I have multiple 401K's because I have worked for multiple companies. How can I consolidate these accounts? One problem is that the company that I prefer in terms of investing flexibility, is not the one which is used by my current company. I am going to incur taxes if I do this? (assuming I even can do it)

  • 2
    Rollovers to an IRA are not taxed since the money is going directly from one retirement account to another retirement account. Taxes are taken when a distribution is taken. Note: this is only with a Direct Rollover; if you receive cash taxes will be withheld, even if you deposit it the next minute to an IRA.
    – Chris
    Jun 6, 2016 at 16:08
  • I rolled over two 401k's into an IRA at a discount brokerage house. I did direct rollovers, so I never touched the money. But now I can buy ETF's, stock or mutual funds. Hence I can do whatever I want with my investments. ETF's are nice because they track other indexes and tend to have lower fees. Always pay attention to the fees. Good luck.
    – Gandolf989
    Jun 6, 2016 at 17:35
  • Much of the "why or why not rollover" is covered in this answer from about three years ago. Jun 6, 2016 at 22:13
  • Warning: rollover from one 401k to another may reset the clock on the "Rule of 55". IRAs don't allow Rule Of 55 at all. If you think you may want to take early retirement, you need to understand how this works. (Details belong in another question.)
    – keshlam
    Jun 6, 2016 at 22:55
  • Be very careful when rolling over a 401k to an IRA, because if you do a Roth conversion later on and have any after-tax basis in the IRA (i.e., nondeductible contributions to a regular IRA because your income prevents you from contributing to a Roth in a given year), you have to prorate the non/deductible IRAs proportionately during the conversion for tax purposes. This isn't an issue if the money is left in one of your 401k accounts, as the IRA/401k distinction avoids the proration requirement for conversions from a traditional IRA to a Roth IRA.
    – user117529
    Sep 18, 2020 at 5:48

4 Answers 4


You have three options.

  • Roll over funds from your former employers 401Ks into the 401K for your current employer. This can only be done if the current employer allows this. Not all do. Some may only limit you to specific types of funds: pre-tax, post-tax, Roth, company match.
  • Roll over funds from your former employers into IRAs. You have to make sure that the money from the 401Ks is handled correctly. You will most likely have multiple IRAs depending on what types of funds you are rolling over. The good news is that the IRAs can all be under the same company.
  • Leave them the way they are. Some people like to keep them in 401Ks. Others don't.
  • The 4th option to move funds into a former employees plan. I have never found a company that allows this.

If you follow the procedures outlined by the IRA trustee there should not be any problems. There will not be any taxes involved, unless as part of the process you change non-Roth funds to Roth funds, or you don't follow the procedures. In my experience the IRA companies know how to handle the transfer. In some cases the check must be sent to you, and then you send it to the IRA company, but they will tell you exactly how the check is to be made out to.

I would start by talking to the IRA trustee they are likely to have seen it all, and can guide you through the process.

  • 1
    I like this answer the best as it is the most complete. One area that it did not cover is fees. Many 401Ks pass fees onto their participants. Some rollover IRA trustees pass fees onto their participants. To the contrary some IRA trustees will manage your account for free and even give rebates in the form of free trades or actual cash.
    – Pete B.
    Jun 6, 2016 at 16:06
  • As @PeteB. says, you may be charged a fee. I've done several direct rollovers from 401(k) to IRA - and once I was charged a $50 fee (by the 401(k) company). The "physical" procedures vary - a couple of times I never saw the check, once I got a check made out to the destination fund company (with my account number on it), and once I got a check to me and I sent my own check to the destination fund company (I think at that one I had been in the 401(k) less than a year and that made a difference).
    – davidbak
    Jun 6, 2016 at 20:59
  • @PeteB, this is indeed an excellent summary, but does not answer the OP's question directly as I read it. OP asks "how" and specifies that they do not prefer the plan offered by their current company. This answer seems to ignore that information.
    – jkuz
    Jun 6, 2016 at 21:18

You can do this with no problem. What you want is a direct transfer style of rollover. This is simply where the money is transferred from your 401(k) custodian directly to your new IRA custodian. This will ensure there are no taxes or penalties on the balance.

