How to Move Your 401k From One Company to Another

To move your 401(k) from one company to another, contact your new employer’s plan administrator to confirm it accepts rollovers, then ask your old plan for a direct rollover distribution form and send the money straight from the old trustee to the new one. Done correctly, the full vested balance transfers in roughly two to four weeks with no tax withheld, no early withdrawal penalty, and nothing for you to report as taxable income.

The sections below walk through the steps in order, plus the handful of things that most often slow a rollover down or turn it into a tax bill.

Confirm the New Plan Will Take the Money

Not every employer plan accepts incoming rollovers. Ask your new plan administrator before you start any paperwork with the old plan. If the new 401(k) won’t accept the transfer, your main alternative for getting funds out of the old plan is rolling into an IRA instead, which carries its own tradeoffs around investment selection, loan access, and creditor protection. Leaving the balance where it is or cashing out are the other options, though cashing out generally triggers income tax plus a 10% penalty if you’re under 59½.

Know What Actually Transfers: Your Vested Balance

Only your vested balance moves. Everything you contributed yourself is always yours. Employer matching or profit-sharing contributions vest on a schedule set by the plan, and if you left before you were fully vested, you forfeit the unvested portion. The plan’s summary plan description tells you which schedule applies.

Small balances come with less flexibility. If your vested balance is at or below $7,000, the old plan can force a distribution. Balances under $1,000 can be mailed to you as a check; balances between $1,000 and $7,000 are typically rolled automatically into an IRA the plan picks for you. Starting your own rollover before the plan acts means you choose where the money lands.

Gather the Paperwork From Both Sides

From your new plan administrator, request:

The plan’s full legal name, exactly as it should appear on the check or wire
The plan’s Employer Identification Number (EIN)
Your new account number
Mailing or wire instructions for where the old plan should send the funds

From your old plan administrator, request a distribution form and specify a direct rollover. The payee line should read something like “[New Plan Trustee] FBO [Your Name]” — the “For Benefit Of” language identifies you as the beneficiary while keeping the check negotiable only by the receiving trustee. Grab direct contact information for a human at each administrator in case either side has questions mid-process.

Choose a Direct Rollover, Not an Indirect One

This is the single most important decision in the whole process. The two methods look similar on paper and produce wildly different outcomes if anything goes sideways.

Direct Rollover

In a direct rollover, your old plan sends the money straight to the new plan. Funds may move electronically between institutions, or the old plan may mail a check made payable to the new plan’s trustee. Even if that check gets mailed to your home address, it’s still a direct rollover because it’s payable to the plan, not to you.¹ No taxes are withheld. You report nothing as taxable income.

Indirect Rollover

In an indirect rollover, the old plan pays the distribution to you personally. Federal law requires the plan to withhold 20% for income tax before cutting your check.² You then have 60 days from the date you receive the money to deposit it into an eligible retirement plan.³

Here’s the trap: to complete a full rollover, you have to deposit the entire original distribution amount, including the 20% that was withheld. That means coming up with the 20% from your own pocket and adding it to the check you received. You get the withheld amount back as a refund when you file, but only if the full balance made it into the new account. Any shortfall is treated as a taxable distribution, with the 10% early withdrawal penalty stacked on top if you’re under 59½.

Unless you have a specific reason to take the money in hand, pick the direct rollover every time.

Submit the Request and Watch Your Investments Convert to Cash

Send the completed distribution form through whatever channel the old plan uses: online portal, fax, or mail. Most administrators take about three to ten business days to review the request and verify your account.

Your investments will almost always be sold and converted to cash before the transfer. The old plan liquidates your holdings, and the new plan receives cash that you’ll reinvest from the new plan’s fund menu. If you hold appreciated company stock in the old plan, look into net unrealized appreciation rules before rolling over, because moving company stock into another tax-advantaged account eliminates a tax benefit you may want to preserve.

When processing wraps up, the old administrator sends a confirmation that the distribution is on its way.

Handle the Check (If One Shows Up at Your House)

Electronic transfers typically land in the new account within two to five business days. Wire transfers are faster but less common.

