401(k) 20% rollover withholding: $50,000 → $10,000
If a plan pays an eligible rollover distribution to you instead of another trustee, IRC 3405(c) requires 20% federal withholding. A direct trustee-to-trustee rollover withholds $0.
This page models only that 20% federal withholding. It does not compute ordinary income tax, the 10% early-distribution additional tax, or state withholding.
Read the evergreen explainer →
Withheld = distribution × 20% if paid to you Withheld = $0 if direct rollover to another plan or IRA Net check = distribution − withheld A full 60-day rollover needs the withheld 20% replaced from other funds
Worked example: $50,000 paid to you
Eligible distribution $50,000 paid to the participant (not direct):
- Federal withholding 20%: $10,000.00
- Check to you: $40,000.00
- Extra cash to roll the full $50,000 within 60 days: $10,000.00
If the same $50,000 is a direct rollover to another plan or IRA, withholding is $0 and the transfer is $50,000.
| Distribution | Mode | Withheld (20%) | Check / net | To replace (60 days) |
|---|---|---|---|---|
| $10,000 | Paid to you | $2,000.00 | $8,000.00 | $2,000.00 |
| $25,000 | Paid to you | $5,000.00 | $20,000.00 | $5,000.00 |
| $50,000 | Paid to you | $10,000.00 | $40,000.00 | $10,000.00 |
| $100,000 | Paid to you | $20,000.00 | $80,000.00 | $20,000.00 |
| $50,000 | Direct rollover | $0.00 | $50,000.00 | $0.00 |
Hero breakdown: $50,000 paid to you
| Item | Base / rate | Amount |
|---|---|---|
| Eligible distribution | Plan amount | $50,000.00 |
| Federal withholding 3405(c) | 20% × $50,000 | $10,000.00 |
| Check to you | 50,000 − 10,000 | $40,000.00 |
| Cash to complete 60-day rollover | Equals withheld | $10,000.00 |
What is in scope
| Item | In this calculator? | Note |
|---|---|---|
| 20% federal if paid an eligible rollover | Yes | IRC 3405(c) |
| Direct trustee-to-trustee rollover | Yes ($0 withheld) | Avoids the 20% |
| Ordinary tax on the distribution | No | Depends on your bracket and whether the rollover succeeds |
| 10% early-distribution additional tax | No | See the 401(k) early distribution calculator |
| Hardship / RMD | No | Not eligible rollover distributions |
| State withholding | No | Varies by state |
Quick FAQ
- Why 20%? The plan paid you. IRC 3405(c) requires 20% in that case. On $50,000 that is $10,000 withheld and a $40,000 check.
- How do I avoid 20%? Request a direct rollover to another plan or IRA: withholding is $0.
- What about 60 days? To roll the full amount you must replace the 20% from other funds. If you only deposit the net check, the withheld 20% may stay taxable.
Related: paycheck take-home, 401(k) deferral limit, 401(k) early distribution, 401(k) loan.
Educational estimate, not tax advice.