The key is that the money is moving directly to the new account without you having direct access to the balance. This keeps the money out of your hands in the eyes of the IRS. The process should look something like this:

  • Establish your IRA account at the financial institution of your choice. This can be an existing IRA account if you have one.
  • Tell the IRA administrator that you would like to initialize a direct transfer rollover into that account. They will be able to tell you how to have the check written and where to mail it.
  • Contact the administrator for the 401(k) you want to consolidate. They will have to make a check payable to the new institution, and they may be able to mail the check directly to the new institution. This check should not be made out to you or mailed to you, if possible.
  • Follow up with your IRA administrator to ensure that they received the check for the correct amount.
  • You should receive the tax forms at the end of the year detailing the transaction.

A few notes:

  • If the 401(k) administrator requires the check to be in your name, have them make the check out to "[new institution] FBO [your name]". They should be able to do this. Make sure you do not endorse the check, but send it directly to the new administrator within 60 days. The key here is that you cannot deposit this check for direct withdrawal, which avoids IRS penalties and taxes.
  • Make sure the IRA account type is correct. For example, you cannot roll traditional 401(k) funds into a ROTH IRA fund without paying the income tax on the balance. If you are moving traditional 401(k) to traditional IRA, you should have no surprises.

401(k)'s can be rolled over into IRAs. You can roll all of your former company 401(k)'s into a single IRA, managed by whatever company you like.

Many employers will not let you transfer money out of your 401(k) while you're still a current employee, though, so you may be stuck with the 401(k) used by your current company until you leave. You'll have to check with your 401(k) administrator to be sure.

You won't incur any taxes as long as you execute the rollovers properly. The best way to do it is to coordinate the transfer directly between your old 401(k) and your new IRA, so the check is never sent directly to you.

  • 1
    The magic phrase is "trustee-to-trustee transfer" to be sure you never have a dime in your hands and avoid the taxes. Jun 6, 2016 at 20:45
  • 1
    @MontyHarder not necessarily. While it is certainly more convenient to do a trustee-to-trustee transfer, there is no penalty for being the intermediary as long as you follow the rules. Forward it on, don't spend it, don't hang on to it too long, etc. I recently transferred funds from an old 401(k) into an IRA. While the money transferred directly, I had the option of receiving a check and I would have paid neither taxes nor penalties for doing so.
    – user19851
    Jun 6, 2016 at 22:22

You can also roll money from prior 401ks into current 401ks. Call the administrator of the 401k you prefer (i.e., Fidelity/Schwab, whoever the financial institution is). Explain you don't work there anymore and ask if you can roll money into it. Some plans allow this and some don't.

So either, 1) You can roll all your prior 401ks into your current 401k. 2) You might be able to roll all prior 401ks into the prior 401k of your choice if they will accept contributions after you've left. You can't move the amount in your current employer's 401k until you separate or hit a certain age. 3) Like mentioned above, you can roll all prior 401ks into an IRA at any financial institution that will let you set up an IRA.

Process: -Call the financial institutions you want to move the money from. Tell them you want a direct rollover. Have them write the check to the financial institution you are rolling into with your name mentioned but not the beneficiary (i.e., check written to Schwab FBO: John Doe account #12345)

Tax implications: -If you are rolling from a pre-tax 401k to a pre-tax 401k or IRA, and the money goes directly from institution to institution, you are not liable for taxes. You can also roll from a Roth type (already taxed) account into another Roth type account with no tax implications. If they write a check to YOU and you don't put the money in an IRA or 401k within 60 days you will pay ~20% tax and a 10% early withdrawal penalty. That's why it's best to transfer from institution to institution.

401k vs IRA: -This is a personal decision. You could move all your prior 401ks into an IRA you set up for yourself. Generally the limitations of a 401k are the lack of funds to invest in that fit your retirement strategy, or high expense ratios. Be sure to investigate the fees you would pay for trades in an IRA (401k are almost always free) and the expense ratio for funds in your 401k vs funds you might invest in at a broker for your IRA.

Best of both: -You can roll all your 401ks into a single 401k and still set up an IRA or Roth IRA (if your income qualifies) that you can contribute to separately. This could give you flexibility in fund choices if your 401k fees tend to be cheaper while keeping the bulk of your nest egg in low cost mutual funds through an employer account.

Last advice: Even if you don't like the options in your current 401k, make sure you are contributing at least enough to get any employer match.

  • 2
    In addition to the risks associated with the 60-day rollover (missing the 60 day window and triggering tax implications), you're limited in how many you can do in any 12 month period. For most people this limit won't come into play, but since the OP mentioned multiple accounts that he wants to consolidate at the same time, it might be another reason to prefer the institution-to-institution transfer. (There's no limit on direct transfers between institutions.)
    – user32479
    Jun 6, 2016 at 16:03

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