IRA Rollover Checklist 2026: Step-by-Step Execution Guide

You've decided to roll over your 401(k) or other retirement plan to an IRA. Most financial guides spend 2,000 words on whether to roll over. This one focuses on the execution — what to actually do, in what order, so nothing falls through the cracks. Seven checks before you touch anything. Six steps to execute the transfer. Five tasks the week after the money lands.

Part 1: Seven pre-flight checks (do these first)

These checks matter because most rollover mistakes are irreversible. The rule about employer stock (NUA), the pro-rata problem for backdoor Roth, the Rule of 55 penalty window — all of them close permanently once the rollover is initiated. Spend 20 minutes here before you call the plan administrator.

Check 1: Are you 73 or older? Take your RMD before touching anything.

If you've reached Required Minimum Distribution age — 73 for those born 1951–1959, or 75 for those born 1960 or later¹ — you must take your RMD for the current year before initiating the rollover. RMD amounts are ineligible for rollover under IRC § 408(d)(3)(E).¹ If the RMD gets swept into the rollover, it lands in the new IRA as an excess contribution — subject to a 6% annual excise tax — while you still owe income tax on it.

This applies to both the sending account and the receiving IRA. If you're rolling a 401(k) into a traditional IRA you already hold, take RMDs from both accounts first. Your plan administrator is required by law to withhold any 401(k) RMD before processing a rollover, but sequencing this correctly yourself avoids administrative confusion.

Check 2: Do you have an outstanding 401(k) loan?

An unpaid plan loan doesn't disappear when you leave your employer — it becomes a loan offset distribution: the plan reduces your account balance by the outstanding loan amount, which the IRS treats as a taxable distribution (plus 10% penalty if you're under 59½). You don't get a check; the loan just vanishes from your balance and becomes income.

The relief: if this is a Qualified Plan Loan Offset (QPLO) — meaning your plan was terminated or you separated from service — you have until the tax return filing deadline including extensions for the year of the offset to contribute the offset amount to an IRA or eligible plan and treat it as a rollover.² For most people, that means until October 15 of the year after the offset. You need cash on hand to fund that contribution.

Before initiating a rollover, ask your plan administrator: "Do I have any outstanding loans, and what will happen to them at distribution?" Get the answer in writing.

Check 3: Does your 401(k) hold employer stock with low cost basis?

If your 401(k) contains appreciated company stock, rolling it to an IRA is a one-way door that permanently converts a potential long-term capital-gains tax event into ordinary income. Under the Net Unrealized Appreciation (NUA) strategy (IRC § 402(e)(4)), you can take employer stock as an in-kind distribution, pay ordinary income tax only on the original cost basis, and sell the shares at long-term capital gains rates (0/15/20%) on all the appreciation.³

Once the stock is inside an IRA, those shares lose their NUA character permanently — all future IRA distributions are ordinary income. The NUA strategy requires a lump-sum distribution and a triggering event (separation from service, disability, death, or age 59½). Use our NUA calculator to model the split-rollover decision before moving employer stock.

Check 4: Does your 401(k) contain after-tax (non-Roth) contributions?

Many 401(k) plans allow after-tax contributions beyond normal deferral limits. Under IRS Notice 2014-54, you can direct after-tax basis to a Roth IRA and pre-tax amounts to a traditional IRA in a single split rollover — with zero federal income tax on the Roth-bound portion.⁴

If you roll everything into a single traditional IRA, your after-tax basis is preserved but trapped in a vehicle that generates ordinary income on every future distribution. You've given up a free Roth IRA conversion.

How to check: look at your most recent 401(k) statement for a line item labeled "after-tax" or "non-Roth after-tax basis." Ask your HR department if you're unsure. If any balance exists, review our after-tax 401(k) split rollover guide before proceeding.

Check 5: Do you make backdoor Roth IRA contributions?

The IRS's pro-rata rule (IRC § 408(d)(2)) treats all your traditional IRA balances as a single pool when calculating the taxable portion of any Roth conversion.⁵ If you currently make backdoor Roth contributions — a non-deductible traditional IRA contribution immediately converted to Roth — and you have zero pre-tax IRA balance, that strategy works tax-free. Rolling a pre-tax 401(k) into a traditional IRA activates the pro-rata rule and breaks future backdoor Roth contributions.

The alternative: if your new employer's 401(k) accepts incoming rollovers, consider rolling the pre-tax 401(k) there instead — keeping your IRA clean for backdoor Roth. See our reverse rollover guide and pro-rata rule analysis for the full math.

Check 6: Are you between 55 and 59½ and recently separated from service?

Under IRC § 72(t)(2)(A)(v), if you separate from service during or after the calendar year you turn 55, distributions from that employer's 401(k) are exempt from the 10% early withdrawal penalty — immediately, without waiting for a birthday.⁶ This is the Rule of 55. Once you roll that 401(k) to an IRA, the Rule of 55 access is gone permanently — IRA early distributions are subject to the 10% penalty with different (and generally narrower) exceptions.

