Guide
How do you convert a 401(k) to a Roth IRA?
By Secure Retirement PlannerUpdated
If you have pre-tax 401(k) money, you can move it into a Roth IRA with a direct rollover. The amount you move is taxed as ordinary income for that year. For 2026, your money must leave the plan by December 31, 2026 to count as 2026 income. You can't undo the conversion later.
If you have left the job, you can roll your 401(k) into a traditional IRA first. Then you convert a slice to the Roth each year to keep your tax in a lower bracket. That also helps you avoid a big jump in your Medicare premiums. The same rules apply to your 403(b), governmental 457(b) and TSP accounts.
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The short version
- You can do a direct rollover from your 401(k) to a Roth IRA. The pre-tax part is taxable income for the year.
- Moving it all in one year can push much of it into the 24% bracket or higher.
- Rolling to a traditional IRA first lets you convert a set amount each year.
- Ask for a direct rollover. A check paid to you has 20% withheld.
- Before you move it, check what you give up: the age-55 rule and special treatment for company stock.
Can I roll my 401(k) straight into a Roth IRA?
Yes. Once you leave the job, you can roll your money directly into a Roth IRA. You can also do it while you still work if your plan allows withdrawals (many do at 59½). The pre-tax part is added to your income for the year.
Your Roth 401(k) money is different. It moves to a Roth IRA with no tax. Your after-tax contributions (not Roth) can also go to a Roth IRA tax-free, but the earnings on them are pre-tax.
| Method | Tax on pre-tax money | Withholding | Best for |
|---|---|---|---|
| Direct rollover to a Roth IRA | All taxed in the year moved | None required | Small balances or a low-income year |
| Direct rollover to a traditional IRA, then convert yearly | Taxed only on what you convert each year | None required | Larger balances, spreading the tax |
| In-plan Roth conversion (if your plan offers it) | Taxed in the year converted | None on a direct in-plan rollover | People still working who want to stay in the plan |
| Check paid to you, then deposit within 60 days | Taxed in the year paid | 20% mandatory | Rarely a good choice |
Should I convert my whole 401(k) at once or a little each year?
If your balance is large, a little each year usually costs you less tax. Every dollar you convert stacks on top of your other income. A big one-year conversion pushes your top dollars into the 24%, 32% or 35% brackets.
Converting yearly lets you stop at the top of a bracket you choose. See How much to convert each year to find your number. Or try your own figures in Roth conversion tax calculator.
One more reason to spread it out: from age 63, your income each year affects the Medicare premiums you pay two years later.
Can I convert my 401(k) to Roth while I'm still working?
Only if your plan allows it. Many plans now offer an in-plan Roth rollover. It moves your pre-tax money to the Roth side of the same 401(k). You are taxed in the year you do it, the same as an IRA conversion.
The 10% early withdrawal tax doesn't apply to the conversion itself. But if you're under 59½ and take that money out within five years, the 10% tax can come back. Each of your in-plan conversions has its own five-year clock.
Your other route is an in-service distribution to a Roth IRA, which some plans allow from age 59½. Call your plan and ask which options it offers you.
What happens to after-tax money in my 401(k)?
If you made after-tax contributions (not Roth), the IRS lets you split one distribution. Your after-tax contributions can go to a Roth IRA with no tax. Your pre-tax money and earnings can go to a traditional IRA.
You can't take out only the after-tax part and leave the rest. The IRS treats any partial withdrawal as a mix of both. To send all your after-tax money to a Roth IRA, you generally take out your whole balance. Then you split it at the same time.
Example of the split
Say your $100,000 balance has $20,000 of after-tax contributions. You can split it: $80,000 to a traditional IRA (no tax now) and $20,000 to a Roth IRA (no tax now).
What do I lose by moving my 401(k) to an IRA?
Check three things before you move your money. Once it's in an IRA, you usually can't get the old 401(k) rules back.
- The age-55 rule: if you left the job in or after the year you turned 55, you can take 401(k) withdrawals with no 10% penalty. In an IRA you generally wait until 59½.
- Company stock: if your plan holds your employer's stock, ask about net unrealized appreciation (NUA) first. Rolling the stock into an IRA gives up that special tax treatment.
- Low-cost funds: some large plans offer funds with lower fees than you can buy in an IRA. Compare before you move.
How do I pay the tax and avoid the 20% withholding trap?
Ask for a direct rollover. If your plan cuts the check to you, it must withhold 20%. To roll over your full amount, you would then have to replace that 20% from your own savings within 60 days. Any part you don't replace is taxable. It can also owe a 10% penalty if you're under 59½.
The cleanest way is to pay the tax from your savings or a brokerage account. That keeps your whole amount growing in the Roth.
If you roll Roth 401(k) money into a Roth IRA, note one rule. The years your money spent in the 401(k) don't count toward your Roth IRA's five-year clock. If you've never had a Roth IRA, your clock starts with the year you first fund one. See The 5-year rules.
