How to Roll Over a 401(k) Into a Roth IRA

Yes, you can roll over a 401(k) to a Roth IRA, but you will owe income tax on the money you convert

A rollover from a traditional 401(k) to a Roth IRA is legal and available to most people, but it is not automatic and it comes with a tax bill. When you move pre-tax money from a 401(k) into a Roth IRA, the IRS treats that as income in the year you do it. You pay ordinary income tax on the full amount you convert. After that, the money grows tax-free in the Roth IRA, and you can withdraw it tax-free in retirement.

The process itself is straightforward: you contact your 401(k) plan administrator, request a distribution, and direct it to a Roth IRA you have opened at a bank or brokerage. The money can go directly from the 401(k) custodian to the IRA custodian (a direct rollover), which is the safest route. If the money passes through your hands first, you have 60 days to deposit it into the Roth IRA, or the IRS treats it as a withdrawal and you owe a 10% penalty if you are under 59½.

Key Takeaways

You owe income tax on the full amount you convert from a traditional 401(k) to a Roth IRA in the year you do the rollover.
A direct rollover, where money moves straight from your 401(k) custodian to your Roth IRA custodian, avoids the 60-day deadline and withholding complications.
You must have earned income in the year of the conversion, and your income does not limit whether you can do a Roth conversion (though it affects your tax bill).
If you have other traditional IRAs, SEP IRAs, or SIMPLE IRAs, the IRS counts all of them together when calculating the tax you owe on a conversion.

When you can roll over a 401(k) to a Roth IRA

You can do a Roth conversion rollover at almost any time, but the timing depends on your employment status and your plan's rules. If you are still working and your 401(k) is with your current employer, most plans do not allow in-service rollovers to an IRA. You will need to wait until you leave the job, retire, or reach age 59½ (some plans allow conversions at 59½ while you are still employed). Check your plan documents or call your plan administrator to confirm.

If you have already left the job or are rolling over an old 401(k) from a previous employer, you can do the rollover whenever you want. There is no age requirement, no income limit, and no annual limit on how much you can convert. You can roll over $50,000 one year and $10,000 the next, or convert your entire balance at once.

The tax bill you will owe

The amount of tax you owe depends on your total income for the year and your tax bracket. If you convert $100,000 from a traditional 401(k) to a Roth IRA, that $100,000 is added to your other income for the year. If you normally earn $60,000 and convert $100,000, your taxable income for that year becomes $160,000. You pay tax on that $160,000 at your marginal rate.

This can push you into a higher tax bracket. It can also trigger the net investment income tax (an extra 3.8% tax on certain income if your modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married filing jointly) and reduce tax deductions or credits you would otherwise receive. Many people spread conversions over multiple years to keep their income lower and their tax bill smaller.

If you have a traditional IRA, SEP IRA, or SIMPLE IRA in addition to your 401(k), the IRS applies the pro-rata rule. This rule counts all your traditional and SEP/SIMPLE IRAs together and taxes a portion of your conversion based on how much pre-tax money you have across all accounts. If you have $50,000 in a traditional IRA and convert $50,000 from a 401(k), roughly half of the conversion is taxed as if it came from pre-tax money (even though the 401(k) money is pre-tax). This can make conversions much more expensive if you have other IRAs.

Direct rollover versus 60-day rollover

A direct rollover is the simpler and safer method. You ask your 401(k) plan administrator to send the money directly to the Roth IRA custodian (your bank or brokerage). The money never touches your bank account. There is no withholding, no 60-day clock, and no risk of accidentally missing a deadline. This is the method most people should use.

A 60-day rollover means the 401(k) plan sends the check to you. You then have 60 calendar days to deposit that money into a Roth IRA. If you miss the deadline, the IRS treats it as a withdrawal. If you are under 59½, you owe a 10% early withdrawal penalty on top of income tax. Additionally, the plan usually withholds 20% of the amount for federal taxes, so if you convert $100,000, you receive a check for $80,000. You have to come up with the other $20,000 from your own money to deposit the full $100,000 into the Roth IRA, or you will owe tax on the $20,000 you did not convert.

Use a direct rollover unless you have a specific reason not to. It eliminates withholding, the 60-day deadline, and the risk of penalties.

Steps to roll over your 401(k) to a Roth IRA

First, open a Roth IRA at a bank, brokerage, or credit union if you do not already have one. You will need to provide your Social Security number and basic personal information. This takes a few minutes online or over the phone.

Second, contact your 401(k) plan administrator or your employer's benefits department. Tell them you want to do a direct rollover to a Roth IRA. They will ask for the name and address of the Roth IRA custodian (your bank or brokerage) and the account number. Some plans have a form you fill out; others handle it by phone. Ask whether your plan allows in-service conversions if you are still employed.

Third, the plan administrator will send the money directly to your Roth IRA custodian. This usually takes one to two weeks, though it can take longer depending on the plan and the custodian. Once the money arrives, it sits in your Roth IRA and you can invest it however you want.

Fourth, when you file your taxes for that year, you will report the conversion on Form 8606. This form tells the IRS how much you converted and ensures you do not pay tax twice on the same money. Your tax preparer or tax software will walk you through this.

What happens if you have a Roth 401(k)

If your 401(k) is a Roth 401(k) (not a traditional 401(k)), rolling it over to a Roth IRA is simpler because the money is already after-tax. You do not owe income tax on the conversion. The process is the same: contact your plan administrator, request a direct rollover to a Roth IRA, and provide the IRA custodian's information. The money moves tax-free.

Some people roll over a Roth 401(k) to a Roth IRA to consolidate accounts or to access better investment options. Roth IRAs often have lower fees and more investment choices than employer 401(k) plans.

Frequently Asked Questions

Can I roll over a 401(k) to a Roth IRA if I am still working?

It depends on your plan. Most plans do not allow in-service rollovers while you are employed, but some allow them once you reach age 59½. Check your plan documents or call your benefits department. If your plan does not allow it, you can roll over the 401(k) after you leave the job.

What if I cannot afford to pay the taxes on the conversion?

You do not have to convert the entire balance at once. You can convert part of your 401(k) one year and the rest later, spreading the tax bill across multiple years. Many people convert smaller amounts annually to stay in a lower tax bracket.

Do I have to convert my entire 401(k), or can I convert just part of it?

You can convert as much or as little as you want. You could convert $10,000 and leave the rest in the 401(k), or convert it all. There is no rule requiring you to convert the whole balance.

What if my 401(k) plan does not allow rollovers?

Some plans restrict rollovers. If yours does, you will need to wait until you leave the job or reach age 59½ (if your plan allows in-service conversions at that age). Once you leave, you can roll over the balance to a Roth IRA at any time.

Will the rollover affect my Social Security or Medicare?

The conversion counts as income for the year you do it, which can affect your Medicare premiums if your income exceeds certain thresholds. It does not affect Social Security benefits directly, but higher income can trigger taxation of your Social Security benefits. Consult a tax professional if you are close to these income limits.

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.