What should I watch for before rolling over a 401(k)?

What’s the most common way people lose money on a rollover?

Timing and withholding — not the investment decision most people spend the most time on.

When money moves directly from your old 401(k) to your new IRA or employer plan — a direct, trustee-to-trustee transfer — nothing is withheld and there’s no deadline to race. When the distribution is paid to you first instead, your old plan administrator is required by law to withhold 20% for federal taxes, even if your intention is to roll over the entire amount. You’d then need to come up with that missing 20% out of pocket to complete a full rollover, or accept that the withheld portion counts as a taxable distribution.

What’s the 60-day rule, and why does it matter?

It’s the deadline that turns a paperwork delay into a tax bill.

If you receive a retirement plan distribution directly (an “indirect” rollover), you have 60 days from the date you receive it to deposit the full amount into another qualified account. Miss that window, and the amount not rolled over is generally treated as a taxable distribution — and if you’re under 59½, it can also trigger an early-withdrawal penalty on top of ordinary income tax. The IRS can waive the deadline in limited circumstances beyond your control, but that’s the exception, not something to plan around.

I’ve heard there’s a limit on how often I can roll over an IRA — is that true?

Yes, but it only applies to one specific kind of rollover, and it’s easy to sidestep.

Since 2015, you’re limited to one indirect IRA-to-IRA rollover in any 12-month period, no matter how many IRAs you own. Direct trustee-to-trustee transfers are exempt from this limit entirely — they aren’t counted as rollovers under the rule at all, so there’s no frequency restriction on moving money that way. This is one more reason the direct-transfer method is generally the more forgiving path if you expect to consolidate or move accounts more than once.

Does that mean I should always move an old 401(k) into an IRA?

Not automatically — and this is where the decision deserves more than a reflexive “always roll it over.”

An old employer 401(k) isn’t inherently worse than an IRA. Some employer plans offer institutional-pricing investment options an individual IRA can’t access, and 401(k)s carry broader federal creditor protection under ERISA than IRAs typically do in many states. On the other hand, employer plans often have a narrower investment menu, and consolidating scattered old 401(k)s into one account can make ongoing management and required distributions simpler to track. The right answer depends on comparing your specific old plan’s actual fees and options against the actual alternative — not defaulting to either “always roll it over” or “always leave it.”

What’s the first real step?

Before any money moves, get the receiving account set up and request a direct, trustee-to-trustee transfer from the old plan — never a check made out to you personally. Then compare the old plan’s real fee and investment lineup against the new account’s, so the decision to move (or not) is based on your actual numbers rather than a general rule of thumb.