Rolling over a 401(k) to an E*TRADE IRA is a five-step process that costs nothing and takes one to three weeks, with no taxes or penalties when done as a direct rollover. ETRADE’s main appeal for rollover clients is the Power ETRADE platform — one of the best options trading tools available in an IRA — combined with $0 commissions and the Core Portfolios robo-advisor for those who prefer automated investing.
Why Roll Over Your 401(k) to E*TRADE?
A 401(k) rollover to an IRA is generally worth doing when you leave an employer, because it expands your investment choices and consolidates your retirement savings. E*TRADE is the right destination if:
- You’re an active options trader — Power E*TRADE is available inside an IRA account, with full options chain analysis and paper trading to test strategies
- You qualify for the volume discount — if you place 30+ options contracts per month, E*TRADE drops its per-contract fee from $0.65 to $0.50
- You want a low-fee robo-advisor — Core Portfolios charges 0.30% annually with a $500 minimum, among the lower-cost automated options
- You want 24/7 live phone support — E*TRADE’s customer service is staffed by live agents around the clock
Before committing: note that ETRADE charges a $75 ACAT-out fee if you later want to move your account to another brokerage. If you’re not certain you’ll stay with ETRADE long-term, Fidelity and Schwab offer $0 ACAT-out fees, giving you more flexibility.
Direct vs Indirect Rollover
Always choose a direct rollover. Here’s the critical difference:
| Feature | Direct rollover | Indirect rollover |
|---|---|---|
| Check payable to | E*TRADE on your behalf | You personally |
| Employer withholds 20% | No | Yes — mandatory |
| Penalty risk | None | 10% early withdrawal if 60-day deadline missed |
| Recommended? | Yes | Avoid |
With an indirect rollover, your employer is required to withhold 20% of the distribution for federal taxes. To complete the rollover tax-free, you must deposit the entire original balance — including the withheld 20%, which you’d need to cover from your own savings — into the IRA within 60 days. Failing to cover the shortfall results in taxable income plus a 10% early withdrawal penalty if you’re under 59½.
The IRS allows only one indirect rollover per 12-month period. There is no limit on direct rollovers.
Step-by-Step: Roll Over a 401(k) to E*TRADE
Step 1: Open an E*TRADE Rollover IRA
Go to etrade.com and open a Rollover IRA. For a Roth 401(k), open a Roth IRA instead. You’ll need:
- Social Security number
- Government-issued ID
- Bank account details for future transfers
There is no minimum deposit. E*TRADE approves most accounts within one business day. You can also apply with options trading permissions at this stage if you plan to trade options inside your IRA.
Step 2: Get Your E*TRADE IRA Account Number
After account opening, log in to etrade.com and locate your IRA account number in the account summary. You’ll give this to your old plan administrator in the next step.
Step 3: Contact Your Old Plan Administrator
Call your former employer’s HR department or benefits administrator and request a direct rollover to E*TRADE. Many plans now offer online rollover portals — check the plan’s participant website first.
Provide:
- Your E*TRADE IRA account number
- Custodian name: E*TRADE Securities LLC (or Morgan Stanley Smith Barney LLC — confirm the exact payee name with E*TRADE at 800-387-2331 before requesting the check)
- Rollover mailing address from E*TRADE
Step 4: Receive and Deposit the Rollover Check
The check should be made payable to:
E*TRADE Securities LLC FBO [Your Full Name] Account: [Your E*TRADE IRA Account Number]
If the plan mails the check to you:
- Mobile deposit — fastest; use the ETRADE or Power ETRADE mobile app
- Mail to E*TRADE — use the rollover mailing address from etrade.com or provided by customer service
- Call 800-387-2331 — a representative can confirm the correct mailing address and check payee name
Step 5: Invest the Funds
Once E*TRADE credits your account, the cash is uninvested. Log in and place buy orders for your chosen investments:
Option A — ETF portfolio for long-term investors: Low-cost ETFs covering the major asset classes — for example, a broad US market ETF, an international ETF, and a bond ETF. E*TRADE charges $0 for all ETF trades.
Option B — Core Portfolios (robo-advisor): Move funds into E*TRADE Core Portfolios (0.30% annual fee, $500 minimum). Core Portfolios automatically selects ETFs and rebalances quarterly. See the E*TRADE IRA guide for details.
Option C — Active self-directed trading: If you intend to use Power E*TRADE for options strategies, confirm your options approval level after the rollover. Standard IRA accounts are typically approved for covered calls and cash-secured puts; higher-risk strategies may require additional approval.
Timeline
| Stage | Typical timeframe |
|---|---|
| Open E*TRADE IRA | 1 business day |
| Old plan processes request | 3–10 business days |
| Check mailed/wired to E*TRADE | 1–5 business days |
| E*TRADE credits account | 1–2 business days after receipt |
| Total (typical) | 7–21 business days |
Worked Example
Tom, age 45, leaves his employer with $67,000 in a traditional 401(k).
- He opens an E*TRADE Rollover IRA online (free, no minimum)
- He calls his former plan administrator and requests a direct rollover check payable to “E*TRADE Securities LLC FBO Thomas Martinez”
- The plan mails the check after 7 business days; Tom mobile deposits it via the E*TRADE app
- E*TRADE credits the $67,000 within 2 business days
- Tom invests $67,000 across three ETFs for a diversified retirement portfolio
Total taxes owed on the rollover: $0. Total fees paid to ETRADE: $0. Future consideration: ETRADE’s $75 ACAT-out fee applies if Tom later moves his account to another brokerage.
Common Rollover Mistakes
- Not confirming the correct check payee — call E*TRADE at 800-387-2331 to confirm the exact name for the check payable line before your plan administrator issues it
- Rolling Roth 401(k) into a Traditional IRA — this triggers taxes on the entire balance; always match account types
- Taking an indirect rollover — the 20% mandatory withholding is avoidable with a direct rollover
- Leaving cash uninvested — the rollover arrives as uninvested cash; you must place buy orders
- Not checking ACAT-out policy before committing — ETRADE’s $75 outgoing transfer fee means switching later costs money; confirm you’re comfortable with ETRADE before rolling over
See the full E*TRADE review and compare rollover IRA options at the best brokerage accounts guide.
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