401(k) Rollover: The Complete Guide (2023)

Shawn Plummer

CEO, The Annuity Expert

A 401(k) rollover is a process by which you can move your retirement savings from one 401(k) account to another. This can be a great way to consolidate your retirement savings or to move your money into a better investment plan. This guide will discuss how the 401(k) rollover works and what you need to do to complete it. We will also provide tips on choosing the right investment plan for you!

What Is A 401(k) Rollover?

A 401(k) rollover is a process by which you can move your retirement savings from one 401(k) account to another. This can be a great way to consolidate your retirement savings or to move your money into a better investment plan.

Two main types of 401(k) rollovers are direct and indirect.

Direct Rollover

A direct rollover is when you instruct your old 401(k) plan administrator to send your money directly to your new 401(k) plan or annuity. This process is simple and straightforward, and no taxes or penalties are involved.

Indirect Rollover

An indirect rollover is when you withdraw the money from your old 401(k) account and deposit it into your new 401(k) within 60 days. With an indirect rollover, you will be taxed on the withdrawal, but as long as you deposit the money into your new 401(k) within the 60-day window, there are no penalties.

How Does A 401(k) Rollover Work?

You will need to take a few steps to complete a 401(k) rollover.

First, you will need to contact your old 401(k) plan administrator and let them know that you want to do a rollover. They will likely have some paperwork for you to fill out.

Next, you will need to open a new 401(k) account with the investment company of your choice.

Once your new account is set up, you will instruct your old 401(k) plan administrator to send your money directly to your new account. This is called a direct rollover.

If you choose to do an indirect rollover, you will withdraw the money from your old 401(k) and then deposit it into your new 401(k) or annuity within 60 days. Again, you will need to contact your old 401(k) plan administrator and let them know that you want to do a rollover. They will provide you with the necessary paperwork.

Once you have withdrawn the money from your old 401(k), you must deposit it into your new 401(k) within 60 days. You can do this by writing a check or by transferring the money electronically.

It’s important to note that if you do an indirect rollover, you will be taxed on the withdrawal. However, as long as you deposit the money into your new 401(k) within the 60-day window, there are no penalties.

Benefits of a 401(k) rollover

You can move your 401(k) to an IRA before you retire. There are many reasons, like when you get close to or enter retirement.

Consolidate your money to know how much you have.

When you put your retirement money in a single account, you can see how much money is there and how long it will last. This way, you can know what lifestyle your money will support when you retire.

Withdrawal From One Account

When you retire, it is easier to withdraw your money if it is all in an IRA. However, if you have many 401(k) accounts, you must be careful and ensure that the money spread across multiple accounts lasts for your whole retirement.

More Investment Options

In an IRA, you will have more investment options than if you had your 401(k). You can customize your portfolio to match what stage of life you are in. You can change it as time goes on.

Transparency and control over fees

You can choose an individual retirement account (IRA) or annuity provider with transparent fees to know how much you will pay.

While you can benefit from changing your old 401(k) to a new one, sometimes it is better to keep your old one. First, you must ensure that you are not paying high 401(k) fees or losing money.

If you have less than $5,000 in your 401(k), your company can take it without warning and put it into a safe harbor IRA. This is bad because the fees are higher, and there aren’t as many investment options. This is another reason you should consider rolling over your 401(k) into a better account.

Tips For Choosing The Right Investment Plan

Choosing the right investment plan for your 401(k) rollover is essential! Here are a few tips to help you choose the best plan for you:

  • Consider your investment goals. What are you hoping to achieve with your retirement savings?
  • Think about your risk tolerance. How much risk are you willing to take on?
  • Research different investment options. There are many different types of investments available, so it’s essential to research and choose the option that is right for you.
  • Consider fees and expenses. Some investment plans have higher fees than others. It’s essential to consider these when choosing a plan so that you don’t end up paying more in fees than you need to.

How To Find An Old 401(k)

Contact Your Former Employer.

The most straightforward approach to check up on a previous 401(k) plan is to contact the human resources department or a third-party administrator (TPA) at the company where you used to work.

U.S. Department of Labor’s Employee Benefits Security Administration

The U.S. Department of Labor has a database for people looking for retirement plans that have been abandoned. This database will help you determine if the plan has been terminated and who to contact.

National Registry of Unclaimed Retirement Benefits

Your former employer might have left money for you in a retirement account. You can check to see if they did by going to unclaimedretirementbenefits.com.

Pension Benefit Guaranty Corporation

The Pension Benefit Guaranty Corporation’s Missing Participants Program has recently been expanded to include 401(k) plans.

How Much of a 401(K) is Taxed After Retirement?

Because a 401(k) is a tax-deferred qualified retirement plan, all income withdrawn from a 401(k) is subject to ordinary income taxes.

Can You Roll A Pension Into A 401k?

It is possible to roll a pension into a 401(k) account. This process is called a pension rollover.

A pension rollover allows you to transfer the money from your pension account into a 401(k) account or another qualified retirement account, such as an Individual Retirement Account (IRA). This can be a good option if you want more control over your retirement savings or to consolidate your retirement accounts.

