Yes, you can roll over your 401(k) directly to a Roth IRA, but you'll owe income taxes on the pre-tax contributions and earnings. This can be a powerful strategy if you're in a low tax bracket—such as between jobs, in early retirement before Social Security begins, or during a market downturn when account values are lower. For Scottsdale retirees, the years between retiring at 62 and starting Social Security at 70 often provide ideal low-income windows for Roth conversions. Strategic partial conversions over multiple years can minimize tax impact.

If you own highly appreciated company stock in your 401(k), you may benefit from Net Unrealized Appreciation (NUA) tax treatment instead of rolling over. With NUA, you distribute the company stock to a taxable brokerage account (not an IRA), pay ordinary income tax only on your original cost basis, and then pay long-term capital gains rates (typically 15-20%) on the appreciation when you eventually sell. This can save significantly more in taxes than rolling the stock to an IRA where all withdrawals are taxed as ordinary income.

Yes, potentially. If you roll pre-tax 401(k) funds into a traditional IRA, the pro-rata rule will apply to any future backdoor Roth conversions, causing a portion to be taxable. However, some strategies can help: rolling your 401(k) into your current employer's 401(k) plan (if allowed) keeps your IRA balance at zero for clean backdoor Roths, or converting your entire traditional IRA to Roth and paying the taxes upfront. This is important planning for high-earning Scottsdale professionals who exceed Roth IRA income limits.

There's no deadline for rolling over your 401(k) after leaving an employer, though plans can require accounts under $7,000 to be distributed. However, if you receive a check made payable to you (indirect rollover), you must deposit it into a qualified retirement account within 60 days to avoid taxes and penalties. Direct rollovers—where funds transfer between institutions—are safer and have no time limit. Many Scottsdale retirees benefit from rolling over soon after leaving to begin implementing personalized investment and tax strategies.

For straightforward rollovers with small balances, you may be comfortable managing it yourself. However, working with a fee-only fiduciary advisor is valuable when you have larger balances, company stock requiring NUA analysis, multiple old 401(k)s to consolidate, complex tax situations, or need to coordinate the rollover with Roth conversion strategies, Medicare planning, or broader retirement income planning. The wrong rollover decision can cost thousands in unnecessary taxes or lost planning opportunities—professional guidance typically pays for itself many times over.