Move old plan money with a 401(k) rollover to an IRA at Tolleson Wealth Management

Can I pay myself monthly from three old 401(k)s, or is a rollover to an IRA cleaner?

Leaving money in old plans can feel harmless, but a 401(k) rollover to an IRA is cleaner when three accounts must fund one monthly check and each plan controls what can be sold. Many plans allow only lump sums or require withdrawals from every fund proportionally, which can force sales in a down month.

This often affects someone who changed jobs two or three times, caught up hard at ages 60 to 63 with the IRS 2026 higher catch-up of $11,250, and now needs one account with cash and spending guardrails.

Thirteen weeks from old plan to first IRA deposit

Weeks one and two begin with the most recent statement for each account. Tolleson Wealth Management marks any after-tax money, employer stock, and Roth 401(k) sub-accounts, because those labels determine whether dollars belong in a traditional IRA, a Roth IRA, or should remain in the old plan.

During weeks three and four, the new IRA is opened, along with a Roth IRA when Roth or after-tax dollars call for one. Beneficiaries are named again because an old plan's beneficiary form does not follow the money. Direct rollover requests then go to each plan. A spousal-consent signature or notarized form can add a week.

From weeks five through eight, many plans mail a check payable to the new custodian for your benefit at your home address. Send it on within days, and we confirm that each deposit matches the requested amount. In weeks nine through 13, the IRA is invested, a cash reserve is funded, and the monthly transfer to checking is set for its first deposit. Once invested, the IRA's value can fall below the amount rolled in.

Should I roll all of it, or does some money stay put?

Consolidating everything into a single IRA sounds tidy, but some money should stay in a 401(k). The rule of 55, valuable employer stock, a backdoor Roth, after-tax contributions, and an RMD year can each make a partial rollover or a delay worth more than consolidation.

Under the rule of 55, you can take penalty-free withdrawals from the 401(k) of the employer you separated from in the calendar year you turn 55 or later. Move that same money into an IRA and the exception is gone until 59½. Employer stock with large gains may also qualify for net unrealized appreciation treatment, which a rollover gives up.

For illustration (hypothetical): Pavel, now a 71-year-old divorced retired pharmacist with two adult children, has nearly all his savings in one $2.1M traditional IRA. At 58, while still working and earning above the Roth IRA income range, he rolled a $400K old 401(k) into a traditional IRA for broader fund choices. He then put $8,600 into a nondeductible IRA, using the IRS 2026 IRA limit of $7,500 plus the $1,100 catch-up, and converted it to a Roth.

That move created a tax bill. The pro-rata calculation counted his December 31 IRA balance: $400K divided by $408.6K equals about 97.9 percent pre-tax. Then $8,600 × 97.9 percent equals roughly $8,420 taxable. At an assumed 24 percent tax rate, $8,420 × 24 percent equals about $2,020. Before December 31, Pavel moved the $400K into his current employer's 401(k), which accepted roll-ins. At retirement, he rolled it to his IRA.

Quick test: if you are still working, earn above the IRS 2026 Roth IRA ranges of $153,000–$168,000 single or $242,000–$252,000 joint, and expect to make a backdoor Roth contribution, keep pre-tax dollars out of traditional IRAs by December 31. Put old 401(k) money into the current employer plan if it accepts roll-ins, then wait on the IRA rollover. Find your row before giving rollover instructions; the dividing line is whether a tax rule stays with the old plan or follows all your IRAs.

After-tax 401(k) money placed in a traditional IRA without IRS Form 8606 can lose its paper trail and be taxed again at withdrawal. A hypothetical $40K basis taxed again at an assumed 24 percent costs $9,600. Fixing it means finding old 1099-Rs, where box 5 may show after-tax amounts, locating plan statements, and filing Form 8606 before the first IRA withdrawal when possible.

Tolleson Wealth Management does not use a rollover to make institutional-low fund costs cheaper or repair spending that is too high. A CPA should run the NUA math on employer stock. An estate attorney should also assess creditor protection, because ERISA plans and IRAs receive different protection and IRA rules vary by state.

The IRA after the rollover

For Retirement income planning, Tolleson Wealth Management makes the IRA the account that pays the monthly check. Guardrails raise that transfer after strong markets and trim it after weak ones; the number is never fixed for life. For Social Security claiming, a larger IRA can cover the years you choose to wait for benefits, including a wait to age 70. For a Roth conversion strategy, the IRA becomes the conversion pool, while after-tax 401(k) dollars can go directly to a Roth IRA during the rollover. Pavel's $2.1M IRA is also why his required minimum distributions at 73 will be large.

Is a rollover discussion with Tolleson Wealth Management worth doing this year?

A rollover discussion with Tolleson Wealth Management is worth doing now when you expect to leave work within 12 months, hold two old plans, or see employer stock, after-tax money, or an RMD ahead. If none apply and you are funding a backdoor Roth while still employed, waiting often avoids needless tax friction.

An RMD year deserves special attention. The IRS requires RMDs beginning at 73, or at 75 for people born in 1960 or later, and that year's RMD must come out before the remaining balance can roll over. A rollover also may wait when you left work between 55 and 59½ and need penalty-free access to that employer plan's money, or when the old plan already offers unusually low-cost funds.

Upload the most recent statement for each plan using the form at tollesonmanagement.com. We hold the opening meeting over a screen-share video call or by phone. Before any money moves, Tolleson Wealth Management writes down how it is paid and gives you that explanation. The firm's minimum is $500K in investable assets.