How to Roll Over a 401(k) Into an IRA

Move your old 401(k) to an IRA in 4 steps to keep more investment options and potentially lower fees.

1. Choose between a direct or indirect rollover. A direct rollover means your old 401(k) provider sends the money straight to your new IRA — this is almost always the better choice. An indirect rollover means they cut you a check, but then you have just 60 days to deposit it into an IRA or you'll owe taxes and penalties. Direct rollovers avoid this risk entirely.
2. Open an IRA account at a brokerage or investment company. You'll need somewhere for the money to land before you can start the rollover process. Look for providers that offer commission-free trading on index funds and ETFs, low annual fees (under 0.25% for basic index funds), and good customer service. You can choose a traditional IRA (if your 401(k) was traditional) or convert to a Roth IRA (though you'll owe taxes on the conversion).
3. Contact your old 401(k) provider to start the rollover. Call the customer service number on your 401(k) statement and request a direct rollover to your new IRA. They'll send you paperwork to fill out, including the receiving account information from your new IRA provider. Most companies process rollovers within 2-4 weeks, though some take longer.
4. Choose your investments once the money arrives. Your rollover will likely arrive as cash in your new IRA account. You'll need to actually invest this money — it won't automatically buy anything. Many people choose broad market index funds that track the total stock market or a target-date fund that automatically adjusts over time.