New IRS guidance is aimed at making 401(k) rollovers easier, but financial professionals are warning savers to understand the consequences before moving retirement money into an IRA.
The IRS issued the guidance Aug. 12 to "simplify, standardize, facilitate, and expedite" rollovers, while the CFP Board released a rollover guide Aug. 19 highlighting common misconceptions about whether workers must move their money after leaving a job and whether the decision can be reversed.
The IRS guidance includes sample forms and proposed procedures for rollovers between retirement plans and between retirement plans and IRAs, but not IRA-to-IRA transfers. Use of the sample forms is optional for plan sponsors. Treasury and the IRS are also seeking public comments on the proposed procedures through Oct. 23, 2026.
Millions of Americans move retirement money from workplace plans into individual retirement accounts each year. Investors rolled $682 billion into IRAs in 2023, while nearly 6 million people made rollovers, up from about 4 million in the early 2000s.
Rollover Mistakes Can Be Costly
