How to Roll Over Your 401(k) After Leaving a Job: 2025 Step-by-Step Guide
If you’ve recently changed jobs, retired, or been laid off, you may be wondering what to do with the money in your old 401(k) plan. One of the smartest moves you can make is to roll it over to another retirement account. A rollover allows you to keep your savings growing tax-deferred and gives you more control over your investments. This guide will walk you through how to roll over your 401(k) in 2025—safely and easily.
What Is a 401(k) Rollover?
A 401(k) rollover is when you move your retirement funds from a previous employer’s plan into another retirement account—usually an IRA or your new employer’s 401(k). This allows your money to continue growing tax-deferred without penalties or taxes (as long as the rollover is done correctly).
Why Should You Roll Over Your 401(k)?
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Keep all your retirement funds in one place for easier tracking
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Gain access to more investment options (especially with IRAs)
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Avoid account maintenance fees from old plans
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Retain tax-deferred status and avoid early withdrawal penalties
Step-by-Step Guide to Rolling Over Your 401(k) in 2025
Step 1: Decide Where to Move Your Funds
You have two main options:
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IRA (Traditional or Roth): IRAs usually offer more investment choices and flexibility.
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New Employer’s 401(k): This may be a good choice if the new plan has low fees and strong investment options.
Step 2: Contact the Administrator of Your Old 401(k)
Ask them about the rollover process. You’ll want to request a direct rollover, where the funds go directly to your new account without passing through your hands.
Important: Avoid taking the money yourself unless absolutely necessary. If you do, 20% will be withheld for taxes, and you could face penalties unless you deposit it into a new account within 60 days.
Step 3: Open a Rollover IRA (if needed)
If you choose to move your money to an IRA and don’t already have one, open a Rollover IRA with a financial institution of your choice. Most major brokers—like Fidelity, Vanguard, or Charles Schwab—offer this service online for free.
Step 4: Initiate the Transfer
Once your new account is ready, your old plan provider will either:
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Transfer the funds electronically (the fastest and safest method)
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Send a check made payable to your new IRA or 401(k) provider (not to you personally)
Step 5: Confirm the Funds Arrived Safely
Keep an eye on your new account to ensure the funds arrive and are properly credited. This can take a few days to a couple of weeks.
Step 6: Choose Your Investments
Once your rollover is complete, you’ll need to select how your funds will be invested. Choose a mix that matches your retirement goals, timeline, and risk tolerance.
What If You Have a Roth 401(k)?
If you had a Roth 401(k), you should roll it over to a Roth IRA to preserve the tax-free status of your earnings. Rolling it into a Traditional IRA would create tax complications.
Common Mistakes to Avoid
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Taking a lump sum distribution instead of a direct rollover
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Missing the 60-day deadline if you receive a check
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Failing to update your investment strategy after the rollover
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Overlooking fees in the new account
When Should You NOT Roll Over Your 401(k)?
Sometimes, it’s better to leave your 401(k) where it is:
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If the old plan has very low fees and strong investment options
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If you’re 55 or older and plan to retire soon (you may be able to access funds penalty-free directly from the 401(k))
