How to roll over a 401(k) to a new employer
Last updated August 2026
Short answer
The default advice is to roll everything into an IRA. For a specific group of people, consolidating into the new plan is materially better, and the reasons have nothing to do with investment choice.
Confirm the plan accepts rollovers
Most do, and it is not universal, so this is the first call to make.
Ask whether both pre-tax and Roth balances are accepted, since some plans take one and not the other.
Request the incoming rollover instructions at the same time, including the exact payee wording the old plan should use.
The backdoor Roth reason
A Roth conversion is taxed proportionally across all your pre-tax IRA balances, so a large rollover IRA makes the backdoor route expensive.
Money inside a 401(k) is excluded from that calculation entirely.
For a high earner contributing through the backdoor each year, this single point usually settles the question in favour of the plan.
The rule of 55 reason
Separating from service in or after the year you turn 55 allows penalty-free withdrawals from that employer's plan.
It applies to the plan you are in when you leave, so consolidating old balances into your current plan extends the protection to all of it.
An IRA has no equivalent before 59.5, which is why rolling everything out early can be an expensive tidy-up.
Try it in Walnut
Walnut connects to brokerage accounts and analyses what you hold. Whether a workplace plan can be connected depends on the recordkeeper.
Compare the fees properly
Both plans publish a participant fee disclosure listing fund expense ratios and any administrative charge.
Large employer plans frequently access institutional share classes cheaper than anything available retail.
Small plans often carry recordkeeping fees that make an IRA the cheaper home, so read both before assuming the newer plan is better.
Making the transfer
Request a direct rollover from the old recordkeeper using the new plan's instructions.
Never accept a cheque payable to you personally, which triggers 20% withholding and a 60-day scramble to replace it.
Expect two to four weeks, with the balance in cash for part of that, since plans generally liquidate before transferring.
After it arrives
Check the amounts landed in the right buckets, particularly if both pre-tax and Roth money moved.
Choose investments from the new menu, because rolled-in money frequently defaults to a money market or the plan's default fund.
Update beneficiary designations on the new plan, which do not carry across from the old one.
If the new plan will not take it
Some plans do not accept incoming rollovers at all, and some accept pre-tax money while refusing Roth balances.
Leaving the old plan in place is then the alternative to an IRA, and it costs nothing to wait while you compare.
A solo 401(k), if you have self-employment income, can serve the same purpose of keeping pre-tax money out of IRAs, which is a route worth knowing for anyone with side earnings.
Sources
Rollover mechanics, withholding and the treatment of direct transfers are published by the IRS at Rollovers of retirement plan and IRA distributions, with the exceptions to the additional tax at Exceptions to tax on early distributions. Walnut is informational and is not an investment adviser. This guide is educational and not personalized tax advice.
FAQ
Can I move an old 401(k) into my new employer's plan?
+
Usually, if the new plan accepts incoming rollovers, which most do but not all. Ask the new recordkeeper first, since the answer determines whether this route is available at all.
Why choose the plan over an IRA?
+
Three reasons: it keeps the balance out of the pro-rata calculation for a backdoor Roth, it preserves the rule of 55 for the plan you are in when you separate, and ERISA creditor protection is generally stronger than an IRA's.
When is an IRA better?
+
When the new plan's fund menu is expensive or narrow, when you want investments the plan does not offer, or when you value consolidation across several old accounts more than the plan-specific protections.
How do I start it?
+
Get the incoming rollover instructions from the new plan, then contact the old recordkeeper and request a direct rollover to those details. The new plan usually provides a form or a payee wording to use.
Does the money have to be pre-tax?
+
Not necessarily. Many plans accept Roth 401(k) balances as well, into the plan's designated Roth account. Confirm both types are accepted before initiating, and keep them separate through the transfer.
Will the five-year Roth clock carry over?
+
Not automatically. Rolling a Roth 401(k) into a new plan can restart that plan's five-year clock, whereas rolling to a Roth IRA uses the IRA's own clock. If you have an older Roth IRA, that route may preserve more.
Can I do this later?
+
Yes. There is no deadline for leaving money in a former employer's plan unless the balance is small enough to be forced out. Waiting until you have compared the fee disclosures properly is entirely reasonable.
What if I have several old 401(k)s?
+
They can generally all be rolled into the new plan one at a time. Consolidating reduces the number of required distribution calculations later, since workplace plans are not aggregated the way IRAs are.
What if the new plan refuses the rollover?
+
Leaving the balance in the old plan is the alternative to an IRA, and there is no cost to waiting. If you have self-employment income, a solo 401(k) can serve the same purpose of keeping pre-tax money out of IRAs for backdoor Roth purposes.