How to Combine Retirement Accounts

15 eggs representing different types of accounts to be consolidated.
Photo: AndyRoberts/OJOImages/GettyImages

It can get confusing to keep track of how much money you have and how it is invested when you have multiple retirement accounts. For the most part, you can combine them. But keep in mind that certain restrictions may apply.

Combining at least some of your accounts is a good way to simplify your retirement planning. For instance, you will have fewer accounts to take required minimum distributions from once you reach age 70 1/2. And having fewer accounts should mean you're paying less in fees overall.

Key Takeaways

  • Accounts that you've contributed to with pre-tax money can be combined in one traditional IRA; this process is called a "rollover."
  • A Roth conversion occurs when you roll over a pre-tax retirement account into a Roth account that’s funded with after-tax money.
  • You can roll over or combine a Roth 401(k) into a Roth IRA, because both are funded with after-tax contributions.
  • You can avoid tax penalties if these moves are made directly from one account to another. Other rules apply as well.

What Is Your Account Type?

In most cases, accounts that function in a similar way can easily be combined without any tax penalty. The first seven items in the list below are all funded with pre-tax money; when you withdraw money for retirement, it will be taxed. Roth accounts are funded with post-tax money.

Retirement Account Types

  1. IRA
  2. 401(k)
  3. 403(b)
  4. 457 plan
  6. SEP-IRA
  7. Keogh
  8. Pension plan
  9. Roth IRA
  10. Roth 401(k). This is also called a "designated Roth account."

IRA Rollovers

If you have a few types of accounts from the first seven items in the list, they can be combined into one IRA account. This process of combining accounts into an IRA is called an "IRA rollover."

The Roth IRA and Roth 401(k) function similarly. They're both funded with after-tax money; when you withdraw money, it won't be taxed as long as you follow the IRS's rules. If you have both a Roth IRA and a Roth 401(k) at retirement, your Roth 401(k) can be rolled over into your Roth IRA.

What if your pension plan, which is number eight on the list, offers you the ability to take a lump-sum distribution? Then that entire amount can usually be rolled over into your IRA.

Roth Conversions

The IRS permits you to roll over any of the first seven types of accounts into a Roth IRA in a process known as a "Roth conversion." When you do a Roth conversion, the amount that's converted is included as taxable income on your tax return that year. That means you could end up owing a large sum of money to the IRS.

Before you carry out a Roth conversion, you should decide whether it makes sense for you. Do you expect to be in a higher tax bracket when you begin taking the funds? Do you want to pass along all or part of the account tax-free to a beneficiary? You may also want to consult with a financial planner.

How Can You Avoid Tax Penalties?

When combining accounts, you should make sure the assets are being moved in a rollover. That means it's a direct transfer of assets from one account into another.

For instance, let's say you are moving an old 401(k) plan into your IRA. You will then fill out paperwork or an online form that directs your old 401(k) plan to make the check payable directly to the new custodian for the benefit of you.

If your IRA is at Charles Schwab and your name is Jane Smith, then your 401(k) provider would make the check payable to “Charles Schwab for the benefit of Jane Smith.”

You won't ever see that check, and that's a good thing. It means the rollover was done the right way, and you've avoided a 20% tax penalty. But if the custodian of the account mails you a check made out to you, you can still spare yourself a tax penalty if you act quickly.

You have 60 days to deposit this check into the IRA. Keep this in mind: It will have 20% withdrawn for federal income tax. You must also deposit the amount that was withdrawn for income tax; you can get that money back from the IRS when you next file a tax return. If you don't deposit that entire sum of money—the amount of the check and the amount that was taken out for income tax—and you are under age 59 1/2, you may also be subject to a 10% early withdrawal penalty.

Keep These Restrictions in Mind

There are some restrictions to be aware of when making an account rollover.

You Can Only Make One IRA Rollover Per Year

You can make only one rollover between IRAs in any 12-month period. If you have a lot of IRAs to consolidate, you'll have to spread the rollovers out. This time restriction applies to traditional IRAs, Roth IRAs, SIMPLE IRAs, and SEP-IRAs.

This rule does not apply to:

  • Conversions of traditional IRAs to Roth IRAs
  • Rollovers from any other type of retirement plan to an IRA
  • Rollovers from an IRA to a different type of retirement plan
  • Rollovers between non-IRA retirement plans

What if you carry out a second IRA rollover before 12 months have passed? The IRS will require you to include as gross income on your tax return any previously untaxed amounts distributed from an IRA. And those amounts may be subject to a 10% early-withdrawal penalty tax.

You Can't Move a Current Plan

While you are still working for a company that has a retirement account that you—and hopefully the company—are contributing to, you can not move that retirement account anywhere else. However, many company-sponsored plans allow you to move outside retirement accounts into your current plan.

Check with your 401(k) plan provider to see whether you can roll over 401(k)s from previous employers or existing IRAs into your current workplace plan.

Before making such a move, think about the fees you pay for your current 401(k) and the quality of the investment options. You may be better off leaving the funds where they are or moving them to an IRA that gives you more investment choices.

Two-Year Wait for SIMPLE IRAs

You must wait two years after establishing a SIMPLE IRA before you can combine it with a different type of retirement account, either by rolling funds out of it or into it. However, you do not have to wait two years before combining it with another SIMPLE IRA.

Roth IRAs and Roth 401(k)s Are Limited

You may not roll over a Roth IRA into any other type of retirement account. A Roth 401(k) can be rolled over only into a Roth IRA or another Roth 401(k).

Spouses Can't Combine Accounts

Spouses can't combine retirement accounts while they're both alive. A retirement account must be titled in one person’s name.

After you or your spouse dies, the deceased person's IRA can be rolled over into the surviving spouse’s IRA. Your spouse must be the beneficiary of your IRA, unless they have signed a waiver giving you permission to name someone else. The same rule does not apply to a 401(k) account.


The IRS has a Rollover Chart that explains which types of retirement accounts can and cannot be rolled over into the other types of accounts. It also outlines the restrictions that apply.

Frequently Asked Questions (FAQs)

Can you rollover multiple 401(k) plans into an IRA?

A rollover IRA can accept funds from as many 401(k) plans as you have to roll over. The only exception is for Roth 401(k) plans; since those plans use after-tax dollars, they can't be rolled over into a pre-tax account.

Can you combine 401(k) accounts in another 401(k) plan?

Whether or not you can combine 401(k) accounts into another 401(k) plan depends on the 401(k) plan you hope to transfer the funds into. Some plans are more flexible about transferring funds from other plans. You can check with the human resources department at your workplace for more information about what your 401(k) plan does and doesn't allow.

Was this page helpful?
Related Articles