401(k) Rollover Calculator: Compare IRA, Roth & Cash-Out

When you leave a job, your 401(k) can stay where it is, move to an IRA, move to your new employer's plan, or be cashed out. This calculator puts a dollar figure on the biggest difference between those choices: keeping the money invested versus taking it now.

The short answer: for most people under 59½, a direct rollover beats cashing out by a wide margin, because cashing out costs your income tax rate plus a 10% penalty today and forfeits decades of tax-deferred growth. With the calculator's default inputs, an $85,000 balance at age 35 nets $56,100 in cash, while the same money rolled over projects to about $647,000 at 65, or about $504,700 after a 22% tax on withdrawal.

This calculator is for informational purposes only. Its results are estimates based on the rates you enter, not tax advice or a guarantee of future returns.

For the full rules on moving pre-tax money into a Roth IRA, read how to roll a 401(k) into a Roth IRA without a penalty.

What each input means

How the calculator does the math

Growth factor: (1 + annual return)^(retirement age − current age)

For each option it reports the tax paid today and the after-tax value at retirement:

• Traditional IRA rollover and new employer 401(k): no tax today on a direct rollover. After-tax value = balance × growth factor × (1 − retirement tax rate).
• Roth IRA conversion: tax today = balance × current rate, with no 10% penalty on a direct conversion. The account grows tax-free, and the tool subtracts what the tax money would have grown to if you'd kept it invested: after-tax value = balance × growth factor − tax today × growth factor.
• Cash out: income tax = balance × current rate, plus the 10% penalty if you're under 59½ and the age-55 exception doesn't apply. The plan withholds a mandatory 20% for federal tax, and you settle the difference on your return. The cash you keep is then projected at the same return, before any tax on its future gains.

The tool highlights the option with the highest after-tax value and explains whether today's rate or the retirement rate favors a Roth conversion.

Worked example using the default inputs

Inputs: $85,000 balance, age 35, 7% return, 24% current bracket, 22% retirement bracket, 10% penalty.

• Years to 65: 30
• Growth factor: 1.07³⁰ ≈ 7.612
• Projected rollover value: $85,000 × 7.612 ≈ $647,042
• Cash-out income tax: $85,000 × 24% = $20,400
• Penalty: $85,000 × 10% = $8,500
• Net cash-out: $85,000 − $20,400 − $8,500 = $56,100
• Rollover benefit: $647,042 − $56,100 ≈ $590,942

Because 24% today is higher than 22% later, the tool ranks the traditional rollover first. The comparison table shows why:

• Traditional rollover or new 401(k): $647,042 taxed at 22% on withdrawal leaves about $504,692 after tax.
• Roth conversion: you'd pay $20,400 of tax now from savings, and the $647,042 is tax-free later. But that $20,400 would otherwise stay invested; at 7% for 30 years it grows to about $155,290. Subtracting it leaves $491,752, about $12,940 behind the traditional route.
• Cash out: the $56,100 you keep grows to about $427,048 at the same return, before tax on its gains. The plan withholds $17,000 (20%) at payout, so you'd owe another $11,900 when you file.

Flip the rates (22% now, 24% later) and the Roth conversion wins. That's the core rule of thumb: convert when you expect a higher rate later.

How your age changes the cost of cashing out

The younger you are, the more a cash-out costs in growth you give up. Here is a $30,000 balance run through the same formulas at a 7% return, a 22% tax rate, and the 10% penalty:

The cash you keep is the same at every age because tax and penalty are a flat share of the balance. The future value is what changes: at 25, every dollar you cash out is worth roughly $15 at 65 at this return. Run the numbers at a lower return too; at 5%, the age-25 figure is still about $211,000.

How to read the results honestly

The calculator keeps the math simple, so keep these limits in mind:

• It applies one tax rate to the whole balance. A large cash-out can push part of the money into a higher bracket, and part may fall in a lower one. For bracket-by-bracket math, run the amount through the IRA withdrawal tax calculator, which stacks the withdrawal on top of your other income.
• One retirement rate for every withdrawal. In reality, withdrawals are taxed through the brackets each year, and Social Security and RMDs change your rate; treat the retirement rate as your best average guess.
• Returns aren't guaranteed. A 7% average doesn't mean 7% each year, and the order of returns matters if you withdraw during a downturn.
• Fees aren't modeled. A plan with high expense ratios can make a low-cost IRA the better home even when everything else is equal.
• Mandatory 20% withholding isn't the final tax. On a cash-out, the plan withholds 20% for federal tax, and you settle the true amount on your return; the tool shows the balance due.
• Roth conversions assume outside cash pays the tax. If the tax comes out of the converted balance instead, less money goes into the Roth, and under 59½ the amount withheld is itself an early distribution subject to the 10% penalty.

Which rollover destination fits you?

If you plan to use the backdoor Roth calculator for future Roth contributions, the new-employer 401(k) or leaving it in the old plan often beats a traditional IRA rollover, because pre-tax IRA balances trigger the pro-rata rule.

How a direct rollover works, step by step

1. Open the receiving account (traditional IRA, Roth IRA, or confirm your new plan accepts rollovers) and get its rollover instructions.
2. Request a direct rollover from your old plan, online or by phone. Specify where each money type goes: pre-tax to traditional, Roth 401(k) to Roth IRA.
3. Choose no withholding on the rolled amount. Direct rollovers aren't subject to the mandatory 20%.
4. Track the check or wire. Some plans mail a check payable to the new custodian for your benefit; forward it promptly.
5. Keep Form 1099-R from the old plan (code G for a direct rollover) and report it on Form 1040 lines 5a and 5b; the taxable amount should be $0 for a traditional rollover.

If you already received a check, you have 60 days to deposit the full pre-withholding amount. Any part you don't replace, including the withheld 20%, becomes a taxable distribution.

Special situations

You're 55 or older. If you left your job in or after the year you turned 55, withdrawals from that employer's plan avoid the 10% penalty. Rolling that money into an IRA ends the exception, and IRA withdrawals before 59½ are penalized. Consider leaving what you'll need before 59½ in the plan.

You hold company stock. With a lump-sum distribution, the net unrealized appreciation (NUA) on employer stock can be taxed at long-term capital gains rates when sold, rather than as ordinary income. Rolling the stock into an IRA gives up that option.

You have an outstanding loan. The unpaid balance is usually offset when you leave. You can avoid tax on the offset by rolling the same amount into an IRA from other money by your tax-return due date, including extensions.

You're 73 or older. You must take that year's required minimum distribution before rolling over, and RMDs can't be rolled over. The RMD age is 75 if you were born in 1960 or later.

Related tools and guides

• Cashing out a 401(k) at 30: a full worked example including 20% withholding, state tax, and the 60-day fix.
• Roth conversion calculator: bracket-by-bracket cost of converting.
• IRA withdrawal tax rules and penalties: every exception to the 10% additional tax.