Rollover Decisions in 2026
Questions to Ask Before You Move Your 401(k) or 403(b)
The rollover pitch is everywhere. And in some situations, moving your money into an IRA genuinely makes sense. But 2026 brings limit changes and new rules that make the calculation more nuanced than most advisors let on. Here’s what to check before you sign anything.
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If you’ve recently left a job, you’ve probably gotten the nudge. A mailer from a financial firm. A call from a broker. Maybe even advice from a well-meaning friend: “Just roll it over into an IRA.”
And maybe that’s the right move. But maybe it isn’t.
The rollover decision is one of the most consequential financial choices you’ll make, and it’s also one of the most aggressively marketed. In 2026, with new contribution limits and rule changes reshaping what workplace plans and IRAs can actually do for you, this is a good time to slow down and ask the right questions before you sign anything.
Rolling a 401(k) or 403(b) into an IRA can give you more investment options and potentially lower fees, but it can also mean giving up legal protections, loan access, and creditor shields your employer plan provides. Before moving your money, evaluate both the plan you’re leaving and the advisor or firm you’d be rolling into. The questions below will help you do exactly that.
What Changed in 2026 (and Why It Matters for This Decision)
The IRS raised contribution limits again this year, and a few of the changes are significant enough to affect how you should think about rollovers.
2026 Contribution Limits at a Glance
| Limit Type | 2025 | 2026 |
|---|---|---|
| 401(k) / 403(b) employee contribution | $23,500 | $24,500 |
| IRA contribution limit | $7,000 | $7,500 |
| Standard catch-up (age 50+) in 401(k)/403(b) | $7,500 | $8,000 |
| IRA catch-up (age 50+) | $1,000 | $1,100 |
| Enhanced catch-up for ages 60–63 in 401(k)/403(b) | $11,250 | $11,250 |
| Combined employer + employee max (401k/403b) | $70,000 | $72,000 |
Here’s where this connects directly to the rollover question. If you’re 60, 61, 62, or 63, your workplace plan now lets you contribute up to $35,750 per year when you stack the base limit with the enhanced catch-up. An IRA caps you at $8,600. That’s a gap of more than $27,000 in annual savings capacity.
If you’re still working and your plan is solid, rolling over might actually reduce your ability to build wealth during your final peak earning years.
The Roth Catch-Up Rule Change Taking Effect in 2026
Starting in 2026, if you earned more than $150,000 in FICA wages from your employer in the prior year, any catch-up contributions you make to a 401(k), 403(b), or governmental 457(b) must go in as Roth contributions. Pre-tax catch-up contributions are no longer an option for high earners.
Some people see the mandatory Roth catch-up as a drawback. Others see it as a forced opportunity for tax-free growth. Either way, it changes the tax math for anyone weighing whether to stay in a plan or roll out.
What You’re Actually Giving Up When You Leave a Plan
Most rollover conversations focus on what you’ll gain in an IRA: more investment choices, one consolidated account, maybe a relationship with a financial advisor. That framing tends to skip over what you might be walking away from.
Legal Protections Under ERISA
Many 401(k) and 403(b) plans offer important legal protections because they are governed by ERISA, a federal law that sets standards for how certain employer retirement plans must be operated. When ERISA applies, it generally requires plan fiduciaries to act in participants’ best interests and provides a federal framework for disclosures, oversight, and dispute resolution.
However, not every employer plan is covered by ERISA, and protections can depend on the specific type of plan and whether it is being administered in compliance with applicable rules. For that reason, it is important to evaluate the details of the plan rather than assume all workplace accounts are protected the same way.
Creditor and Bankruptcy Protection
ERISA-covered plans can offer substantial creditor protection, particularly in bankruptcy. IRAs may also have meaningful protections, but the rules are different and often depend on state law, especially outside of bankruptcy.
That distinction can matter for investors with greater personal liability exposure or those going through a financially sensitive period. Before completing a rollover, it is worth understanding not just the investment implications, but also the legal protections you may be giving up or retaining.
Loan Access
Some 401(k) and 403(b) plans allow participants to borrow against their balance. IRAs do not. This isn’t a reason to stay in a bad plan, but if liquidity might ever be a concern, you’re giving up that option when you roll out.
The Rule of 55
If you leave your employer in or after the year you turn 55, you can take penalty-free withdrawals from that employer’s plan. Roll the money into an IRA and that window closes. You’d have to wait until 59½ for penalty-free access. For anyone in their mid-50s considering early retirement, this is a real consideration that rarely comes up in the rollover pitch.
What an IRA Can Actually Offer
None of the above means staying in a plan is always better. There are genuine reasons people roll over, and they’re worth acknowledging honestly.
- More investment options. Many workplace plans are limited to 15 to 30 funds, often with higher expense ratios than you’d find in a self-directed IRA. If your plan has mostly actively managed funds with expense ratios above 0.75%, you could be paying thousands more per year than you need to.
- Consolidation. If you’ve had several jobs and have multiple old accounts floating around, rolling them into one IRA simplifies your financial life and makes it easier to manage your overall asset allocation.
- Estate planning flexibility. IRAs generally offer more options for naming beneficiaries and structuring distributions for heirs than most employer plans do.
- Access to broader tax strategies. With an IRA, you have more control over Roth conversions, backdoor Roth contributions if eligible, and other planning approaches.