Example: a 62-year-old single retiree with a $300,000 401(k)
Carol is 62, single and retired. She has $300,000 of pre-tax money in her old employer's 401(k) and a $30,000 pension. She hasn't claimed Social Security yet. After the $16,100 standard deduction, her 2026 taxable income is $13,900 and her federal tax is about $1,420.
If she rolls all $300,000 into a Roth IRA in 2026, her federal tax rises by about $77,214. The top $208,200 of it is taxed at 24%, 32% and 35%.
Say she rolls the 401(k) into a traditional IRA and converts $75,000 a year for four years. Each year adds about $12,850 in federal tax, or about $51,400 in all. Her income each year stays at $105,000, below the 2026 single IRMAA line of $109,000. That matters once her conversions start counting toward Medicare premiums at 63.
If you have a large 401(k) like Carol's, spreading your conversion over several years may cost you far less tax. It can also keep you under the Medicare surcharge line.
| Plan | Amount converted | Added federal tax | Average rate on the conversion |
|---|---|---|---|
| All at once in 2026 | $300,000 | about $77,214 | about 25.7% |
| $75,000 a year for four years | $300,000 total | about $51,400 ($12,850 a year) | about 17.1% |
| Fill only the 12% bracket, one year | $36,500 | about $4,380 | 12% |
Hypothetical example using 2026 federal brackets and the 2026 single standard deduction (IRS Rev. Proc. 2025-32) for every year. It ignores investment growth, state income tax and future inflation changes to brackets. The tax is paid from savings. Your numbers will differ.
Step by step
Find out what kind of money is in the plan
Ask your plan for a breakdown of your pre-tax money, Roth 401(k) money and any after-tax contributions. Each type is treated differently when it moves.
Open the receiving accounts
Open a Roth IRA. If you plan to convert over several years, also open a traditional IRA. It holds your pre-tax money until you convert it.
Request a direct rollover
Ask your plan to send the money straight to your new IRA custodian. A direct rollover has no mandatory withholding. A check made out to you has 20% withheld.
Convert the amount that fits your bracket
Move a set dollar amount from your traditional IRA to your Roth IRA each year. The 2026 12% bracket ends at $100,800 of taxable income for couples and $50,400 for single filers.
Set aside money for the tax
Pay the tax from your savings if you can, so your whole amount stays in the Roth. Make an estimated payment or raise your withholding elsewhere. That way you don't owe an underpayment penalty.
Common questions
Is converting a 401(k) to a Roth IRA taxable?
The pre-tax part is taxable as ordinary income in the year it moves. Roth 401(k) money and after-tax contributions move tax-free.
Is there a limit on how much 401(k) money I can convert?
No. There is no dollar limit and no income limit on rolling a 401(k) into a Roth IRA. Your practical limit is how much tax you want to pay in one year.
Do I pay the 10% early withdrawal penalty if I'm under 59½?
Not on a direct rollover to a Roth IRA. The penalty can apply to any amount withheld for taxes. It can also apply to converted money you take out within five years, before 59½.
Can I convert my 403(b), 457(b) or TSP the same way?
Yes. The same rollover rules apply to 403(b), governmental 457(b) and TSP accounts. Check whether your plan also offers in-plan Roth conversions.
Can I roll my required minimum distribution into a Roth IRA?
No. If you're old enough for RMDs, that year's RMD must come out first and can't be rolled over or converted. You can convert more after it's taken.
Can I undo a 401(k) to Roth IRA conversion?
No. Recharacterizing (undoing) a conversion has not been allowed since 2018. Once it's done, you owe the tax for that year.
Will I get a tax form for the rollover?
Yes. Your plan sends you Form 1099-R for the year the money left the plan. You or your tax preparer use it to report the taxable amount.
Sources
Facts on this page were last checked on November 9, 2026.
- IRS: Rollovers of retirement plan and IRA distributions · Direct rollovers, 20% mandatory withholding, 60-day rule, RMDs can't be rolled over. Read Nov 9, 2026.
- IRS: Rollovers of after-tax contributions in retirement plans · Splitting pre-tax and after-tax money (Notice 2014-54), earnings are pre-tax. Read Nov 9, 2026.
- IRS: Retirement plans FAQs on designated Roth accounts · In-plan Roth rollovers, 5-year recapture, Roth 401(k) time not counting toward the Roth IRA 5-year period. Read Nov 9, 2026.
- IRS: Exceptions to tax on early distributions · Age-55 separation from service exception applies to plans, not IRAs. Read Nov 9, 2026.
- IRS Publication 575, Pension and Annuity Income · Net unrealized appreciation on employer stock. Read Nov 9, 2026.
- IRS Rev. Proc. 2025-32 (2026 inflation adjustments) · 2026 brackets and standard deduction used in the example. Read Nov 9, 2026.
Who wrote this
This guide was written and fact-checked by the Secure Retirement Planner editorial team using IRS, CMS and Social Security sources listed above. We update guides when the law or yearly limits change. How we research.