What is the withholding rate for an indirect IRA rollover?

10% federal withholding by default. You can elect a different rate (including 0%) on Form W-4R. This differs from qualified-plan distributions, which have 20% mandatory withholding.

What is the withholding rate for an indirect 401(k) rollover?

20% mandatory federal withholding. This is set by IRS rules and cannot be waived. To avoid it, request a direct rollover (trustee-to-trustee) instead.

How long do I have to redeposit funds in an indirect rollover?

60 days from the date you receive the funds. Missing this deadline converts the full rollover amount into a taxable distribution. Direct rollovers do not have this 60-day deadline.

What is the IRA one-rollover-per-year rule?

Since 2015, the IRS allows only one IRA-to-IRA indirect rollover across all your IRAs in any rolling 12-month period. Trustee-to-trustee transfers and Roth conversions are NOT subject to this limit.

Does the early-withdrawal penalty apply to a missed rollover?

Yes. If you are under age 59½ and any portion becomes a taxable distribution (because of a missed deadline or unreplaced withholding), the 10% early-withdrawal penalty applies on top of regular income tax.

Rollover Tax Trap Visualizer

Indirect rollovers from a 401(k) and from an IRA follow different withholding rules. Many online calculators get this wrong. This tool walks through both, plus the 60-day cliff and the IRA one-rollover-per-year rule.

Educational tool. Withholding rules differ for IRAs and qualified plans — most online calculators conflate them. This tool surfaces the distinction. It is not tax advice. Confirm your specific situation with a CPA before acting.

Rollover amount

Source account type

Traditional IRA

Includes SEP and SIMPLE IRAs

401(k) or 403(b)

Most common employer retirement plans

Other qualified plan

Pension, profit-sharing, ESOP

Roth IRA

Different rules — see redirect

457(b) plan

Not supported in this calculator

Rollover method

direct rollover

Trustee-to-trustee. Funds never reach you.

indirect rollover

Funds paid to you, then redeposited within 60 days.

Your age at rollover

Under 59½ adds 10% early-withdrawal penalty on taxable portion.

Your federal bracket

Days to redeposit: 30

1 dayDay 60 cliff →120 days

Direct rollover (always shown)

Withholding0%

Net to destination$100,000

60-day riskNone

Direct rollover is usually the lower-operational-risk path: no withholding and no 60-day redeposit handling.

Indirect 401(k) / 403(b) rollover

Withholding rate20%

Withheld at source$20,000

Received by you$80,000

Must redeposit for full rollover$100,000

20% mandatory federal withholding applies to eligible rollover distributions from qualified retirement plans (401(k), 403(b), pension, etc.) when paid to you. This is set by IRS rules and cannot be waived.

If you only redeposit what you received

The withholding becomes a taxable distribution. You owe income tax and possibly an early-withdrawal penalty on it.

Taxable shortfall$20,000

Income tax on shortfall$4,400

Early-withdrawal penalty (under 59½)$0

Total cost$4,400

If you miss the 60-day deadline

The full rollover amount becomes a taxable distribution — even if you eventually redeposit later.

Cliff triggeredNo (within 60 days)

Income tax at bracket$0

Early-withdrawal penalty (under 59½)$0

Total cost$0

Source: IRS Pub 575 and Notice 2009-68 — 20% mandatory withholding on eligible rollover distributions from qualified plans. IRC § 408(d)(3)(A); IRS Pub 590-A.

Why direct rollover is usually the lower-risk path

A direct rollover (also called a trustee-to-trustee transfer) moves your funds from one custodian to another without ever passing through your hands. Because you never receive the funds personally, there is nothing to withhold — and no 60-day clock.

An indirect rollover, by contrast, sends the funds to you first. You then have 60 days to deposit the full amount into the destination account. If withholding was applied, you must replace that amount from other funds — otherwise the withholding becomes a taxable distribution.

For most situations, direct rollovers eliminate the operational risk. Indirect rollovers exist for cases where short-term access to the funds is intentionally desired.

What counts as a qualified plan vs an IRA

Qualified plans (20% mandatory withholding for indirect distributions): 401(k), 403(b), pension plans, profit-sharing plans, ESOPs.
IRAs (10% default withholding, electable): traditional IRA, SEP-IRA, SIMPLE IRA.
Roth IRAs follow different distribution rules (qualified vs non-qualified) and are out of scope for this tool. See Traditional vs Roth Gold IRA.
457(b) plans have unique rules — particularly around the early-withdrawal penalty for governmental plans — and are not covered in this v1 calculator.

Common mistakes

Conflating IRA and plan withholding. Many online calculators apply 20% withholding generically. The 20% rate only applies to qualified plans (401(k), 403(b)). IRAs default to 10% and the participant can elect out entirely.
Forgetting to replace the withheld portion. If a 401(k) withholds 20% and you only redeposit what you received, the 20% becomes a taxable distribution — even if you eventually file taxes on it.
Doing two indirect IRA rollovers in one year. Since 2015, the IRS limits IRA-to-IRA indirect rollovers to one per rolling 12 months across all your IRAs. Trustee-to-trustee transfers don't count toward this limit.
Missing the 60-day clock. The clock starts the day you receive the funds, not the day they were paid. Bank processing time and weekends count.
Forgetting the early-withdrawal penalty. If you're under 59½ and any portion becomes a taxable distribution, the 10% penalty applies on top of regular income tax.