How to Evaluate the Advisor or Firm Before You Move Anything
This is where most people skip ahead. They like the advisor, they trust the branding, and they sign the paperwork. Then they find out later that the recommendation wasn’t entirely in their interest.
Here’s how to evaluate who’s actually asking you to roll over your money.
Are They a Fiduciary?
Ask directly: “Are you a fiduciary for this account, and will that be in writing?” A fiduciary is legally required to act in your best interest. A broker operating under a “best interest” suitability standard has more flexibility to recommend products that pay them well, as long as those products aren’t technically unsuitable for you. That’s a lower bar.
This matters with rollovers specifically because rollover recommendations are a well-documented source of conflict in the advisory industry. Rolling money from a low-cost plan into a fee-based IRA generates ongoing revenue for the advisor. That incentive exists whether or not the rollover is the right call for you.
Some advisors who earn commissions describe themselves as “acting in your best interest” without being legal fiduciaries. Ask specifically: “Are you registered as an RIA or IAR, and are you bound by the fiduciary standard at all times?” Then ask for it in writing as part of the advisory agreement.
How Are They Compensated?
Ask: “How are you paid, and does that change depending on what I invest in?” A fee-only advisor charges you directly and doesn’t earn commissions. A fee-based advisor might charge a management fee but can also earn commissions or trail payments from products they recommend. Neither structure is automatically disqualifying, but you need to understand the full picture before you hand over your retirement savings.
What’s the All-In Cost?
When someone pitches a rollover, the fee you hear first is usually just one layer. Ask for the complete cost breakdown:
- What’s the advisory fee as an annual percentage of assets?
- What are the underlying fund expense ratios?
- Are there transaction fees or account minimums?
- Any maintenance fees?
A common scenario: the advisor charges 1% annually, the funds inside the account average 0.75% in expense ratios, and there’s a small account fee on top. Your all-in cost could be close to 2% per year. On a $400,000 account, that’s $8,000 annually. Compare that to staying in a large employer plan where the total cost might be 0.25% or less.
What’s Their Specific Rationale for the Rollover?
“More flexibility” and “everything in one place” are sales pitches, not financial analysis. A substantive case for rolling over should address:
- Why the new account’s investment options are meaningfully better for your situation specifically
- How the total cost compares to your current plan
- What you’re giving up, including protections, contribution capacity if applicable, and loan access
- Whether alternatives like an in-plan Roth conversion or simply leaving assets in the plan were considered and why they were ruled out
If they can’t walk through that comparison clearly, that’s a signal worth paying attention to.
Questions to Ask Before You Sign Anything
- Are you a fiduciary? Will you confirm this in writing in our advisory agreement?
- Are you fee-only, or do you receive any compensation from third parties including commissions on products you recommend?
- What is the total annual cost of this IRA compared to what I’m paying in my current plan?
- What protections am I giving up by leaving my employer plan, specifically ERISA and creditor protection?
- Did you consider alternatives to a rollover, and why did you rule them out for my situation?
- What investment options are available here that I don’t currently have access to?
- Am I in or approaching the age 60–63 window where my plan’s enhanced catch-up limit is higher than what an IRA allows?
- Can I see your Form ADV Part 2 before we move forward?
- What happens to my money if your firm closes or you leave the industry?
If the advisor pushes back on any of these as excessive or unnecessary, that’s your answer.
Common Mistakes People Make With Rollovers
Doing an indirect rollover
If you take a distribution and then deposit it into an IRA yourself within 60 days, that’s an indirect rollover. Your plan will withhold 20% for taxes, and you’ll have to come up with that money out of pocket to roll over the full amount. You can almost always avoid this entirely by requesting a direct rollover, also called a trustee-to-trustee transfer, from your plan administrator.
Rolling over company stock without looking at NUA first
If you hold appreciated employer stock in your plan, rolling it into an IRA may cost you significantly more in taxes than a strategy called Net Unrealized Appreciation (NUA). This is worth a conversation with a tax professional before you initiate any transfer.
Assuming a larger institution means lower cost
Big financial firms offer scale and brand recognition. That doesn’t automatically mean lower fees, better fund selection, or more personalized service. Compare on actual numbers, not name recognition.
Not comparing your current plan first
Before assuming an IRA is better, actually pull up your plan’s fund lineup and look at the expense ratios. Many large employer plans offer institutional-class funds with very low costs that you wouldn’t have access to in a retail IRA.
Moving money you might need before 59½
If you’re in your mid-50s, leaving your former employer’s plan may preserve the Rule of 55 option for penalty-free withdrawals before 59½. Roll it into an IRA and that option is gone until you hit the standard age threshold.
Red Flags That Should Give You Pause
Who Should Probably Roll Over
Who Should Think Carefully First
The Bottom Line
The rollover conversation happens constantly in financial services, partly because it’s genuinely useful in some situations, and partly because it generates recurring revenue for advisors and firms. The 2026 rule changes make the comparison more nuanced than ever, especially for people in their early 60s who have access to enhanced catch-up contributions their employer plan still allows.
Before you move anything, slow down. Look at what your current plan actually costs. Ask the advisor in front of you how they’re compensated. And make sure the decision is based on your situation, not a general pitch about flexibility and simplicity.
The money you’ve spent decades building deserves that level of attention.
This content is for informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified fiduciary advisor before making rollover decisions.