If you need income before 59½ and you're in this window, quantify how much penalty-free access you'd give up before rolling. Our leave-vs.-rollover guide includes a Rule of 55 break-even calculator.

Check 7: Does your plan have stable-value or guaranteed funds you'd lose?

Some 401(k) plans offer stable-value funds — typically yielding 4–5% with capital preservation and no duration risk — that aren't available in retail IRAs. Stable-value funds hold a book-value contract that protects against interest-rate fluctuation; money market funds (the IRA equivalent) offer lower yields with no such protection. TSP's G Fund is the most well-known version of this dynamic (see our TSP rollover guide for the full analysis).

Check your current plan's fund menu. If you hold stable-value and yield is meaningful to your retirement plan, compare alternatives before rolling. This doesn't block the rollover — it informs the timing and structure.

Part 2: Choose your transfer method

Direct rollover (trustee-to-trustee): always prefer this

A direct rollover means the money moves from your old plan directly to the new IRA custodian — you never receive the funds. No withholding, no 60-day clock, no risk of an accidental taxable event. The check is made payable to "Fidelity FBO Jane Smith" (or whichever custodian receives it), not to you personally.

This is the standard method for rolling a 401(k), 403(b), 457(b), or TSP into an IRA. There is no limit on how many direct rollovers you can do in a year.

Indirect (60-day) rollover: only when unavoidable

An indirect rollover means the plan sends a check payable to you. Federal law requires the plan to withhold 20% for federal income taxes before cutting that check.⁷ To complete a tax-free rollover, you must deposit the full original distribution amount — including the withheld 20% — into an IRA within 60 days. Most people don't have the withheld portion available, which means a portion becomes ordinary income plus potential 10% penalty.

The once-per-year rule applies only to indirect IRA-to-IRA rollovers, not to 401(k)-to-IRA rollovers. You can roll multiple employer plans to an IRA in the same year via direct transfer without triggering the once-per-year limit.

Part 3: Six execution steps

Step 1 — Open the receiving IRA before you initiate the rollover

You need a destination account open and ready before triggering the transfer. Most major custodians (Fidelity, Vanguard, Schwab, etc.) let you open an IRA online in under 10 minutes.

• Traditional IRA for pre-tax 401(k) funds — no income limit to open; deductibility of new contributions depends on income and plan coverage, but rollovers are always deductible on a tax-neutral basis
• Roth IRA for after-tax 401(k) basis you're splitting under IRS Notice 2014-54, or for direct Roth 401(k) rollovers — income limits apply to Roth IRA contributions, not to rollovers
• Both accounts if doing a split rollover (after-tax basis to Roth IRA, pre-tax to Traditional IRA)

Write down the new account number(s) and the custodian's mailing address. You'll need these for the paperwork.

Step 2 — Contact your plan administrator and say "I want a direct rollover"

Call the plan's recordkeeper (often Fidelity NetBenefits, Vanguard Plan, Empower, Transamerica, etc. — check your statement). Say explicitly: "I want a direct rollover to an IRA. I do not want a check payable to me."

Ask specifically:

• Does the check go directly to my new custodian, or will they mail it to me to forward? (Either can be a "direct rollover" — the key is that the check is payable to the new custodian, not you)
• Is there a separation date I must hit first? (Some plans require formal HR processing before you're eligible)
• Can I do a partial rollover? (Most plans allow you to roll part of the balance and leave the rest)
• Are there any outstanding loans or after-tax balances I should know about?

Step 3 — Complete the rollover paperwork

Your plan will require a distribution request form. Review carefully before signing:

• Confirm "direct rollover" is selected (not "lump sum distribution")
• Enter the receiving IRA custodian name, mailing address, and account number exactly as they appear on your new account confirmation
• Select 0% withholding for a direct rollover (no withholding should occur on a properly structured direct rollover)
• If doing a split rollover (pre-tax to Traditional IRA, after-tax to Roth IRA), specify the allocation and provide two separate account numbers
• If your plan sends a check to you to forward (not uncommon), confirm the payee is "[Custodian] FBO [Your Name]" — not just your name

Step 4 — Monitor the transfer

Processing takes 2–6 weeks. The variation depends on the plan administrator, whether the check is mailed or wired, and your new custodian's processing queue.

• Keep your old account open and funded until the transfer confirms — some custodians require a small remaining balance, and transfers occasionally need to be resubmitted
• If the plan mails a check to your address (to forward to the new custodian), watch for it, and deposit it quickly — the 60-day clock starts from the date of the distribution, even if it was intended as a direct rollover with a check-forwarding step
• Follow up with both the old plan and new custodian after 3 weeks if nothing has moved

Step 5 — Confirm the full amount arrived

Log into your new IRA and verify:

• The amount received matches what you expected (minus any RMD that was appropriately withheld)
• The custodian correctly coded the transaction as a rollover contribution (not a regular contribution, which would count against the annual limit)
• If you did a split rollover, both the Traditional IRA and Roth IRA received their respective portions

If there's a discrepancy, call both the old plan and new custodian immediately. Catching this within the 60-day window gives you options to cure a misallocation.

