How to Convert Your 401(k) to a Roth IRA

By Felix Thorpe · Retirement Accounts WriterPublished October 8, 2026

Yes, you can convert a 401(k) to a Roth IRA, but the rules depend on whether you still work for the employer and what type of 401(k) you have

A Roth conversion moves money from your 401(k) into a Roth IRA. The money becomes taxable in the year you convert it, but then grows tax-free and you pay no tax on withdrawals in retirement. You can convert a 401(k) to a Roth IRA in two main situations: if you have left your job, or if your current employer's plan allows in-service conversions. Not all plans permit in-service conversions, so you will need to check your plan documents or call your plan administrator.

The conversion itself is straightforward mechanically—you instruct your 401(k) custodian to send the money to a Roth IRA you open at a bank, brokerage, or credit union. The tax bill arrives when you file your return for that year. The larger decision is whether converting makes sense for your situation, because the tax cost upfront is real and immediate, while the benefit comes later.

Key Takeaways

You can convert a 401(k) to a Roth IRA after you leave your job, or during employment if your plan allows in-service conversions.
The amount you convert is taxable as ordinary income in the year of conversion, which can push you into a higher tax bracket.
After conversion, the money grows tax-free in the Roth IRA and you owe no tax on withdrawals in retirement.
A backdoor Roth conversion may be blocked if you have other pre-tax IRAs, because the IRS applies a pro-rata rule across all your IRAs.
You must complete the conversion by December 31 of the year you want it to count, and report it on Form 8606.

Converting after you leave your job

Once you separate from your employer, you have the most flexibility. You can roll your 401(k) balance into a Roth IRA at any time after you leave, with no permission needed from your former employer's plan. This is the most common conversion path because it does not depend on your plan's rules.

The process is simple: open a Roth IRA at a financial institution, then contact your 401(k) custodian and request a direct rollover to that Roth IRA. Provide the Roth IRA account details. The custodian sends the money directly to the new account—you do not touch it. This avoids the 60-day rollover rule that applies if you take the money yourself. The entire amount becomes taxable income in that tax year.

Timing matters for tax planning. If you leave your job mid-year and convert in December, you may have lower income that year than you would in a full working year. Some people convert in the year they retire for this reason. Others convert over several years to spread the tax bill across multiple years and stay in a lower bracket each year.

In-service conversions while you still work

Some 401(k) plans allow you to convert money to a Roth IRA while you are still employed and contributing to the plan. This is called an in-service conversion. Not all plans offer this option—it is entirely up to the employer. You will find this information in your plan's summary plan description, or you can ask your benefits administrator or HR department directly.

If your plan allows in-service conversions, you can typically convert any portion of your balance, or the entire balance. The money moves to a Roth IRA you set up outside the plan. You continue contributing to your 401(k) as normal. The converted amount is taxable in that year, just as it would be after you leave the job.

In-service conversions are useful if you want to start moving money into a Roth while you are still working and earning income, or if you expect to leave your job soon and want to convert before you separate. Some people use in-service conversions to convert only the after-tax contributions in their 401(k), which may have lower tax consequences than converting pre-tax money.

Understanding the tax bill when you convert

The entire amount you convert is added to your taxable income for that year. If you convert $50,000, your taxable income increases by $50,000. This can push you into a higher tax bracket and increase your tax bill substantially. You owe the tax from your own pocket—the IRS does not withhold it from the conversion itself, so you need to have cash available to pay when you file.

The tax rate you pay depends on your total income that year and your filing status. If you convert in a year when you have little other income—such as the year you retire—your tax rate may be lower than if you convert while still working full-time. This is why some people time their conversions strategically around job changes or retirement.

You can request that your 401(k) custodian withhold taxes from the conversion amount before sending it to the Roth IRA, but this is optional and reduces the amount that actually converts. Most people do not withhold and instead pay the tax bill separately when they file their return.

The pro-rata rule and backdoor Roth conversions

If you have other pre-tax IRAs—such as a traditional IRA, SEP IRA, or SIMPLE IRA—the IRS applies a pro-rata rule to any Roth conversion. This rule treats all your pre-tax IRAs as a single pool for tax purposes. If you have $100,000 in a traditional IRA and convert $20,000 to a Roth, the IRS calculates what percentage of your total pre-tax IRA balance is after-tax money, and applies that percentage to the conversion. This can create an unexpected tax bill.

