401(a) Rollover Options (To IRA, 457, 401(k) and more)

You can roll over funds from your 401(a) plan into a variety of other plans. We look at the different options below.

Options For a 401(a) After Leaving an Employer

If you have a 401(a) with your existing employer and you leave that job, you can either keep the funds in the 401(a) plan, roll them over into another plan – such as another 401(a), 401(k), a 457, or an IRA – or cash the funds out.

If you are below age 59½ and decide to withdraw the funds, you will pay a 10% penalty on the early withdrawal.

Most people either leave the funds in the existing 401(a) plan or roll the funds into a new account. If you choose to leave the funds in the 401(a) but you job, you’ll no longer be able to contribute to the plan, but funds already in the plan will continue to be invested and grow tax-deferred until retirement. At that point you can withdraw them as regular taxable income.

401(a) Rollover Rules

You can roll over funds from a 401(a) into a qualified 401(a) plan with another employer, (if the employer allows rollovers), as well as into a traditional IRA or a private-sector 401(k). You can also convert pre-tax 401(a) contributions into Roth contributions and then roll the funds over into a Roth IRA, although you’ll be liable for taxes on the funds that you convert to the Roth.

Below are details about your options; for more information see the IRS rollover chart.

401(a) Rollover to Another 401(a)

If you leave one job for another and both employers offer 401(a) plans, you may roll one 401(a) plan into another 401(a) plan.

When rolling a 401(a) into a 401(a), so long as the rollover is made according to IRS rules, you don’t pay any tax. You’re also unlikely to pay any fees, and you simply need to talk to the providers of each plan to learn the best way to roll one 401(a) into another.

401(a) to 457 Rollover

If you leave an employer with a 401(a) plan and join one with a 457 plan, you may roll your 401(a) funds into your new employer's 457 plan.

As with a 401(a) to 401(a) rollover, you won’t pay any taxes when rolling over the funds. To initiate the rollover, first contact the provider of your original 401(a) plan. You’ll need to provide them with some details about your new 457 plan, but with some basic information in hand, rolling a 401(a) to 457 plan is straightforward.

401(a) to 401(k) Rollover

If you have a 401(a) with your employer in the public sector and leave for a position in the private sector, you may be offered a 401(k) in your new role. You can roll over 401(a) funds into a traditional private sector 401(k) plan in a process similar to rolling a 401(a) into another 401(a).

401(a) to IRA Rollover

When you roll over a 401(a) into an IRA, you don't pay any tax but in some cases there may be fees involved. Typically, there aren’t any associated fees, but you should check with both the provider of your 401(a) plan and the IRA provider.

401(a) to Roth IRA

Rolling 401(a) funds into a Roth IRA is different from the rollovers discussed above, because 401(a) funds are made on a pre-tax basis while Roth contributions are made on an after-tax basis.

That means you’re changing pre-tax contributions into post-tax contributions and will need to pay equivalent taxes on the full balance of your rollover as ordinary income. This is known as a "Roth Conversion." As an example, if you have $100,000 in your 401(a) and you wish to roll over those funds into a Roth IRA, the $100,000 will be taxed as income if you withdraw the $100,00 from the 401(a) in one full distribution.

In this case, once you've paid taxes on the funds, you aren’t liable for taxes when you withdraw them in retirement.

Questions? Contact Your Retirement Plan Advisor

If you have a question about rolling over your 401(a), you should contact the advisor who manages your plan. If your plan is held with MissionSquare, contact us.