Five Signs Your Rollover Is Too Complicated to DIY
Rolling over a single 401(k) to a Fidelity IRA? Pretty straightforward. Download some forms, make some calls, wait a few weeks. But not every rollover situation is simple. Some situations genuinely demand professional help, and trying to handle them yourself can cost thousands in taxes, penalties, or missed opportunities.
Here are five signs your rollover needs expert guidance.
Sign 1: You Have Multiple Account Types That Need 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 too, the complexity multiplies fast.
Each piece has its own rules:
- Traditional pre-tax 401(k) goes to a Traditional IRA (no tax)
- Roth 401(k) goes to a Roth IRA (no tax, but track it separately)
- After-tax contributions can go to a Roth IRA (potential mega backdoor Roth)
- Company stock might go to a taxable account (Net Unrealized Appreciation strategy)
- Pension may have survivor benefit requirements attached
Roll everything into one traditional IRA and you lose the Roth benefits and the NUA opportunity. A professional can map each piece to where it belongs.
Sign 2: Company Stock With Significant Appreciation
Net Unrealized Appreciation (NUA) is one of the most valuable tax strategies out there, and also one of the most misunderstood. If your 401(k) holds company stock that’s gone up substantially, rolling it into an IRA might actually be the wrong move.
The NUA strategy: Transfer company stock to a taxable brokerage account instead of an IRA. You pay ordinary income tax only on the cost basis, which is the original purchase price. All the appreciation gets 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If rolled to IRA and withdrawn at 32% bracket: $64,000 in ordinary income tax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 comes with strict requirements. Miss one rule and you’ve lost the opportunity forever. This really isn’t DIY territory.
Sign 3: You’re Within 5 Years of Retirement
Rollovers close to retirement require thinking about sequence-of-returns planning, tax bracket management, and Social Security coordination that people in their 40s don’t have to worry about.
Questions a professional should help you answer:
- Should you convert some funds to Roth before RMDs kick in?
- How will the timing affect your Medicare premiums (IRMAA)?
- Is a partial rollover better than moving everything at once?
- Should you leave funds in the 401(k) for the “still-working” RMD exception?
A wrong move at 63 doesn’t give you much time to recover. The stakes are higher than when you’re 43.
Sign 4: Divorce, Inheritance, or Legal Complexity
Retirement accounts in a divorce need a Qualified Domestic Relations Order (QDRO) before anything gets divided. Rolling over before the QDRO is finalized can create tax problems and legal headaches.
Inherited retirement accounts follow entirely different rules based on your relationship to the deceased, whether they’d started taking RMDs, and what type of account it was. The SECURE Act’s 10-year rule makes inherited IRA planning more complicated than ever.
If your rollover involves:
- A pending or recent divorce
- Assets you inherited from someone other than a spouse
- Accounts with multiple beneficiaries
- Trusts
- Creditor protection concerns
…you need professional guidance before moving anything.
Sign 5: Your Gut Is Telling You Something’s Off
Trust your instincts on this one. If you’ve researched rollover rules and still feel uncertain, that uncertainty means something. The cost of a few hours with a fee-only financial advisor ($200-$400/hour) is nothing compared to a mistake on a $500,000 rollover.
Signs you might be in over your head:
- You can’t clearly explain the tax consequences of each rollover option
- Terms like “basis,” “pro-rata rule,” or “NUA” are unfamiliar
- You’re rolling over more than $250,000
- Multiple life changes are happening at once (retirement, divorce, inheritance, moving)
- You’re not sure whether a Roth conversion makes sense
Finding the Right Help
Avoid advisors who want to manage your money in exchange for rollover help. Instead, look for:
- Fee-only fiduciary advisors: No commissions, legally required to act in your interest
- Hourly or flat-fee structure: Pay for advice, not ongoing management
- CFP (Certified Financial Planner) credential: Shows comprehensive training
- CPA with retirement planning experience: For tax-heavy situations
Good 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 the picture, whether that’s multiple account types, company stock, divorce, inheritance, or being close to retirement, the potential for expensive mistakes grows. Recognizing when you need help is actually a sign of financial maturity. Don’t let pride cost you tens of thousands in avoidable errors.
