How Long Do You Have to Rollover a 401(k) After Leaving a Job?

Until you take action, your 401(k) with your previous employer-sponsored plan will remain in place after you quit your job. If the balance in your account isn’t too low, you might be able to keep it that way. As an alternative, you can transfer the funds from the previous 401(k) into an individual retirement account (IRA) or, if there is one, the plan offered by your new employer.

You can also withdraw all or part of the funds, but doing so might have detrimental tax effects. Before choosing your course of action, make sure you are aware of the specifics of the options that are open to you.

Navigating your retirement savings after leaving a job can be confusing, especially when it comes to your 401(k). This article will answer the question “how long do you have to rollover a 401(k) after leaving a job?” and provide you with the information you need to make informed decisions about your retirement savings.

Understanding the Time Limit for Rollovers

There is no set time limit to roll over your 401(k) retirement account once you’ve left your employer. Many people choose to leave their 401(k) account in their old employer’s plan. However, if you elect to roll over your 401(k) into an IRA, there can be a time limit on how long you have to transfer those funds into your IRA account.

Direct vs. Indirect Rollovers

There are two types of rollovers: direct and indirect.

  • Direct rollovers involve moving money from 401(k) plan-to-plan or from a 401(k) to an IRA retirement savings account. This is the recommended way to roll over an old 401(k). Usually, it happens in one of two ways:
    • You’ll contact your former employer-sponsored retirement plan provider and request a check for the entire account balance made out to your new provider (for your benefit) as a rollover contribution. They’ll send a check directly to your new company and deposit it into your new account. No taxes are withheld and it’s generally considered penalty-free and rollover fees are fairly uncommon.
    • Or
    • You’ll request a check in the same manner described above (made out to your new provider for your benefit), except you’ll receive the check directly and will be required to forward it along to your new company yourself. Again, no taxes are withheld and it’s generally considered penalty-free.
  • Indirect rollovers are a bit more complex and can get you into hot water if you don’t follow certain rollover rules carefully. It’s usually best to first speak with a tax advisor to understand potential tax penalties.
    • You’ll request a check from the old employer’s retirement plan 401(k), except in this case the money is paid directly to you as an individual. Taxes will be withheld. Then, you’ll need to deposit the full amount withdrawn, before taxes, into a new 401(k) or IRA retirement savings account within 60 days to avoid taxes and early withdrawal penalties (if you’re not yet at retirement age).
    • In other words, if you have a $100,000 401(k) balance and request an indirect rollover, your plan administrator will send you a check less any tax withholding (usually 20%). You’d receive $80,000 in your bank account in this example.
    • But to avoid taxes and penalties, you’d need to roll over $100,000 to a new retirement account within 60 days of your initial withdrawal. You’d then receive your tax withholding back when you file your tax return.

Advantages and Disadvantages of Waiting to Rollover

There are both advantages and disadvantages to waiting to roll over your 401(k).


  • You’ll have time to re-evaluate your new circumstances before changing your financial accounts.
  • You’ll have time to consider any tax consequences of rolling over your account.


  • If your previous employer-sponsored retirement plan had expensive investment options or high fees, consider moving the money to an IRA or your new 401(k) plan as soon as possible. The longer you leave the money there, the more the fees will eat away at your hard-earned investment returns.
  • Leaving the account at your old employer can sometimes lead to it being forgotten. At the same time, a financial life with scattered accounts is much more difficult to manage. It’s smart to consolidate to the extent possible and be proactive about optimizing the number of accounts you have.

FAQs: What is the 60-Day Rollover Rule?

The 60-day rollover rule applies to indirect rollovers and is usually used to take a short-term loan from your retirement plan. You don’t necessarily have to leave a job to attempt an indirect rollover.

Here’s how it works:

  1. Say you withdraw money from your 401(k) and receive it directly into your bank account.
  2. Within 60 days, you’ll need to deposit the entire amount withdrawn, before taxes, to a new retirement plan to avoid taxation (and an early withdrawal penalty if it’s an early distribution). When you take money out of a retirement plan early, you’re subject to a 10% penalty if you’re below 59 ½, unless it’s for a qualified exception.

How many indirect rollovers can I make each year?

Due to the nature of indirect rollovers, you’re only allowed to complete one per 12-month period. This one-per-12-month rule only applies to indirect rollovers, not the more traditional direct rollovers as described above.

Note that this does not mean you only have 60 days to roll over your 401(k) after leaving a job. This time limit only applies to indirect rollovers. Many leave old 401(k) plans in place for years before deciding to move them.

Exceptions to the 60-Day Rollover Rule

There are exceptions to the 60-day rollover rule. Direct rollovers — where money is moved from provider to provider — are not subject to this rule. You’re simply moving tax-advantaged money from one company to another. There’s no true withdrawal taking place to disturb the tax-advantaged status of the account.

The Bottom Line

Managing your finances amidst a job change can be an overwhelming undertaking. Knowing the options you have for your old 401(k) can help you start to make an informed decision. Rest assured that there isn’t a set time limit on rolling over your 401(k) unless you’ve begun the process and need to adhere to the 60-day rule.

If you’re considering rolling over your old 401(k), Capitalize can manage the entire process for you – for free. From finding your old 401(k) provider to helping you select the IRA account that best suits your needs, they can manage the entire process and save you time.

What Happens If You Don’t Roll Over Your 401(k) Within 60 Days?

You have sixty days to transfer funds from an indirect rollover into an IRA or another 401(k) plan. In the event that you do not comply, the funds will be subject to taxes and you will probably incur additional 2010 early withdrawal penalties. This is commonly referred to as the 60-day rollover rule.

Your 401(k) Can Stay Where It Is

Most 401(k) plans allow you to keep your money in your account after you leave your job if you have more than $5,000 ($7,000 starting in 2024) invested in it. If you have a sizable savings account and are satisfied with the plan portfolio, it might be wise to keep your 401(k) in the account. Take a look at some of the other options if you are likely to forget about the account or are dissatisfied with the fees or investment options offered by the plan.

You won’t be able to continue contributing to your 401(k) if you leave your previous employer. It will remain invested the same, and if you’d like, you can work with the 401(k) provider to make changes to your portfolio.

What Do I Do With the 401(k) From My Old Job?

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