A backdoor Roth is a strategy where you contribute to a traditional IRA and immediately convert it to a Roth. This works only if you have no other pre-tax IRAs. If you do, the pro-rata rule applies and the backdoor strategy becomes inefficient or impossible. Before attempting a backdoor Roth, check whether you have any pre-tax IRAs. If you do, consult a tax professional about whether a conversion makes sense.

The pro-rata rule applies only to IRAs, not to 401(k)s. If all your pre-tax money is in a 401(k) and you have no traditional IRAs, you can convert without triggering the pro-rata rule. This is one reason some people keep their 401(k) separate from their IRA accounts.

Roth conversion rules and deadlines

A conversion must be completed by December 31 of the year you want it to count. If you initiate a conversion in December but the money does not arrive in your Roth IRA until January, it counts as a conversion in the year it arrives, not the year you initiated it. Plan ahead if you want a conversion to count in a specific tax year.

You report the conversion on Form 8606, which you file with your tax return. This form calculates how much of the conversion is taxable and ensures the IRS knows you converted. If you do not file Form 8606, the IRS may treat the conversion as a non-may have access to distribution and assess penalties.

Once money is in a Roth IRA, you can withdraw contributions (the amount you put in) at any time without tax or penalty. Earnings (growth) cannot be withdrawn tax-free until you are 59½ and have held the Roth for at least five years. This five-year rule applies separately to each Roth IRA you own, based on when you first converted or contributed to any Roth.

When a conversion makes financial sense

A conversion is most attractive when your current tax rate is lower than the rate you expect to pay in retirement. If you are in a low-income year—such as the year you retire or take a sabbatical—converting can lock in a lower tax rate on that money. If you expect your retirement income to be higher than your current income, or if tax rates are likely to rise, a conversion may be worth the upfront cost.

Conversions also make sense if you want to reduce your required minimum distributions in retirement. Money in a Roth IRA does not trigger RMDs, so converting now can lower your taxable income later. This is particularly useful if you have a large 401(k) and expect RMDs to push you into a higher bracket or affect your Medicare premiums.

Conversions are less attractive if you are in a high tax bracket now and expect to be in a lower bracket in retirement, or if you do not have cash outside the retirement account to pay the tax bill. Converting with money from the account itself reduces the amount that actually moves to the Roth and defeats much of the purpose.

Steps to convert your 401(k) to a Roth IRA

First, decide whether you are converting after leaving your job or requesting an in-service conversion while employed. If you are still working, contact your benefits administrator or HR to confirm your plan allows in-service conversions and ask for the procedure.

Second, open a Roth IRA at a bank, brokerage, or credit union if you do not already have one. You will need the account number and routing information to provide to your 401(k) custodian.

Third, contact your 401(k) custodian and request a direct rollover to your Roth IRA. Specify the amount you want to convert. The custodian will send you forms to sign. Do not take the money yourself—request a direct transfer to avoid the 60-day rule and withholding complications.

Fourth, confirm the money arrived in your Roth IRA. This usually takes five to ten business days. Keep records of the conversion for your tax file.

Fifth, file Form 8606 with your tax return for the year of conversion. Your tax software will typically prompt you for this information. If you use a tax professional, provide them with the conversion documentation from your custodian.

Frequently Asked Questions

Can I convert my 401(k) to a Roth IRA if I am still working?

Only if your employer's 401(k) plan allows in-service conversions. Not all plans offer this option. Check your plan documents or ask your HR department. If your plan does not allow in-service conversions, you can convert after you leave the job.

Do I have to convert my entire 401(k) balance?

No. You can convert part of your balance and leave the rest in the 401(k) or roll it to a traditional IRA. Some people convert only the after-tax contributions to minimize the tax bill. Your custodian can split the conversion for you.

What happens if I have a traditional IRA and want to convert my 401(k)?

The pro-rata rule applies to any Roth conversion if you have pre-tax IRAs. The IRS treats all your pre-tax IRAs as one pool and calculates the tax based on the ratio of pre-tax to after-tax money across all accounts. This can increase your tax bill significantly. Consult a tax professional before converting.

Can I undo a Roth conversion if I change my mind?

You can no longer recharacterize a conversion back to a traditional IRA. Once the conversion is complete and reported on your tax return, it is permanent. Plan carefully before converting, or consider converting smaller amounts over multiple years to test the impact.

When do I pay taxes on the conversion?

You pay taxes when you file your return for the year of conversion. The converted amount is added to your taxable income. You can request withholding from the conversion itself, but most people pay the tax bill separately when they file.