct 401(k) rollovers take two to four weeks, according to Vanguard. Indirect rollovers depend on how quickly you move the funds — you have 60 days to complete the transfer.
Delays can occur if:
- Paperwork is incomplete or inaccurate
- Paper checks are mailed instead of sent electronically
- Your new plan needs extra time to open or verify the account
- Either plan provider has slow processing times
Being proactive — confirming details and monitoring your account — can help you avoid unnecessary waiting.
How to Track and Confirm Your 401(k) Rollover
Keep tabs on your rollover from start to finish to ensure the funds move successfully.
- Ask for a timeline. Your old plan provider can give you an estimated processing date.
- Follow up on late transfers. If your funds haven’t arrived as expected, contact your new provider so they can coordinate with the old one.
- Track indirect rollovers carefully. Record when you received the funds and when the 60-day deadline expires. If a check is mailed, monitor its delivery or confirm the deposit online.
- Request confirmation. Once the transfer settles, ask your new plan for written proof or an acceptance letter. You should also receive IRS Form 1099-R documenting the transaction.
When to Get Professional Help with a 401(k) Rollover
Most 401(k) rollovers are simple and can be handled on your own. However, consider working with a tax professional or financial advisor if you:
- Have a large or complex account balance
- Are combining multiple old 401(k)s or IRAs
- Need help minimizing tax exposure or choosing the right rollover type
A professional can help you understand the tax rules, avoid penalties, and ensure your money continues to grow efficiently in its new home.
Final Thoughts: Choosing the Best Path for Your 401(k)
Consolidating your retirement accounts can simplify saving and help your money grow without unnecessary fees. When you leave a job, you can leave your 401(k) where it is, roll it into an IRA, or transfer it to your new employer’s plan.
For most people, a direct rollover is the easiest and safest choice. It moves funds directly between custodians, avoiding taxes, penalties and the 60-day deadline that comes with indirect rollovers.
A 401(k) rollover typically takes two to four weeks, though incomplete paperwork or mailed checks can cause delays. Whether you choose an IRA or a new employer plan, the best option is the one that keeps your savings consolidated, low-cost and working toward your long-term goals.
