5 Signs Your Rollover Is Too Complex for DIY

When Self-Directed Rollovers Become Dangerous

Rolling over a single 401(k) to a Fidelity IRA is straightforward. Download some forms, make some phone calls, wait a few weeks. But not every rollover is simple. Some situations demand professional guidance—and attempting them alone can cost thousands in taxes, penalties, or lost opportunities.

Here are five signs your rollover needs expert help.

Sign 1: You Have Multiple Account Types Requiring Different Treatment

When you’re rolling over a mix of traditional 401(k), Roth 401(k), after-tax contributions, company stock, and maybe a pension, the complexity multiplies exponentially.

Each piece has different rules:

Traditional pre-tax 401(k) → Traditional IRA (no tax)
Roth 401(k) → Roth IRA (no tax, but must track separately)
After-tax contributions → Roth IRA (potential mega backdoor Roth)
Company stock → Taxable account (Net Unrealized Appreciation strategy)
Pension → May have survivor benefit requirements

Rolling all of this into a single traditional IRA loses the Roth benefits and NUA opportunity. A professional can map each component to its optimal destination.

Sign 2: Company Stock With Significant Appreciation

Net Unrealized Appreciation (NUA) is one of the most valuable—and most misunderstood—tax strategies available. If your 401(k) holds company stock that has appreciated significantly, rolling it into an IRA might be the wrong move.

NUA strategy: Transfer company stock to a taxable brokerage account (not an IRA). You pay ordinary income tax only on the cost basis—the original purchase price. All appreciation is taxed at long-term capital gains rates when you eventually sell.

Example:

Company stock in 401(k): $200,000 current value
Cost basis: $40,000
Appreciation: $160,000

If rolled to IRA and withdrawn at 32% bracket: $64,000 in ordinary income tax

If NUA strategy used (15% capital gains rate): $12,800 on cost basis + $24,000 on appreciation = $36,800 total

Savings: $27,200

But NUA has strict requirements. Miss one rule, and you’ve lost the opportunity permanently. This is not DIY territory.

Sign 3: You’re Within 5 Years of Retirement

Rollovers near retirement require sequence-of-returns planning, tax bracket management, and Social Security coordination that younger accumulators don’t face.

Questions a professional should help answer:

Should you convert some funds to Roth before RMDs begin?
How will rollover timing affect Medicare premiums (IRMAA)?
Is a partial rollover better than full consolidation?
Should you leave funds in the 401(k) for the “still-working” RMD exception?

A wrong move at 63 has limited recovery time. The stakes are higher than at 43.

Sign 4: Divorce, Inheritance, or Legal Complexity

Retirement accounts in divorce require a Qualified Domestic Relations Order (QDRO) before assets can be divided. Rolling over before the QDRO is finalized can create tax liability and legal complications.

Inherited retirement accounts have entirely different rules based on your relationship to the deceased, whether they’d started RMDs, and the account type. The SECURE Act’s 10-year rule makes inherited IRA planning more complex than ever.

If your rollover involves:

Pending or recent divorce
Assets you inherited from someone other than a spouse
Accounts with multiple beneficiaries
Trust involvement
Creditor protection concerns

…you need professional guidance before moving anything.

Sign 5: Your Total Situation Makes You Uncomfortable

Trust your instincts. If you’ve researched rollover rules and still feel uncertain, that uncertainty is valuable information. The cost of a few hours with a fee-only financial advisor ($200-$400/hour) is trivial compared to a mistake on a $500,000 rollover.

Signs you’re in over your head:

You can’t explain the tax consequences of each rollover option
The terms “basis,” “pro-rata rule,” or “NUA” are unfamiliar
You’re rolling over more than $250,000
Multiple life changes are happening simultaneously (retirement, divorce, inheritance, relocation)
You’re not sure if a Roth conversion makes sense

Finding the Right Help

Avoid advisors who want to manage your money in exchange for rollover help. Look for:

Fee-only fiduciary advisors: No commissions, legally required to act in your interest
Hourly or flat-fee structure: Pay for the advice, not ongoing management
CFP (Certified Financial Planner) credential: Ensures comprehensive training
CPA with retirement planning experience: For tax-complex situations

Resources: NAPFA.org, Garrett Planning Network, and fee-only advisors listed on XY Planning Network.

The Bottom Line

Most rollovers are simple. But when complexity enters—multiple account types, company stock, divorce, inheritance, or proximity to retirement—the potential for expensive mistakes grows. Recognizing when you need help is itself a sign of financial maturity. Don’t let pride cost you tens of thousands in avoidable errors.