Does it change my taxes if a 401(k) goes into a traditional IRA or a Roth IRA?

By Kaz · Published 28 September 2026 · How this site checks figures

Summary

Yes, and the difference shows up on this year's return. Pretax 401(k) money that goes into a traditional IRA is not taxed until you withdraw it; the same money put into a Roth IRA is added to this year's income, and in exchange qualified withdrawals later are tax-free and nothing has to come out during your lifetime. Money from a Roth 401(k) has only one IRA destination, a Roth IRA.

What the IRS chart allows

The IRS rollover chart settles which destination each kind of 401(k) money can use. Pretax money from a qualified plan such as a 401(k) can go to a traditional IRA, and it can also go to a Roth IRA, with a footnote that reads "Must include in income." Money from a designated Roth account, the Roth side of a 401(k), can go to a Roth IRA but not to a traditional IRA.

Topic 413 puts the same rule the other way around: a rollover isn't taxable "unless the rollover is to a Roth IRA or a designated Roth account from another type of plan or account."

The bill in the year you move

Take $80,000 of pretax 401(k) money. Rolled into a traditional IRA, it adds nothing to this year's taxable income. Rolled into a Roth IRA, the whole $80,000 is added to this year's income and taxed along with your pay at your own rates, so the cost depends on what else you earn that year. How to work out the taxable amount when part of the money is after-tax is covered in the guide to what's taxable when a 401(k) goes into a Roth IRA.

The rules that follow the money

Withdrawals. Traditional IRA withdrawals are taxed except for any basis, the after-tax money you have already paid tax on. Roth IRA withdrawals are tax-free only when they are qualified distributions, and the five-year clock below is one of the conditions.
Required minimum distributions. A traditional IRA owner has to start withdrawals at 73, with the first one due by April 1 of the following year. Roth IRAs, and designated Roth accounts in a 401(k) or 403(b), require no withdrawals while the owner is alive. Beneficiaries of either are subject to the RMD rules.
The five-year clock. When designated Roth money is rolled into a Roth IRA, the years it spent in the 401(k) do not count toward the Roth IRA's five-year period. If you contributed to any Roth IRA in an earlier year, the clock runs from that first contribution instead.

Sources

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