If you’re looking to take money out of your 401k plan, either through a rollover or withdrawal, it can take anywhere from a few business days to two months, depending on what options you choose.

How long does a 401k rollover take?

A 401k rollover is the transfer of money from your old 401k plan to another tax-advantaged retirement plan. If you’re leaving your employer, you could choose to rollover your funds to an IRA or another 401k.

The length of time it takes for your rollover to complete depends on if you choose to do a direct rollover or an indirect rollover.

How long does a direct rollover take?

A direct rollover is the faster rollover option, and takes anywhere between 3 to 7 business days depending on your plan provider. The money gets sent straight from your old plan provider to your new plan provider, and you never touch the money.

A direct rollover is typically not a taxable event, and there are no penalties associated with direct rollovers. Taxes would only be applied if you’re moving funds from a pre-tax retirement account to a Roth retirement account.

How long does an indirect rollover take?

An indirect rollover is oftentimes called a 60-day rollover because you’re given 60 days to complete the rollover yourself.

Unlike a direct rollover, your plan provider will send you the money rather than sending it directly to the new plan provider. You’re given 60 days to deposit the money in full to your new account. If you’re late, it’ll be treated as an early distribution and, if you’re under the age of 59½, a penalty of 10% would be applied on top of regular income taxes.

An indirect rollover technically takes longer than 60 days to complete because 20% of the rollover amount is withheld by your old plan provider. 

For example, if you do a 60-day rollover of $10,000 then $2,000 would get withheld. It’s then up to you to come up with the withheld amount from other sources and make the deposit in full to your new account.

If you successfully deposit the money in full to your new account, the withheld amount gets returned to you in the form of a tax credit the next time you file your taxes.

How long does a 401k withdrawal take?

A 401k withdrawal can take anywhere between 1 to 2 weeks, depending on your plan provider. 

Early withdrawal penalties

If you’re taking a 401k distribution and you’re under the age of 59½, you’ll have to pay a 10% early distribution penalty plus income taxes on your withdrawal. If you request exemption from the penalty due to hardship, it can add several days or weeks to your withdrawal processing time.

Check or direct deposit

A direct deposit into your bank account is the fastest way to receive a 401k withdrawal. If you choose to take your distribution through a physical check, this can add 7 to 10 days to your withdrawal processing time, as your plan provider will need to write the check and snail mail it to you. Depending on the size of the check, it may also take a few days for the funds to clear once you deposit the check into your bank account.