How many 401k rollovers per year?

The IRS imposes certain restrictions on the number of times you can rollover 401(k)s and IRAs. Find out how many times you can rollover 401(k) per year.

3 min read

If you are looking for greater flexibility with your retirement money, you could consider rolling over your 401(k). The IRS allows 401(k) participants to move the retirement money from one retirement account to another. You can rollover your 401(k) funds to a new 401(k) or an IRA. However, 401(k) rollovers are subject to certain restrictions that participants must observe.

There is no limit on the number of 401(k) rollovers you can do. You can rollover a 401(k) to another 401(k) or IRA multiple times per year without breaking the once-per-year IRS rollover rules. The once-per-year IRS rule only applies to the 60-day IRA rollovers. You can only rollover the 60-day IRA rollover once per year, but there is no limit on direct trustee-to-trustee IRA rollovers. 

How Many 401(k) Rollovers per Year?

The once-per-year rule does not apply to 401(k) rollovers, and you can rollover multiple 401(k)s in a year. When you transfer money from one 401(k) to another 401(k), the check is made payable to the new 401(k) and not the name of the account holder. Therefore, this transfer is considered a trustee-to-trustee transfer, and hence, it is excluded from the once-per-year rule. Also, this rule does not apply to 401(k) rollovers to an IRA or Solo 401(k) account.

How Many IRA Rollovers per Year?

You can only rollover IRAs once per year, for all your aggregate IRAs. The once-per-year rule applies to the 60-day IRA rollover, where funds are withdrawn from one IRA account, and the account holder has 60 days to deposit the funds into another IRA account. The 60-day rollovers are considered a distribution since the account holder personally receives the check from their IRA; the check must be deposited to another IRA to avoid creating a tax liability.

However, direct IRA rollovers are excluded from the once-per-year rule. This type of rollover is also known as trustee-to-trustee rollover, where the IRA transfers the retirement money directly to another IRA. Trustee-to-trustee rollovers are not subjected to the 60-day deadline. These transfers are not considered distributions, hence are excluded from the once-per-year IRS rule.

How Many Roth IRA Rollovers per Year?

You can only rollover a Roth IRA to another Roth IRA once per year. The once-per-year Roth IRA rollover only applies to the 60-day rollover, and it applies across all separate Roth IRAs. Direct trustee-to-trustee rollovers are excluded from this rule.

Although Roth IRA rollovers are limited to one rollover per year, this rule does not apply to qualified plan rollovers such as 401(k), IRA, or Solo 401(k) to a Roth IRA. The rule also excludes Roth IRA rollovers to traditional IRA or 401(k).

What happens if you do more than one IRA rollover in a year?

If you make more than one IRA to IRA rollover or Roth IRA to Roth IRA rollovers, the subsequent rollovers are not treated as a tax-free rollover. Instead, the IRA will treat the additional rollovers as taxable distributions; you will pay income tax on the distribution at your tax bracket, and an additional 10% early distribution penalty if you are younger than age 59 ½. 

Additionally, if you exceed the once-per-year IRA rollover limit, the distribution may be treated as an excess contribution in your account. The IRS will impose a 6% penalty on the excess contribution for each year the excess amount remains in your account. If the excess contribution is corrected, the 6% penalty will not be imposed.

Will you pay taxes when you rollover from 401(k)?

If you rollover a 401(k) to another 401(k) or IRA, there are situations when you may owe taxes on the transaction. Usually, you must pay taxes when you rollover funds from a traditional 401(k) to a Roth 401(k) or Roth IRA, since funds are moved from a pre-tax account to an after-tax account.

For example, if you rollover from a traditional 401(k) to a Roth 401(k) or Roth IRA, you must pay taxes on the rollover, since a Roth 401(k) and Roth IRA are funded with after-tax dollars. In contrast, if you rollover from a traditional 401(k) to a traditional 401(k), you won’t pay tax on the rollover since both retirement accounts are pretax.

Taxes may also arise if you don’t complete the rollover within the 60-day period. Generally, when you opt for an indirect rollover, the 401(k) plan will send you a check with your 401(k) money, and you must deposit the check to a qualified retirement plan. If you don’t rollover the funds within 60 days, the money will be considered a taxable distribution subject to income taxes and a potential 10% early distribution penalty.

Can You Rollover Multiple 401(k) to IRA?

You can rollover multiple 401(k)s to an IRA within a year. Use Beagle to find your old 401(k)s left with former employers, and seamlessly rollover the old 401(k)s to an IRA. You can rollover all your 401(k)s to an IRA without worrying about the once-per-year rollover limit- 401(k) rollovers are excluded from this rule. An IRA has multiple benefits over an IRA, and you get a wider pool of investments and greater flexibility with your money.