Minds → Retirement & Social Security → How do you roll over a 401(k) without triggering tax, direct versus 60-day rollovers? Answer in under 100 words. Cite only eCFR (www.ecfr.gov) sources.
US FederalHow do you roll over a 401(k) without triggering tax, direct versus 60-day rollovers? Answer in under 100 words. Cite only eCFR (www.ecfr.gov) sources.
For distributions on or after January 1, 2025, avoid taxation by choosing between two methods: elect a **direct rollover**, where your 401(k) pays the funds straight to an IRA or other eligible retirement plan, or take an **indirect distribution** and contribute every dollar (including any amount withheld for taxes) to an eligible plan by the 60th day after you receive it; any portion not contributed within 60 days is included in gross income and may face a 10-percent additional tax.
Last verified: 2026-08-26 · Sources checked: 1/1 resolving · Next scheduled review: 2026-11-24
How it works
- Direct rollover: Section 401(a)(31) requires the plan to let you send the payment straight to an eligible retirement plan; you are deemed to irrevocably designate it as a rollover contribution, so nothing passes through your hands.
- 60-day (indirect) rollover: If you receive the money yourself, you must contribute it to an eligible retirement plan no later than the 60th day after receipt; the plan must withhold 20 percent under section 3405(c), which you must add back from your own funds.
Numbers & thresholds
| Item | Value |
|---|---|
| Rollover window (indirect) | 60 days after receipt |
| Mandatory withholding if not direct | 20% (section 3405(c)) |
| Additional tax if not rolled over | 10% (section 72(t)) may apply |
| Rules effective for | Distributions on or after January 1, 2025 |
Exceptions & edge cases
- Required minimum distributions under section 401(a)(9) are not eligible rollover distributions.
- The Commissioner may waive the 60-day deadline where failure would be against equity or good conscience (e.g., casualty or disaster).
- Each distribution received in a year gets its own separate 60-day deadline.
- Qualified plan loan offset amounts may be rolled over until the tax filing due date (including extensions); non-qualified offsets get only 60 days.
Sources
- [1]U.S. National Archives, Electronic Code of Federal Regulations — 26 CFR 1.402(c)-2 - Eligible rollover distributions · as of 2026-08-26
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