401(k) Rollover Guide: Should You Roll Over or Keep Your Old 401k?

If you’ve recently left your job, one of the biggest financial decisions you’ll face is what to do with your old 401(k). Should you roll it into an IRA, move it to your new job, or leave it? 401(k) Rollover Guide: Should You Roll

Each option has pros and cons—affecting your fees, investment choices, taxes, and long-term flexibility. The process can feel overwhelming, but the good news is that rolling over (or deciding not to) is simpler than most people think.

In this guide, we’ll break down:

• The main options for your old 401(k)
• When it makes sense to roll over vs. leave it
• How the rollover process works step by step
• Top providers for IRA rollovers
• My personal experience with making this choice

What Is A 401(k)? Rollover?

A 401(k) rollover is when you move money from an old employer-sponsored retirement account into another tax-advantaged account, such as an IRA or a new employer’s 401(k). 401(k) Rollover Guide: Should You Roll

There are two main types of rollovers:

• Direct Rollover (Recommended): Your old plan sends funds directly to your new account. No taxes withheld, no penalties.
• Indirect Rollover: Your old plan cuts you a cheque, and you have 60 days to deposit it into a new account. If you miss the deadline, the IRS treats it as a taxable distribution with possible penalties if you’re under 59½. 401(k) Rollover Guide: Should You Roll

Should You Roll Over or Keep It? (Pros & Cons)

When you leave a job, you typically have three options for your 401(k): leave it, roll it into a new employer’s plan, or move it to an IRA. Here’s how they compare:

How To Roll Over Your 401(k) Step-By-Step

Rolling over a 401(k) is easier than most people think. Here’s how it works: 401(k) Rollover Guide: Should You Roll

1. Choose your destination account → Decide if you want an IRA or your new employer’s 401(k).
2. Open the account. For an IRA, choose a provider like Fidelity, Vanguard, or M1 Finance.
3. Request a direct rollover → Contact your old plan provider and ask for funds to be transferred directly.
4. Confirm the transfer → Check that funds are deposited into the correct account.
5. Reinvest the money → Set up your investments according to your retirement strategy.

⚠️ Common Mistake: If you take an indirect rollover (a cheque made out to you), your old plan may withhold 20% for taxes. You’ll need to replace that money out of pocket to avoid penalties. 401(k) Rollover Guide: Should You Roll

If that sounds challenging, your new provider (i.e., Fidelity or Vanguard) will usually handle everything for you. They will do the paperwork required, reach out to your old provider, get things transferred, and ensure that your new account is set up.

If even that sounds overwhelming, there are services available like Meet Beagle and Capitalise that will do it for you (sometimes for free). 401(k) Rollover Guide: Should You Roll

Best Places To Roll Over Your 401(k)

We have a list of the best IRA providers that have proven themselves for years. These companies are solid choices for where to roll over your 401k. They offer many of the same options, so it’s personal preference on where you want to invest.

To start the process, all you have to do is go to one of these companies, select “Open Rollover IRA” and provide your 401k information. The company will handle the rest. 401(k) Rollover Guide: Should You Roll

Fidelity

Fidelity is a full-service broker that is known as an industry leader. They offer a great no-fee IRA account, and they offer a variety of commission-free investing options.

They even have mutual funds with zero expense ratios.

Vanguard
Vanguard has always been known as a market leader in low-cost investing. However, when you move to Vanguard, you’re limited to Vanguard funds unless you pay much higher commissions. 401(k) Rollover Guide: Should You Roll

Many companies are starting to strongly compete with Vanguard, but Vanguard is still a strong choice.

Open an account at Vanguard here >>

Charles Schwab
Schwab is another of the best broking firms out there, and they have been consistently adding new features that make them a compelling choice to have your IRA (with no monthly maintenance fees) along with basically every type of account you can imagine. 401(k) Rollover Guide: Should You Roll

Open an account at Charles Schwab >>

Tax Considerations And Common Mistakes
Before you roll over, consider:

Traditional vs. Roth IRA → Rolling into a Roth triggers taxes now but grows tax-free later.
The Pro-Rata Rule → If you plan to use a backdoor Roth IRA, having a traditional IRA complicates things.
60-Day Rule → Miss the deadline on an indirect rollover, and you’ll face taxes and penalties.
Account Closing Fees → Some brokers charge $100–$150 to close an IRA (check before moving).
My Personal Experience (Harry’s Story) 401(k) Rollover Guide: Should You Roll
Recently, I left my employer of four years, and one of the many things I had to consider was what to do with my 401(k). I never realised how much work it was to leave your job: I had to figure out which day I was going to quit on, where to do a 401(k) rollover, and move my HSA, and I even had to get new health insurance. 401(k) Rollover Guide: Should You Roll

Although I started off my career with contributions only up to the company match, I made sure to increase my contribution every time I got a raise or merit increase. After a couple of years, I had finally maxed out my account, and after four years, I had a pretty significant amount waiting for me.

Once I left my job, I was always planning on transferring my money to Vanguard, where I hold my Roth IRA. But when it came time to do it, I felt like there were some things I wasn’t considering. I’ve only worked for one company since I graduated college, so all of this was new to me. 401(k) Rollover Guide: Should You Roll

I knew that I didn’t want to convert to a Roth since I’d have to pay taxes. And because I worked for a top Fortune 500 company, my 401(k) plan was pretty solid. They had a wide variety of choices and ultra-low fees. Although there was a monthly $2.55 account maintenance fee, that only amounted to an additional expense of 0.03% on a $100,000 portfolio.