401(k) Rollover Options: Compare the 4 Choices Before You Move
Keep it in the old plan, move it to a new workplace plan, roll it to an IRA, or cash out. The fees, the rollover mechanics, and the exceptions that can change the decision — quoted from the Internal Revenue Service and the Department of Labor.
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The four options, side by side
| Keep it in the old plan | Move it to a new workplace plan | Roll it to an IRA | Cash out | |
|---|---|---|---|---|
| Fees to check | The plan's fee and investment disclosure and account statement, including investment expenses and any account charges | The new plan's disclosure and statement, compared with the old plan on the same basis | The IRA provider's account and investment fee schedules; the plan's 404(a)(5) disclosure does not apply to an IRA | Check taxes and any early-distribution additional tax, not just fees |
| Investment menu | Whatever the old plan's menu holds, unchanged | Whatever the new plan's menu holds | Whatever the custodian's documents permit | None |
| Loans | Ask the old plan how separation affects any outstanding loan and whether an offset occurs | A new plan may allow new loans; its terms and IRS limits apply | An IRA cannot make a loan to its owner | A loan offset may be taxable if it is not rolled over on time |
| Age-55 separation exception | May apply to qualifying distributions from the former employer's plan after separation in or after the year you turn 55 | Do not assume the old employer's exception follows the money; check the new plan and your later separation date | This particular exception does not apply to IRA distributions | Check whether an exception to the 10% additional tax applies to the distribution |
| Company stock (NUA) | Preserved while the securities stay in the plan | Ask whether they transfer in kind | "The NUA is generally not subject to tax until you sell the securities" applies to a lump-sum distribution, not to shares rolled into an IRA | The election is made in the year of distribution |
| RMD and still working | Do not assume the still-working delay applies to a former employer's plan; check the plan and your retirement date | Ask the new plan whether it allows the still-working delay; 5% owners do not qualify | Traditional IRAs have no still-working delay; the applicable starting age depends on birth year | An RMD is not eligible for rollover; check the tax treatment of any other distribution |
| Backdoor Roth and pro-rata | No effect: plan money is not counted in the IRA pro-rata calculation | No effect, for the same reason | Adds pre-tax money to the IRA total, and "all traditional/SEP/SIMPLE IRAs are treated as one contract" on Form 8606 | Removes the balance, and the tax bill arrives instead |
| Creditor protection | Ask. The rules differ between ERISA plans and IRAs, and IRA protection turns on state law | Ask the new plan the same question in writing | Ask the custodian, and check the state | Nothing left to protect |
| Withholding and the 60-day clock | Nothing moves, so neither applies | An eligible direct rollover has no 60-day receipt clock and no mandatory 20% withholding | Direct rollover: same. For a taxable eligible plan distribution paid to you, generally 20% is withheld and the 60-day clock starts on receipt | A taxable eligible plan distribution paid to you is generally subject to 20% withholding; withholding is not the final tax bill |
Scroll the table sideways on a narrow screen.
Which of these is best is not something this page can say: it turns on facts about a specific plan, a specific tax position and a specific set of documents. What it can do is name the questions, and each of them has a document behind it. The compounding cost of the fee row is worked through in how a 0.75-point difference in annual fees compounds, and the mechanics of the last row are in direct vs indirect rollover.
The IRS rollover rules explain the 60-day window, direct rollovers and withholding. Check the IRS early-distribution exception table and RMD rules against your plan's terms. The Department of Labor fee guide explains which charges to compare. These sources were checked on 30 September 2026.
Before you move money, check these five items
Each one can change the answer, and each is settled by a written reply rather than a conversation.
- The age 55 separation exception. It can apply to a qualifying plan distribution after separation in or after the year you turn 55, but does not apply to an IRA distribution. Ask the plan: "Does this plan permit partial distributions after separation from service, and from what age?"
- Employer securities and net unrealized appreciation. The NUA treatment attaches to a lump-sum distribution of employer securities, not to shares rolled into an IRA. Ask the plan: "Does my account hold employer securities, and what is the cost basis and the net unrealized appreciation on them?"
- An outstanding plan loan. Where it is not repaid, the balance is offset and reported as a distribution. A qualified plan loan offset may have a tax-return due-date rollover window, including extensions; other offsets may have the ordinary 60-day window. Ask the plan: "What is the outstanding loan balance, and what is the deadline to repay or roll over the offset amount?"
- After-tax and Roth money in the plan. The two are tracked separately and land in different destination accounts. Ask the plan: "What are the pre-tax, Roth and after-tax balances in my account, and where can each be sent?"
- Backdoor Roth contributions and the pro-rata rule. Moving pre-tax money into an IRA changes the Form 8606 arithmetic, because all traditional, SEP and SIMPLE IRAs are treated as one contract. Ask yourself first: "Do I make backdoor Roth contributions, and what is my total pre-tax IRA balance on 31 December?"
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Direct vs indirect rollover: which rules actually apply?
The 60-day clock, the IRA-to-IRA one-per-12-months limit and the 20% withholding rule, and which of them your route actually triggers.
Fee calculator: old plan, new plan and IRA side by side
Three columns, each with an annual percentage and a flat administration fee, and the cumulative gap between them.
60-day rollover deadline calculator
The date the window closes, the amount withheld, and what is left to replace — with a calendar file you can save.
What a 1% fee costs over 25 years
$92,000 on this site's example, and the recurrence that rebuilds it with your own figures.
Browse all guides → 43 questions people ask before a rollover → Where the money actually goes →