ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

401k Rollover Rules

Updated on July 16, 2009

401k Rollover Rules – How You Can Avoid Penalties and Withholding Policies

A retirement savings account rollover is a procedure that takes place when contributed funds from one retirement plan are transferred into another retirement account. In actual fact, the usual rollover circumstances is; if a taxpayer was employed by another company, he or she will most likely rollover the current 401k account to his or her new company sponsored retirement plan. If you have the same scenario, the most efficient way to carry out the rollover is to learn about the 401k rollover rules and policies.

401k Rules

Rules of a 401k Rollover

You don’t need to be burden by your situation because your previous or current employer’s 401k account administrator will assist you in making the transfer. But, you should take each step carefully; uncalculated stride might let you incur tax penalties without your knowledge. This may occur because the Internal Revenue Service has strict policies to any form of retirement account rollover. You should not let them perceive your 401k rollover as a lump sum withdrawal of your contributed funds.

401k rollover rules take account of the 60 days redeposit period. When 401k rollover takes place, you carry out distributions or withdrawals of your assets that may include mutual funds, common stocks, bonds or even cash. You should be able to make contributions on all or part of them into another 401k plan of another financial institution, to an IRA or to a qualified retirement account. As a general rule, if you have not yet reached the qualifying age of 59 ½, then all of the contributions you’ve made to your 401k account on pre-tax basis are eligible for a rollover.

401k Rollover Advice

When you make a direct 401k rollover, the previous administrator of your 401k plan will normally require you to completely fill out some forms. These most of the time, let you describe the amounts you’ve withdrawn and the account information of your new chosen retirement savings plan where the retirement funds will transferred or deposited.

It’s important to note that the direct 401k rollover is the easiest way to transfer your money from your current 401k account into another retirement savings plan. Through direct rollover, your contributed funds are moved from one financial body to another institution. This type of transfer inhibits tax penalties and withholding policies.

Additional 401k Rollover Rules

If you are below 59 ½ years of age and would like to get your money out of your 401k plan, you should be aware of the tax penalties and withholding obligation you’ll face. A 401k IRA rollover, which is paid directly to you, will give you a mandatory withholding penalty of 20% even if you plan to rollover the money into a new retirement account afterwards. The IRS prohibits and highly discourages an early withdrawal, that’s why performing untimely distributions will grants you several sticky situations.

If in doubt, you should talk to your retirement savings plan administrator, so you can better understand all of the 401k rollover rules. Keep in mind that a 401k rollover is an efficient approach and method to manage your retirement savings very well - do your best to accomplish it the right way.

Know the 401k Rules


This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

Show Details
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)