How do you roll over an Empower 401(k) to an IRA? Open an IRA first, then ask Empower for a direct rollover so the funds move straight to the new account. Handled this way, the transfer is not taxed, and you keep more control over how the money is invested.
An Empower 401(k) rollover to IRA moves your retirement savings out of a former employer plan and into an account you direct. If you have left a job, the balance does not have to stay where it sits. This guide covers the exact steps, the difference between a direct and an indirect transfer, and the one withholding trap that catches people who move the money the wrong way.
Is an Empower 401(k) Rollover to an IRA Taxable?
A direct rollover from an Empower 401(k) to a traditional IRA is generally not a taxable event, because the money moves straight between custodians and never lands in your hands. An indirect rollover, where Empower sends a check to you, can trigger withholding and taxes if you miss the 60-day redeposit window.
What an Empower 401(k) Rollover to IRA Involves
The path has four clear steps, and the order matters. Opening the receiving account first gives Empower a destination, which keeps the money out of your hands and protects the tax treatment. The work mirrors the broader 401(k) rollover strategy that applies whenever you leave an employer.
- Open the receiving IRA first. Set up a traditional IRA at the custodian you want to use. A traditional IRA keeps the same tax-deferred treatment your workplace plan had.
- Ask Empower for a direct rollover. Request that the funds go directly to the new account. Avoid having the check made out to you personally.
- Tell Empower where the money goes. Provide the receiving account number and custodian details so the transfer is routed correctly.
- Confirm the deposit, then invest. Cash often arrives uninvested, so place your investment selections once the funds settle.
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Direct vs Indirect Rollover: Why the Method Matters
The method you choose decides how much friction and tax risk you take on. A direct transfer moves the money custodian to custodian. An indirect transfer pays you first, and the recordkeeper is required to withhold 20 percent for taxes. To complete an indirect rollover without tax, you have 60 days to redeposit the full original amount, including the part that was withheld. You would need to cover the withheld portion from other cash until you recover it at tax time.
| Feature | Direct Rollover | Indirect Rollover |
|---|---|---|
| How the money moves | Custodian to custodian | Check paid to you |
| 20 percent withholding | None | Required |
| Deadline to act | No 60-day clock | 60 days to redeposit |
| Tax treatment | Stays tax-deferred | Taxable if the window is missed |
Traditional or Roth: Where the Money Lands
Many rollovers go into a traditional IRA, which preserves the tax-deferred status of the original savings. Moving the money into a Roth IRA instead is a conversion, and it is taxable in the year you do it. A Roth move may make sense in a lower-income year, though it can raise your current tax bill. The timing deserves a careful look alongside the rest of your retirement income planning.
When Keeping the Money in the Plan Can Make Sense
A rollover is not always the right call, and a balanced look weighs both sides. Some Empower plans offer a self-directed brokerage account with low-cost institutional funds, strong creditor protection, or a separation-from-service rule that allows penalty-free access at age 55. Those features can favor leaving the balance where it is. The tradeoff is fewer investment choices and less consolidated oversight than an IRA tends to provide. Weighing these factors is part of sound retirement planning.
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Frequently Asked Questions
How Long Does an Empower 401(k) Rollover to an IRA Take?
Direct transfers often settle within one to three weeks, though timing depends on how quickly Empower processes the request and whether the receiving account is open and ready. Opening the IRA before you start tends to shorten the wait.
Will I Owe Taxes on the Rollover?
A direct rollover into a traditional IRA is generally not taxed. Taxes can apply if you choose an indirect rollover and miss the 60-day deadline, or if you convert the money into a Roth IRA, which is a taxable event by design.
Can I Roll an Empower 401(k) into a Roth IRA?
Yes, but it counts as a conversion and the converted amount is taxable in the current year. Many people first roll into a traditional IRA, then convert in stages. You can read more about timing in our guide to a Roth conversion.
What Is the 60-Day Rollover Rule?
If the money is paid to you instead of moving directly, you have 60 days to deposit it into an IRA. Miss that window and the amount may be treated as a taxable distribution, possibly with an early withdrawal penalty.
Should I Roll Over or Leave the Money With Empower?
It depends on your investment options, fees, creditor protection, and access needs. An IRA can offer more choices and simpler oversight, while some plans hold features worth keeping. The right answer tends to vary by situation.
Do I Need to Sell My Investments Before the Rollover?
In many cases the plan liquidates holdings and moves cash, which you then reinvest in the IRA. Some custodians can move certain positions in kind. Confirm the method with Empower before you begin so you understand any time out of the market.
Can I Roll Over Only Part of My Empower 401(k)?
Partial rollovers are often allowed, so you can move a portion to an IRA and leave the rest in the plan. Plan rules vary, so confirm what Empower permits before deciding how much to transfer.
