It depends on your plan. Some 401(k) plans allow in-service rollovers — meaning you can move money to an IRA while still employed. Others restrict rollovers until you leave the company or reach age 59½.
Quick Answer: When You Can Roll Over While Employed
| Situation | Can You Roll Over? |
|---|---|
| Age 59½+ with most plans | Usually yes |
| Under 59½ — your own contributions | Rarely (plan-specific) |
| Under 59½ — employer match/profit sharing | Sometimes (after vesting) |
| After-tax (non-Roth) contributions | Often yes at any age |
| Roth 401(k) contributions | Plan-dependent |
| Former employer’s 401(k) held in current plan | Usually yes anytime |
The only way to know for sure: Call your plan administrator or check your Summary Plan Description (SPD).
What Is an In-Service Rollover?
An in-service rollover transfers some or all of your 401(k) balance to an IRA while you’re still working for the employer that sponsors the plan. The money moves directly from one account to another — no taxes, no penalties, and you continue contributing to the 401(k) as normal.
| Feature | In-Service Rollover | Standard Rollover (after leaving) |
|---|---|---|
| Still employed | Yes | No — must separate from employer |
| Tax consequences | None (direct rollover) | None (direct rollover) |
| Continue contributing to 401(k) | Yes | No |
| Employer match continues | Yes | N/A |
| Age requirement | Often 59½+ | None |
Why Roll Over While Still Employed?
| Reason | Details |
|---|---|
| Better investment options | IRAs at Vanguard, Fidelity, or Schwab offer thousands of low-cost funds vs. the limited menu in most 401(k) plans |
| Lower fees | Many 401(k) plans charge 0.5-1.5% in administrative fees; IRA fees can be 0.03-0.10% |
| More control | Choose individual stocks, ETFs, bonds, or alternative investments not available in the 401(k) |
| Mega backdoor Roth | Roll after-tax contributions to a Roth IRA for tax-free growth |
| Consolidation | Combine old 401(k) money with existing IRA accounts |
The Fee Difference Over Time
| 401(k) Balance | Annual Fee Difference (1.0% vs 0.05%) | Cost Over 20 Years |
|---|---|---|
| $100,000 | $950/year | ~$26,000 |
| $250,000 | $2,375/year | ~$65,000 |
| $500,000 | $4,750/year | ~$130,000 |
Includes lost compounding on fees paid.
How to Do an In-Service Rollover
| Step | Action |
|---|---|
| 1 | Confirm eligibility — call plan administrator or check your SPD |
| 2 | Open an IRA at your preferred brokerage (if you don’t have one) |
| 3 | Request a direct rollover — specify trustee-to-trustee transfer |
| 4 | Choose the amount — you may roll partial or full eligible balance |
| 5 | Complete paperwork — your 401(k) provider and IRA provider both have forms |
| 6 | Funds transfer — typically 5-15 business days |
Critical: Always request a direct rollover (trustee-to-trustee). If they send you a check, 20% mandatory federal withholding applies and you have 60 days to deposit the full amount (including the withheld portion) into the IRA or it’s treated as a taxable distribution.
Types of Rollovers
| Rollover Type | Tax Treatment |
|---|---|
| Pre-tax 401(k) → Traditional IRA | No tax due — same tax treatment |
| Pre-tax 401(k) → Roth IRA | Income tax due on full amount (Roth conversion) |
| Roth 401(k) → Roth IRA | No tax due — same tax treatment |
| After-tax 401(k) → Roth IRA | Tax only on earnings, not contributions (mega backdoor Roth) |
The Mega Backdoor Roth Strategy
If your plan allows after-tax contributions AND in-service rollovers of those contributions, you can execute the mega backdoor Roth:
| Step | Action |
|---|---|
| 1 | Max out pre-tax/Roth 401(k) contributions ($23,500) |
| 2 | Make after-tax contributions up to the total 415(c) limit ($70,000 total in 2026 including employer match) |
| 3 | Immediately roll the after-tax contributions to a Roth IRA |
| 4 | Result: up to $46,500+ extra goes into a Roth IRA tax-free |
This strategy is available to fewer than half of 401(k) plans but is extremely powerful for high earners who have maxed out other tax-advantaged options.
When NOT to Roll Over
| Situation | Why Stay in the 401(k) |
|---|---|
| Age 55-59½ and may leave job | Rule of 55 allows penalty-free 401(k) withdrawals; IRAs require 59½ |
| Lawsuit or creditor risk | 401(k)s have federal ERISA creditor protection; IRA protection varies by state |
| Plan has low-cost institutional funds | Some large-company plans have expense ratios lower than retail funds |
| Stable value funds | Unique to 401(k) plans — guaranteed principal with bond-like returns |
| NUA on company stock | Net unrealized appreciation tax treatment is lost if stock is rolled to IRA |
What to Ask Your Plan Administrator
- Does the plan allow in-service rollovers?
- Is there an age requirement (typically 59½)?
- Which contribution types can be rolled (employee, employer, after-tax)?
- How often can I do an in-service rollover (some limit to once per year)?
- Is there a minimum balance that must remain in the plan?
Related: Can You Have a 401(k) and IRA? | 401(k) Contribution Limits | Traditional vs. Roth IRA