Fee-only financial advisors for IRA rollover strategy.

A direct rollover from a traditional 401(k), 403(b), 457, or TSP into a traditional IRA is completely tax-free — your plan issues Form 1099-R with distribution code G, and the taxable amount on your Form 1040 is $0. A Roth conversion (rolling traditional IRA or pre-tax 401(k) funds into a Roth IRA) is ordinary income in the year you convert, raising your AGI and potentially triggering Medicare IRMAA surcharges ($109,000 single / $218,000 MFJ first tier in 2026). Rule of thumb: traditional-to-traditional is tax-free; traditional-to-Roth is taxable.

If you take an indirect rollover — the funds are sent to you personally rather than directly to the receiving IRA custodian — you have exactly 60 calendar days from the date of receipt to deposit the full original amount (including any withheld federal tax) into the new IRA. Missing the deadline converts the entire distribution to taxable income, plus a 10% early withdrawal penalty if you are under age 59½. IRS Rev. Proc. 2016-47 allows self-certification to waive the 60-day rule for qualifying delays — hospitalization, incapacitation, postal error, or natural disaster — without a private letter ruling. Direct (trustee-to-trustee) rollovers have no deadline at all.

Under IRC § 408(d)(3)(B), as interpreted by the Tax Court in Bobrow v. Commissioner (2014) and IRS Announcements 2014-15 and 2014-32, you may complete only one indirect (60-day) IRA-to-IRA rollover in any rolling 12-month period — counted across all your IRAs combined, not per account. A second indirect IRA rollover within that window is fully taxable plus the 10% early penalty, and the deposit is an excess IRA contribution incurring a 6% excise tax until corrected. This restriction does not apply to direct trustee-to-trustee IRA transfers, Roth conversions, or rollovers from employer plans (401(k), 403(b), 457, TSP) to an IRA.

Yes, you can convert, and there is no income limit on Roth conversions. (Income limits — $153,000–$168,000 single / $242,000–$252,000 MFJ in 2026 — apply to annual Roth IRA contributions, not to conversions.) The converted amount is ordinary income in the year of conversion. Most advisors spread conversions over multiple years, filling the 22% or 24% bracket during the income-gap years between retirement and the start of Social Security and required minimum distributions — rather than converting a large lump sum and hitting the 32–37% bracket. Since TCJA 2017, Roth conversions are irrevocable; recharacterization of conversions was permanently eliminated.

No. Rollovers from employer plans (401(k), 403(b), 457(b), TSP, pension lump sums) into a traditional IRA are not subject to the annual IRA contribution limit ($7,500 or $8,600 age 50+ in 2026). You can roll the entire balance in a single transaction regardless of size. The one critical exception: required minimum distributions cannot be rolled over. If you are age 73 or older (or 75 if born in 1960 or later under SECURE 2.0 § 107), you must take your RMD for the year before initiating the rollover — rolling an RMD amount into an IRA creates an excess contribution subject to a 6% annual excise tax until corrected.

The pro-rata rule (IRC § 408(d)) requires that every IRA distribution or Roth conversion be treated as coming proportionally from your pre-tax and after-tax IRA balances combined — you cannot cherry-pick which dollars to convert first. If you have $90,000 pre-tax and $10,000 after-tax across all traditional IRAs, then 90% of any conversion is taxable regardless of which account you convert from. The rollover risk: adding a large pre-tax 401(k) to your IRA pool dilutes your after-tax basis fraction and makes every future backdoor Roth conversion more expensive. The fix is a reverse rollover — moving IRA pre-tax balances out to a current employer's 401(k) before making non-deductible IRA contributions.