401(k) to Roth IRA Conversion

Make sure you understand these rules before converting your retirement savings.

By Kailey Hagen – Updated May 21, 2025 at 2:08 PM

Key Points

401(k) to Roth IRA conversions allow for tax-free retirement withdrawals, but taxes apply in the year of the conversion.
There's no limit to how much you can convert in a given year; mindful planning can minimize the tax impact.
Roth IRA conversion ladders can give you early access to funds without a tax penalty.

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An infographic outlining the four steps to convert a 401(k) to a Roth IRA. — Image source: The Motley Fool.

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If you don't already have one, you must open a Roth IRA with a broker. Then, you'll provide your 401(k) plan administrator with the details regarding where you'd like your funds transferred and how much you'd like to transfer if you're doing a partial conversion. You may have to fill out some paperwork and pay a one-time rollover fee.

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Brokerage Account

An account that holds and trades investment assets such as stocks, mutual funds, exchange-traded funds, bonds, and certificates of deposit.

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Because the government taxes Roth 401(k) and Roth IRA contributions the same way, you can roll over Roth 401(k) savings to a Roth IRA without paying taxes on your Roth 401(k) contributions. But if the amount you're rolling over includes employer-matched funds made pre-tax, these will affect your tax bill for the year.

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About the Author

Kailey Hagen, CFP, is a contributing Motley Fool retirement analyst covering Social Security, Medicare, and retirement planning. Before The Motley Fool, Kailey was a research analyst for Reviews.com focusing on credit and banking products. She is a Certified Financial Planner® and holds a bachelor’s degree in English from the University of Wisconsin-Madison.

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