A direct 401k rollover to an IRA typically costs $0 to $200 in total fees for most people. The rollover itself is tax-free if done correctly, but you may encounter outgoing transfer fees from your old 401k plan ($50–$200), IRA account setup fees, and ongoing investment expense ratios at your new custodian.
What Fees Can You Expect During a 401k Rollover?
Understanding the full cost picture of a 401k rollover means looking at fees from two sides: what your old plan charges to send money out, and what your new IRA custodian charges to receive it.
Outgoing Fees From Your 401k Plan
Many employer-sponsored 401k plans charge an administrative fee when you request a distribution or rollover. These fees typically range from $50 to $200 and are deducted directly from your account balance before funds are transferred. Some plans charge nothing at all — it depends entirely on your plan administrator and the third-party recordkeeper they use. Check your Summary Plan Description (SPD) or call your HR department to find out the exact fee before initiating the rollover.
Incoming Fees at Your New IRA
Most major IRA custodians — including large brokerage firms and online platforms — charge $0 to open a new IRA and accept an incoming rollover. However, some custodians, particularly smaller banks or credit unions, may charge an annual maintenance fee ranging from $25 to $75 per year. Always confirm the fee schedule in writing before opening your new account.
Ongoing Investment Fees Inside the IRA
After the rollover is complete, your money will be invested in funds or other assets that carry their own expense ratios. Actively managed mutual funds often charge 0.50% to 1.50% annually, while index funds and ETFs may charge as little as 0.03% to 0.20%. Over decades, this difference compounds significantly. These are not rollover fees per se, but they are a real cost of where your money lives after the move.
Taxes on a 401k Rollover to IRA: What You Owe
A properly executed rollover from a traditional 401k to a traditional IRA is a non-taxable event. No income taxes are due, and no penalties apply — as long as you follow IRS rules. Here is where mistakes become expensive.
Direct vs. Indirect Rollovers
There are two types of rollovers, and the tax consequences are very different:
- Direct rollover: Funds move directly from your 401k to your IRA. No taxes are withheld. This is the cleanest and most cost-effective method.
- Indirect rollover: A check is made payable to you. Your plan is required by law to withhold 20% for federal income taxes. You then have 60 days to deposit the full original amount — including the withheld 20% out of your own pocket — into your IRA to avoid owing taxes and penalties on the withheld portion.
The 60-Day Rule and What Happens If You Miss It
If you receive funds via an indirect rollover and miss the 60-day deadline, the IRS treats the undeclared amount as a taxable distribution. If you are under age 59½, you also face a 10% early withdrawal penalty on top of ordinary income taxes. Depending on your tax bracket and state, this can result in a combined tax burden of 30% to 45% of the withdrawn amount. Use our Early Withdrawal Penalty Calculator to estimate this cost before making any decisions.
Rolling a Traditional 401k Into a Roth IRA
If you roll a traditional (pre-tax) 401k into a Roth IRA, the converted amount is treated as taxable income in the year of conversion. This is called a Roth conversion. The entire converted balance is added to your gross income, which can push you into a higher tax bracket. There is no early withdrawal penalty on the converted amount itself, but the tax bill can be substantial. This is a cost-intensive move that requires careful planning with a tax professional.
The 401k Rollover Timeline: How Long Does It Take?
The actual mechanics of moving money from a 401k to an IRA can take anywhere from a few days to six weeks, depending on several factors.
Typical Rollover Timeline
- Step 1 – Open your new IRA: 1–3 business days at most major online custodians
- Step 2 – Request the rollover from your old plan: 3–10 business days for processing, depending on the plan administrator
- Step 3 – Check or wire is issued: If a check, mailing adds 5–7 business days; wire transfers are typically 1–3 business days
- Step 4 – Funds credited to your new IRA: 1–3 business days once received
Some legacy 401k plans managed by older recordkeepers can take four to six weeks to process outgoing requests. Staying in contact with both your old plan and new custodian during this period is important to ensure nothing gets lost or delayed past any applicable deadline.
Use Our Free Calculators
Understanding the cost of a rollover is just the first step. Use these free tools to model your specific situation:
- 401k Rollover Calculator — Estimate the net value of your rollover after fees and potential tax impact.
- Early Withdrawal Penalty Calculator — See how much you could owe if a rollover goes wrong and is treated as a distribution.
- Traditional vs Roth IRA Calculator — Compare the long-term cost difference between rolling into a traditional IRA versus a Roth IRA.
Frequently Asked Questions
Does rolling over a 401k count as income?
A direct rollover from a traditional 401k to a traditional IRA does not count as taxable income. However, a rollover from a traditional 401k to a Roth IRA does count as taxable income in the year of the conversion, since you are moving pre-tax money into an after-tax account.
Can my old employer charge me a fee to roll over my 401k?
Yes. Many plan administrators charge an outgoing distribution or transfer fee, typically between $50 and $200. This fee is usually deducted from your account balance before the funds are sent. Review your plan documents or call your HR department to confirm the exact amount.
Are there any fees to open a rollover IRA?
At most major online brokerage firms, there is no fee to open a rollover IRA. Some smaller banks or financial institutions may charge a one-time setup fee or annual maintenance fee. Always compare fee schedules before selecting a custodian.
What happens if I accidentally miss the 60-day rollover window?
If you miss the 60-day deadline on an indirect rollover, the IRS treats the undeclared amount as a taxable distribution. If you are under 59½, a 10% early withdrawal penalty also applies. In hardship situations, the IRS may grant a waiver, but this requires filing documentation and is not guaranteed.
How many rollovers can I do per year?
The IRS limits indirect (60-day) rollovers to one per 12-month period across all IRAs. This limit does not apply to direct rollovers (trustee-to-trustee transfers), which can be done an unlimited number of times per year. Using direct rollovers is the safest and most cost-efficient method.
Written by James Whitfield | Updated April 2026 | For educational purposes only. Always consult a qualified financial professional before making retirement decisions.