Step 6 — Close the old account when you're ready

Once you've confirmed the transfer and received the Form 1099-R from the old plan (typically mailed in January of the following year, or available in your old plan's online portal), you can close the old account. Keep the confirmation email or written notice of the completed rollover — you'll reference it when reporting on your tax return.

Note: if you left a small remaining balance (for market fluctuations or a plan minimum), request a final distribution or transfer for that amount separately.

Part 4: Five post-rollover tasks

Task 1 — Update beneficiary designations (do this the same week)

Your 401(k) beneficiary designation does not carry over to the new IRA. The IRA opens with no beneficiary on file, or with whatever default the custodian applies (often the estate). If you die with the estate as beneficiary, the full IRA balance must be distributed within 5 years — a massive, compressed income-tax event for your heirs.

Your old 401(k) required spousal consent under ERISA § 205 to name anyone other than your spouse as primary beneficiary. Your IRA has no such requirement (IRAs are governed by IRC § 408, not ERISA). This gives you flexibility — but only if you actually make the designation. Log into your new IRA and designate beneficiaries before you do anything else. See our beneficiary designations guide for the full framework including per-stirpes vs. per-capita, trusts, and EDB categories.

Task 2 — Set your investment allocation (don't leave it in default money market)

Many custodians default incoming rollover funds into a money market or "settlement fund" while you decide on investments. Every month in cash is a month not compounding in your target allocation. Set your investment allocation within the first week of the transfer confirming — or immediately after you confirm receipt of the funds.

If you're not sure where to invest, this is one of the clearest value-adds a fee-only advisor provides. An advisor who handles IRA rollovers regularly can run your allocation decision through a tax-aware lens (considering asset location across Traditional IRA, Roth IRA, and taxable accounts). See our asset location guide.

Task 3 — Understand what's coming at tax time

Expect two forms related to your rollover:

• Form 1099-R from the old plan, issued by January 31 of the year following the rollover. For a direct rollover from a 401(k) to a traditional IRA, the distribution code in Box 7 should be G (direct rollover). Box 2a (taxable amount) should be $0 if done correctly. You'll still need to report this on your tax return — it shows as income received and offset by the rollover exclusion.
• Form 5498 from the new IRA custodian, issued by May 31 of the year following the rollover. This confirms the rollover contribution amount to the IRS. You don't file this form — the custodian sends it directly to the IRS and a copy to you.

If you did an indirect rollover (received a check and redeposited it), the 1099-R will show withholding in Box 4, and you'll claim the withheld amount as a tax credit. Your tax software will walk you through this if you tell it the distribution was "rolled over."

Task 4 — Evaluate Roth conversion opportunities now that funds are in an IRA

The year after a rollover is often a good time to evaluate converting some or all of the traditional IRA to a Roth IRA. Common windows: a lower-income year (career gap, early retirement, between jobs), the years before Social Security and RMDs begin, or a year when the market has declined (converting more shares for the same tax cost).

Roth conversion planning involves bracket-filling math and IRMAA cliff awareness — converting too much in one year can push you into a higher Medicare surcharge tier two years later. See our Roth conversion after rollover guide for the mechanics and a 2026 tax-cost calculator.

Task 5 — Document account balances for pro-rata rule tracking (if relevant)

If you make non-deductible IRA contributions (Form 8606 basis) and your rollover adds pre-tax funds to the IRA universe, your backdoor Roth strategy is now affected by the pro-rata rule. Document your IRA aggregate balance as of December 31 of the rollover year — this is the denominator used in pro-rata calculations on Form 8606. If this matters to you, note the year-end balance from your IRA statement and track it annually.

Interactive checklist — your rollover pre-flight

Use this before initiating the transfer. Check each item you've completed or confirmed doesn't apply. The tool flags open items at the end.

The items that are hardest to catch on your own

Pre-flight checks 1, 3, 4, and 5 (RMD sequencing, NUA, after-tax basis, and pro-rata rule) require knowing your specific account composition in detail. Most rollover processing centers — the plan's 800-number or online portal — are not designed to flag these for you. They will process your direct rollover request exactly as submitted, regardless of whether you've preserved an NUA opportunity or assessed the pro-rata impact on your backdoor Roth.

A fee-only advisor who specializes in IRA rollovers has run this exact checklist across hundreds of accounts and knows which questions to ask based on your plan type, balance composition, age, and tax situation. The cost of a few hours of specialist advice is trivial compared to the value of getting these decisions right — especially NUA and after-tax basis, where the tax savings can be measured in five figures.