IRA Rollover Chart: Where Can You Roll Over Your Retirement Account?

One of the most common reasons for rolling over a retirement account is to move it out of a former employer’s plan. In that case, a 401(k) is rolled into an IRA at another brokerage of your choosing. There are a few benefits to doing this:

• More diversification: Employer retirement plans generally have just a few funds available, which translates into insufficient diversification. Maybe there is an all-world index, an S&P 500 fund, and some bond funds. There may be a handful or so of such offerings. Want to invest in oil, real estate, emerging markets, a specific country, high tech, etc.? You’ll often be out of luck.
• Lower fees: Most employer plan funds also have high fees. While fund fees have come down greatly in recent years, rolling your 401(k) into an IRA will often save you a few tenths of a percentage point in fund fees. Fund fees aren’t the only fees to consider. There are also employer plan administrative fees as well. Most IRA plans only have fund fees.
• More control: Not only do you have more diversification in an IRA, you control when money goes into the account and how. There can also be some benefits when it comes time to pull money out during retirement, depending on what you roll into.

In addition to leaving an employer, there are other reasons to roll over. You might have two or more retirement plans at your previous employer. A rollover offers the chance to consolidate them into one plan, which will provide easier management of those funds.

Finally, you might not have any reason to roll funds over into another account. If your previous employer’s plan offers great diversification and low fees, it might be difficult to compete with that. You could even do an IRA to 401k reverse rollover. 

Let’s answer the question of where you can roll your retirement account to. Depending on the account type, you can roll into a number of retirement account types. The IRS has very specific rollover guidelines.

The most restrictive rollovers are the Roth IRA, which can only be rolled into another Roth IRA, and the designated Roth account, which can only roll into another designated Roth account and a Roth IRA.

Note that each plan listed below can be rolled to the same plan at a different brokerage. For example, a Roth IRA can be rolled into another Roth IRA.

• Roth IRA: Can’t be rolled into any other account type.
• Traditional IRA: Can be rolled to Roth IRA, SEP-IRA, 457(b), pre-tax qualified plan, and pre-tax 403(b).
• SIMPLE IRA: Can be rolled to the following after two years: Roth IRA, traditional IRA, SEP-IRA, 457(b), pre-tax qualified plan, and pre-tax 403(b). The two-year wait doesn’t apply if rolling into another SIMPLE IRA.
• SEP-IRA: Can be rolled to Roth IRA, traditional IRA, 457(b), pre-tax qualified plan, and pre-tax 403(b).
• 457(b): Can be rolled to Roth IRA, traditional IRA, SEP-IRA, pre-tax qualified plan, pre-tax 403(b), and a designated Roth account.
• Pre-tax qualified plan: Can be rolled to Roth IRA, traditional IRA, SEP-IRA, 457(b), pre-tax 403(b), and a designated Roth account.
• Pre-tax 403(b): Can be rolled to Roth IRA, traditional IRA, SEP-IRA, 457(b), pre-tax qualified plan, and a designated Roth account.
• Designated Roth account: Can only be rolled to Roth IRA.

Note, rolling from a pre-tax account to a Roth account may have tax implications. Also, to roll into some plans (such as a 401k or defined benefit plan, the plan must allow it). 

If you aren’t sure which brokerage to roll your new plan to, we’ve identified the top brokerages in our article, The Best Traditional and Roth IRA Accounts of 2020. Some of the names listed you’ll already be familiar with, such as Vanguard, Fidelity, Schwab, and Betterment. Some names you may not have heard of. You really can’t go wrong with any of them.

Rolling over a retirement plan is not difficult or time-consuming. Just follow both plan administrators’ instructions and you should have a hassle-free rollover experience.