Vanguard S&P 500 ETF
Price
$710.72
YTD
+12.78%
Expense
0.03%
Yield
1.28%
🇺🇸 United States
Best ETFs for 401k Rollover
Top ETFs for building a diversified portfolio after rolling over your 401k to an IRA.
Best ETFs for 401(k) Rollover
When you leave a job, rolling your 401(k) into an IRA gives you access to the full universe of ETFs instead of the limited fund menu in most 401(k) plans. This rollover opportunity is a chance to upgrade to lower-cost, better-performing ETFs while maintaining the tax-deferred status of your retirement savings.
The Rollover Process
Request a direct rollover (trustee-to-trustee transfer) from your 401(k) provider to your IRA custodian. This avoids the 20% mandatory withholding that applies to indirect rollovers. Most rollovers complete within 5-10 business days. Invest in your chosen ETF portfolio as soon as the funds arrive to minimize time out of the market.
Fee Savings from Rolling Over
The average 401(k) plan charges 0.50-1.00% in total fees (fund expenses + plan administration). Rolling to low-cost ETFs charging 0.03-0.07% can save thousands annually. On a $300,000 rollover, reducing fees from 0.75% to 0.05% saves $2,100 per year — over $63,000 across 30 years of compounding.
Building Your Rollover Portfolio
A simple three-fund ETF portfolio — VTI (US stocks), VXUS (international stocks), and BND (bonds) — provides excellent diversification at minimal cost. Allocate based on your age and risk tolerance: younger investors tilt toward stocks, while those near retirement increase bond allocation.
🏆 Winner — #1 pick
Vanguard Total Stock Market ETF
Price
$380.93
YTD
+11.92%
Expense
0.03%
Yield
1.32%
Vanguard Total Bond Market ETF
Price
$71.93
YTD
+2.15%
Expense
0.03%
Yield
4.25%
iShares Core U.S. Aggregate Bond ETF
Price
$96.95
YTD
+3.20%
Expense
0.03%
Yield
4.35%
Vanguard Dividend Appreciation ETF
Price
$243.14
YTD
+12.80%
Expense
0.06%
Yield
1.75%
iShares Core S&P Total U.S. Stock Market ETF
Price
$169.17
YTD
—
Expense
0.03%
Yield
—
Frequently asked questions
Should I roll my 401(k) into an IRA with ETFs?
In most cases, yes. Rolling to an IRA gives you access to lower-cost ETFs, greater investment flexibility, and potentially better tools. The exception: if your 401(k) has institutional share classes with fees below 0.03% or offers unique benefits like after-tax contributions.
What are the best ETFs for a 401k rollover?
Start with a core three-fund portfolio: VTI or VOO (US stocks), VXUS (international), and BND (bonds). This simple combination provides global diversification at under 0.05% total cost — far less than most 401(k) plans charge.
How long does a 401(k) rollover take?
A direct trustee-to-trustee rollover typically takes 5-10 business days. During this time, your money is not invested. Some providers may take 2-4 weeks. Request the rollover early and have your ETF purchase plan ready to minimize time out of the market.
Do I pay taxes on a 401(k) to IRA rollover?
No taxes if you do a direct rollover from Traditional 401(k) to Traditional IRA (or Roth 401(k) to Roth IRA). You will owe taxes if converting from Traditional 401(k) to Roth IRA — this is a Roth conversion, taxed as ordinary income.
Can I roll my 401(k) into a Roth IRA?
Yes, but you will owe income taxes on the converted amount. This can be advantageous if you are in a low tax bracket or expect higher future taxes. Consider partial conversions spread across multiple years to manage the tax impact.