IRA & 401(k) Rollovers

A transfer moves IRA money directly from one custodian to another — you never touch the funds. There's no 60-day deadline and no one-per-year limit. A rollover involves receiving a distribution and then re-depositing it. Rollovers trigger the 60-day rule and the one-per-year IRA limit. For IRA-to-IRA moves, a transfer is almost always the better choice.

Yes — but it's a Roth conversion, not a tax-free rollover. The pre-tax portion of the 401(k) balance becomes taxable income in the year of the conversion. You'll owe ordinary income tax on the converted amount. There's no penalty (regardless of age), but the tax bill can be significant. This strategy can make sense in low-income years or early in retirement before Social Security or RMDs begin.

If you request a distribution from a 401(k) payable to yourself, the plan must withhold 20%. If your balance is $50,000, you receive $40,000. To complete the rollover tax-free, you must deposit $50,000 into an IRA within 60 days — meaning you need to replace the $10,000 from other funds. The withheld $10,000 eventually comes back as a tax refund (assuming no tax was owed), but the timing mismatch causes problems. Avoid this entirely by requesting a direct rollover.

The distribution becomes a taxable event — plus a 10% early-withdrawal penalty if you're under 59½. The IRS does allow a self-certification waiver if you missed the deadline for a qualifying reason (illness, bank error, death of a family member, etc.). You certify the reason in writing to the receiving custodian and complete the rollover. This waiver is not a guarantee — the IRS can still audit — but it provides a safe harbor if your reason qualifies. For unusual situations, you can also request a Private Letter Ruling, but that's expensive and slow.

Generally yes, for lump-sum distributions from a defined benefit plan — you can roll the lump sum into a traditional IRA. You cannot roll over ongoing monthly annuity payments — only distributions that qualify as eligible rollover distributions. If a pension offers both a lump sum and a monthly annuity, rolling the lump sum into an IRA gives you control over investments and RMD flexibility; taking the annuity provides a guaranteed income stream. This is a significant decision worth discussing with a financial advisor.

No. The one-per-year rule applies only to IRA-to-IRA indirect rollovers. A rollover from a 401(k), 403(b), or other employer plan to an IRA does not count toward the limit. You could roll over five old 401(k)s to an IRA in the same year with no problem (as long as each is a direct rollover to avoid the 60-day clock).