To roll a pension into a 401(k), you must contact your pension plan administrator and request a rollover of your funds. You will also need to open a 401(k) or IRA account to receive the rollover funds.

Can You Roll a 401(k) to an Annuity

Yes. You can roll over a 40(k) to an IRA annuity. If you’re seeking to roll over your 401(k) into an annuity, remember that the key is finding an annuity provider who offers this option and is happy to accept such a transfer.

Often debated among “financial experts” is whether an annuity should ever be used in a tax-qualified 401(k). Like a 401k, annuities provide income tax deferral. Therefore, placing an annuity inside a qualified retirement plan may initially seem redundant.

That might be true if an annuity’s only benefit is tax deferral. But, the fact is, annuities offer many advantages, whether held inside or outside a 401(k).

Annuities are flexible investment products that can help you achieve your long-term financial goals and provide a source of retirement income. Tax deferral alone is not a sufficient reason to use an annuity in a tax-qualified plan. But income options, death benefit protection, investment selections and services, and flexibility are benefits an annuity can bring to any 401(k).


There are no tax consequences as long as you follow IRS guidelines. You won’t pay any taxes on gains from the annuity until you withdraw your money.

Growth Potential

You can earn additional interest based on the upward movement of an external market index in both bull and bear markets.

Protection from market downturns

You will not lose money due to market downturns in a fixed annuity or fixed index annuity. If the markets have a down year, you earn zero interest. In exchange for this protection, you are limited on the upside you can get each year, unlike an individual stock through a mutual fund.

A variable annuity will provide unlimited upside potential without protection from volatile market conditions. However, adding a Guaranteed Lifetime Withdrawal Benefit can protect the annuitant from running out of money due to a stock market crash.

Guaranteed retirement income for life

You can choose to annuitize your annuity to receive annuity payments over a period of time or for life or add an optional income rider to generate a paycheck you can never outlive. Sometimes the insurance company will provide a paycheck that increases to help with inflation and the cost of living.

Use our 401(k) calculator to estimate your guaranteed payout.


In addition to an income for life, waivers of surrender charges are often included to offer accessibility to your retirement plan in case of emergencies like entering a nursing home or terminal illness. In addition, there are no limits on annual contributions to an annuity.

Estate Planning

With most fixed-indexed annuities, your beneficiaries are guaranteed to receive your annuity’s Accumulation Value or Minimum Guaranteed Value, whichever is greater.

Contribution Match

Like a 401(k) match from your employer, some annuities can offer a premium bonus (up to 20%) on rollovers and additional deposits.

401(k) Vs. Annuity: A Comparison

No Contribution Limits (non-rollover) Limited Contributions
Insurance or Investment Products Investment Products
Guarantee on Investment No Guarantee on Investment
Tax-Deferred or Tax-Free Growth Tax-Deferred Growth
Pass Down to Beneficiaries Pass Down to Beneficiaries
Spousal Continuance Spousal Continuance
Market Volatility Protection Could Lose Money
Guaranteed lifetime Income Could Run Out of Money

How Long Does It Take To Rollover A 401(k)?

There is no one-size-fits-all answer when rolling over a 401(k). The amount of time it will take to complete the rollover process will depend on several factors, including the type of 401(k) you have, the financial institution where your 401(k) is held, and the financial institution where you want to roll over your 401(k).

If you have a traditional 401(k), you will likely be able to complete the rollover process within a few weeks. However, if you have a Roth 401(k), the rollover process may take a bit longer, as special rules apply to Roth 401(k)s.

Finally, it’s important to note that you may be subject to taxes and penalties if you do not complete the rollover process within 60 days. Therefore, it’s essential to work with a financial advisor (like The Annuity Expert) or tax professional to ensure that you complete the rollover process correctly and promptly.

401(k) To IRA Rollover Calculator

Because an annuity is a retirement insurance policy that provides an income for the rest of your life, even after the account runs out of money. Automating this process with an IRA annuity can give you peace of mind in knowing one less thing to worry about in retirement.

Note: You can purchase an annuity (with no tax penalties) by rolling over your traditional and Roth 401(k), IRAs, retirement accounts, investments, and cash.

Retirement Account Withdrawal Comparison

Most financial advisors recommend withdrawing up to 4% of your tax-advantaged retirement account and adjusting for inflation. The table below compares withdrawing from various retirement savings accounts yourself or a financial advisor with an annuity that automates your retirement income distribution.

FeaturesAnnuity401(k)IRARoth IRA
Withdrawal Percentage5.20% – 6.55%4%4%4%
Can Income Increase?YesYesYesYes
Can Income Decrease?NoYesYesYes
How Long Will Money Last?Lifetime30 Years+30 Years+30 Years+
Annual Fees0 – 1.50%1% – 4%1% – 4%1% – 4%
Death BenefitAccount BalanceAccount BalanceAccount BalanceAccount Balance

Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:

Next Steps

401(k) rollovers can be a great way to consolidate your retirement savings or to move your money into a better investment plan. By following the steps outlined above, you can efficiently complete a rollover! And by choosing the right investment plan for you, you can ensure that your retirement savings are working hard for you. Request a quote below.

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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