Rolling a Traditional 401(k) into a Roth IRA is one of the largest single-event tax decisions most savers will face. Because the 401(k) holds pre-tax money, every dollar moved to a Roth is treated as ordinary income in the year of the rollover. The calculator above estimates that upfront tax cost and projects how the post-tax balance compounds tax-free.
Below we walk through when this rollover makes sense, the mechanics of doing it without triggering withholding, and the alternatives — partial conversions, leaving it in the 401(k), or rolling to a Traditional IRA first.
When a 401(k) to Roth rollover makes sense
The strongest case is leaving a job in a low-income year — for example, mid-career sabbatical, switching to part-time work, or early retirement. Your marginal rate may temporarily drop into the 12% or 22% bracket, giving you a window to convert at a much lower cost than your career-average rate. The 401(k) to Roth rollover guide walks through the year-by-year planning.
It's also worth considering if you expect higher tax rates in retirement (large pension, big Social Security, RMD pressure, or political risk to current rates). Conversely, if your retirement income will be lower than your working income, a rollover may cost more than it saves.
Direct rollover vs. 60-day rollover
Always request a direct rollover (trustee-to-trustee transfer). The 401(k) administrator sends the funds directly to your Roth IRA custodian, no money passes through your hands, and there's no withholding.
A 60-day indirect rollover is risky: the 401(k) administrator must withhold 20% for federal tax, you have 60 days to deposit the full pre-withholding amount into the Roth IRA (making up the 20% from outside funds), and missing the deadline turns the entire amount into a taxable distribution with potential 10% penalty.
Spreading the tax across multiple years
You don't have to convert the entire 401(k) in one year. If your administrator allows partial rollovers, you can move smaller amounts each year to keep your taxable income within a target bracket. For most savers, the goal is to convert just enough to fill the 24% bracket without spilling into 32%.
If your administrator doesn't allow partial rollovers, an intermediate step is to roll the entire 401(k) into a Traditional IRA first (which is a tax-free transfer) and then convert portions of that Traditional IRA to a Roth across multiple years — see bracket-filling conversions for the optimal sizing approach.
Rolling Roth 401(k) money is different
If your 401(k) holds Roth (after-tax) contributions, rolling that portion into a Roth IRA is tax-free. Many plans hold a mix of pre-tax and Roth balances; the administrator will split the rollover into two checks or direct transfers.
An advantage of rolling Roth 401(k) money out: Roth 401(k)s previously had RMDs (eliminated for 2024+ under SECURE Act 2.0), and Roth IRAs never have lifetime RMDs. Moving the money simplifies estate planning.
After-tax (non-Roth) 401(k) contributions
If your 401(k) allows after-tax (not Roth) contributions on top of the standard elective deferral, the rollover treatment is special: the after-tax basis can go directly to a Roth IRA tax-free, while any associated earnings on those after-tax contributions go to a Traditional IRA (or are taxed in conversion to Roth). This is the foundation of the mega backdoor Roth strategy.
Frequently asked questions
Will I pay tax on a 401(k) to Roth rollover?+
Yes. The pre-tax portion is taxed as ordinary income in the year of the rollover. Roth 401(k) money rolls over tax-free.
Should I do a direct or indirect rollover?+
Always direct (trustee-to-trustee). Indirect rollovers force 20% withholding and risk turning the whole amount taxable if you miss the 60-day window.
Can I roll just part of my 401(k)?+
It depends on the plan. Many allow partial rollovers; some don't. If yours doesn't, roll the full balance into a Traditional IRA first, then convert portions over multiple years.
Does the rollover count toward my Roth contribution limit?+
No. Rollovers and conversions are separate from the $7,000 / $8,000 annual contribution limit.
When is the deadline for a rollover?+
Rollovers must happen in the tax year you want them attributed to. There is no extension into the following April like there is for contributions.
