Are there any tax consequences if you roll over your 401(k) into an IRA?

Tax-free rollovers from a qualified retirement plan such as a 401(k) to a traditional IRA can be accomplished two ways. The best way is to arrange for a direct trustee-to-trustee transfer. In this manner, no amount will be withheld for income taxes and there is no tax liability. Another method is for you to receive a check for the amount to be rolled over and for you to deposit the gross amount of the distribution (the amount before tax withholding) into a traditional IRA. If you roll over only the net amount of the check after any withheld taxes, then you will have taxable income for the amount withheld for taxes. Also, you must complete this indirect rollover within 60 days, or the total distribution may be taxable.

If the retiree must take a minimum required distribution from the plan, the minimum distribution cannot be rolled over. You must first have the retirement plan issue the distribution and then have the plan administrator transfer the balance in the qualified retirement plan to your IRA account.