Physical checks are still the most common delivery method. If a check made payable to the new plan’s trustee arrives at your home, do not endorse it. The check is negotiable only by the receiving trustee.¹ Forward it to the new administrator using the mailing instructions they provided, and pay for tracked or overnight shipping. A lost check means stop-payment requests and starting the delivery over.

Rollover checks carry a void-after date, commonly 60 to 180 days depending on the issuer. If a check goes stale in your drawer, the old administrator has to reissue it and your money sits in limbo earning nothing. Once the new plan credits the deposit, pull up your transaction history and confirm the amount matches the distribution from the old plan exactly.

Things That Delay or Cost You Money

Outstanding 401(k) Loans

If you borrowed from your old 401(k), the loan balance complicates the rollover. Most plans require you to repay in full when you separate, often within 90 days. If you don’t repay in time, the remaining balance becomes a “loan offset” and the plan reports it on your 1099-R as a taxable distribution.

You do get extra time to replace that amount. If the offset qualifies as a “qualified plan loan offset” because it resulted from your separation, you have until your tax filing deadline for that year, including extensions, to roll an equivalent amount into another retirement plan or IRA.³ The cash has to come from your own resources, since the offset doesn’t produce actual funds.

Spousal Consent

If you’re married, your plan may require your spouse’s written, witnessed, or notarized consent before releasing a distribution. The requirement shows up most often in pension-style and money purchase plans, but some 401(k)s include it too, especially plans that offer annuity payout options.⁴ Submitting the request without the required signature will bounce it back and add weeks. Ask early.

Distribution Fees

Some plans charge a distribution, processing, or termination fee when you roll money out, typically $25 to $100. Plans built around variable annuity products may also impose surrender charges if you move money before a holding period expires.⁵ Your plan’s annual fee disclosure lists what applies. Check it before you initiate the transfer.

Tax Reporting Even Though You Owe Nothing

A clean direct rollover produces no tax bill, but the IRS still wants it reported. Two forms do the work.

By January 31 of the year after the transfer, your old plan sends you Form 1099-R. Box 7 contains a distribution code; for a direct rollover to a qualified plan, that code is “G,” which signals the IRS that the money moved tax-free between retirement accounts.⁶

On your Form 1040, the total distribution appears, and the taxable amount shows as zero if the rollover was completed correctly.⁷ Save your final account statement from the old plan with the 1099-R in your tax records. If the IRS ever questions the transaction, those two documents are your proof.

If You Miss the 60-Day Deadline on an Indirect Rollover

If you took an indirect distribution and the 60 days slipped past, the IRS has a self-certification waiver for certain hardships: serious illness, a natural disaster, an error by the financial institution, and other circumstances outside your control. You complete the model letter in Revenue Procedure 2016-47 and give it to the institution receiving the late contribution, which must happen within 30 days of the reason for the delay being resolved.⁸ Self-certification doesn’t bind the IRS if your return is later audited, but it’s a legitimate path when you have a real excuse.

The 10% Early Withdrawal Penalty

Any portion of a distribution that doesn’t make it into a new retirement account is treated as a taxable withdrawal. If you’re under 59½, the IRS adds a 10% additional tax on top of the regular income tax.⁹ On a $50,000 balance, that’s $5,000 in penalty alone, before income taxes.

A direct rollover avoids the penalty entirely because nothing is distributed to you. An indirect rollover avoids it too, provided you deposit the full amount (including the 20% that was withheld) within 60 days.² The penalty only hits when money falls out of the retirement system, whether by choice or by missed deadline.

1
eCFR. 26 CFR 1.401(a)(31)-1 – Requirement to Offer Direct Rollover of Eligible Rollover Distributions
2
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
3
Office of the Law Revision Counsel. 26 USC 402 – Taxability of Beneficiary of Employees Trust
4
U.S. Department of Labor. FAQs About Retirement Plans and ERISA
5
U.S. Department of Labor, Employee Benefits Security Administration. A Look at 401(k) Plan Fees
6
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
7
Internal Revenue Service. Topic No. 413, Rollovers From Retirement Plans
8
Internal Revenue Service. Retirement Plans FAQs Relating to Waivers of the 60-Day Rollover Requirement
9
Internal Revenue Service. 401(k) Resource Guide – Plan Participants – General Distribution Rules