Making a 401k plan rollover-eligible typically requires a formal plan amendment, which can cost between $500 and $5,000 or more depending on plan complexity. Employers pay these fees to their third-party administrators (TPAs) or ERISA attorneys. Employees generally do not pay amendment fees directly, but they may affect plan options available to you.
What Are Plan Amendment Fees and Who Pays Them?
When an employer wants to change the rules governing their 401k plan — including whether participants can roll money out, take in-service distributions, or accept incoming rollovers — the plan document must be formally amended. This is a legal and administrative process governed by ERISA and IRS regulations.
Here is a breakdown of who typically bears these costs:
- Employer/Plan Sponsor: Almost always pays the amendment fee directly to the TPA or ERISA attorney who drafts the amendment language.
- Third-Party Administrator (TPA): Charges the employer for drafting, reviewing, and filing the amendment. Fees typically range from $500 to $2,500 for standard amendments.
- ERISA Attorney: If the amendment is complex or involves non-standard provisions, an attorney may be retained at hourly rates of $300 to $600 per hour, pushing total costs to $3,000–$5,000 or higher.
- Employees/Participants: Do not typically pay amendment fees directly. However, some plan documents allow amendment costs to be charged to plan assets, which indirectly affects all participants.
It is important to check your Summary Plan Description (SPD) to understand whether administrative costs, including amendments, can be drawn from plan assets. If so, this is a cost that touches your retirement balance even if it does not appear as a line-item deduction on your statement.
Specific Costs: Types of Amendments That Affect Rollover Eligibility
Not every plan amendment is the same. The cost depends heavily on what change is being made. Here are the most common amendments related to rollover eligibility and their typical price ranges:
Enabling Incoming Rollovers
Some plans are not set up to accept rollover contributions from other retirement accounts. Adding this feature requires a plan amendment. Standard cost: $500 to $1,500 through a TPA.
Adding In-Service Distribution Provisions
This allows participants to roll money out of the plan while still employed, typically after age 59½. These amendments are slightly more complex. Standard cost: $750 to $2,000.
Restating the Entire Plan Document
Every six years, the IRS requires plan sponsors to fully restate their plan document to incorporate regulatory changes. A full restatement, which can include rollover-eligibility updates, typically costs $1,500 to $5,000 depending on plan complexity and provider.
Corrective Amendments via IRS Voluntary Correction Program (VCP)
If a plan has been operating incorrectly — for example, allowing rollovers that the plan document did not actually permit — the employer may need to file a correction through the IRS VCP. VCP filing fees are based on plan assets and currently range from $1,500 to $3,500 for most small-to-mid-size plans, before attorney fees.
Prototype vs. Individually Designed Plans
Plans using a pre-approved prototype document (offered by most large recordkeepers like Fidelity or Vanguard) generally have lower amendment costs because the provider handles most of the compliance work. Individually designed plans — common among larger employers — carry higher amendment costs because every change must be custom-drafted.
How Plan Amendments Affect Your Rollover Timeline
Plan amendments do not happen overnight, and their timing can directly affect when you can execute a rollover. Understanding this timeline helps you avoid unnecessary delays or tax mistakes.
- Drafting and Review: Once an employer requests an amendment, the TPA or attorney typically needs 2–6 weeks to draft and review the language.
- IRS Pre-Approval (if required): Certain amendments require IRS pre-approval through a determination letter, which can take 6–12 months. Most routine rollover-related amendments do not require this.
- Adoption Deadline: Some amendments must be adopted by a specific IRS deadline — typically the last day of the plan year in which the change is effective, or in some cases by the tax filing deadline of the employer.
- Participant Notice Requirements: Certain amendments affecting participant rights, including rollover options, may require 15–30 days advance notice to participants before taking effect.
- Effective Date vs. Adoption Date: An amendment can be adopted in 2026 but made effective retroactively to January 1, 2026, in some circumstances. This distinction matters for compliance but does not change when you can actually execute a rollover.
If you are waiting on a plan amendment before you can roll over your 401k balance, confirm the amendment’s effective date with your plan administrator before initiating any transfer. A rollover that happens before the effective date of a new provision may be considered an impermissible distribution.
What Participants Should Ask Their Plan Administrator
As a participant, you have rights under ERISA to information about your plan. Here are specific questions to ask if rollover eligibility is unclear:
- Does the current plan document permit incoming rollover contributions?
- Does the plan allow in-service distributions or rollovers before separation from service?
- Has the plan been restated within the last six years?
- Are any amendment costs charged to plan assets rather than paid by the employer?
- What is the expected timeline if an amendment is needed to enable my rollover?
You are entitled to a copy of your Summary Plan Description (SPD) free of charge. You can also request the actual plan document, though fees of up to $0.25 per page may apply for copies.
Use Our Free Calculators
Understanding rollover fees and amendment costs is just one part of the picture. Use these free tools to model the full financial impact of your rollover decisions:
- 401k Rollover Calculator — Estimate the net value of your rollover after fees and taxes.
- Early Withdrawal Penalty Calculator — See what you would owe if a distribution does not qualify as a valid rollover.
- Traditional vs Roth IRA Calculator — Compare after-tax outcomes when choosing a rollover destination account.
Frequently Asked Questions
Do employees ever pay 401k plan amendment fees directly?
Rarely. Amendment fees are almost always paid by the employer. However, some plan documents allow administrative expenses, including legal and amendment costs, to be charged to plan assets. This indirectly affects participants’ account balances.
How long does a plan amendment take to become effective?
Most routine amendments take 2–6 weeks to draft and adopt. Some require IRS submissions that can take much longer. Always confirm the effective date with your plan administrator before initiating a rollover.
Can a plan refuse to allow rollovers?
Yes. Plans are not required to accept incoming rollover contributions or permit in-service rollover distributions. Whether your plan allows these transactions is determined entirely by the plan document.
What happens if my employer made a rollover mistake because the plan wasn’t amended?
If a plan allowed transactions not permitted by its document, the employer may need to correct the error through the IRS Voluntary Correction Program (VCP). Correction costs typically range from $1,500 to $5,000 or more in fees and attorney costs.
Is there a way to find out if my plan is rollover-eligible without asking HR?
You can request a copy of your Summary Plan Description (SPD) directly from the plan administrator. The SPD must be provided free of charge and will outline distribution and rollover rules. The full plan document provides even more detail.
Written by James Whitfield | Updated April 2026 | For educational purposes only. Always consult a qualified financial professional before making retirement decisions.