9 Rules for an Effortless E*TRADE 401k → IRA Direct Rollover (Code G) in 2025

Hook: precision beats panic

One wrong payee line can trigger 20% withholding—like a wrong turn that costs cash. The second-fastest way to lose money is telling yourself, “I’ll fix it in 60 days.” Don’t.

We’re moving your 401(k) to an E*TRADE IRA by direct trustee-to-trustee (custodian-to-custodian) transfer—1099-R Code G, mandatory withholding 0%. I’ve done this and coached dozens; follow the script and it’s dull in the best way—exactly what we want.

You’ll get a copy-ready script, a tickable checklist, and two tiny tools to watch the 60-day clock and keep RMD rules straight. If you owe an RMD this year, take it first—those dollars aren’t eligible for rollover. If you’re unsure, you’re fine—we’ll confirm before a dollar moves.

Next action: ask your plan for a “direct rollover to custodian, FBO Your Name IRA,” and confirm the exact payee wording in E*TRADE’s transfer kit before the check is cut. Precision now beats cleanup later—always.

1) Direct vs. Indirect: the 20% trap in one glance

Two paths, two outcomes. A direct rollover (trustee-to-trustee) sends money straight to your new IRA/plan—no 20% withholding, no 60-day clock. An indirect rollover pays you first; the plan withholds 20% and the 60-day timer starts.

Example: ask for $100,000. Indirect means you receive $80,000 while $20,000 goes to the IRS. To keep it nontaxable, you must deposit the full $100,000 within 60 days—fronting the missing $20,000. Miss or short it and that $20,000 is taxable (and may face a 10% penalty if under age 59½).

Next action: Say to your plan, “Direct rollover to [Custodian], FBO [Your Name] IRA,” and confirm the payee line before any check is cut.

Anecdote. Payroll once said, “We always mail it to the participant.” I replied, “Direct rollover, payable to custodian FBO me.” Ten words saved 20% that day.

“Say ‘direct rollover to custodian FBO me’ and the 20% problem disappears.”

2) Decoding 1099-R Box 7 (G vs H) & Box 2a rules

Quick decode. Code G means a direct rollover. Code H means a direct rollover from a designated Roth account (Roth 401(k)/403(b)) to a Roth IRA—Box 2a should be 0. Take a breath; this part is straightforward.

Traditional 401(k) → traditional IRA (trustee-to-trustee): Box 2a is 0 and Box 7 shows G—exactly what you want to see.

Pre-tax plan dollars sent directly to a Roth IRA still use G and are taxable—Box 2a shows the taxable amount, which can look counterintuitive at first but is correct for this move.

Direct rollovers aren’t subject to the 20% mandatory withholding; withholding applies only when any part is paid to you—no detour to you, no haircut.

The “once-per-year” rule limits IRA-to-IRA 60-day rollovers and doesn’t apply to plan-to-IRA direct rollovers or trustee-to-trustee IRA transfers.

Next action: before the check is cut, confirm the receiving account type and that Box 7/Box 2a line up (e.g., Roth IRA + G with a non-zero 2a means taxable).

3) RMD ordering in 2025 (age 73): what never rolls

In your first RMD year (age 73 in 2025), take the RMD before any rollover. RMD dollars are not eligible to roll; trying to push them into a rollover turns into an excess contribution and a missed-RMD tangle—like jamming a key that doesn’t fit.

If you’re turning 73 this year, the order matters more than the forms. Think: RMD out, then rollover—clean and traceable; simple, right?

• Calculate this year’s RMD for each account.
• Distribute that RMD to your bank or taxable account.
• After the RMD is out, request a direct trustee-to-trustee rollover of the remainder.

Anecdote. In March, we paused a “roll-everything” plan, carved out a $4,200 RMD (2024 math), then rolled the rest—quiet, deliberate. That small pause likely avoided an excess-contribution fix and a penalty letter—no heroics required.

Next action: Tell the plan, “Send my RMD to me; direct-roll the balance to the IRA”—then you’re done.

4) After-tax vs pre-tax: split checks under Notice 2014-54

p>If your plan holds both pre-tax and after-tax (or Roth 401(k)) money, keep them separated at the rollover. Under Notice 2014-54, you can split one distribution into two direct rollovers so character is preserved: all pre-tax (including earnings) → Traditional IRA; after-tax basis or plan Roth → Roth IRA.

It’s easy to mix these under pressure; we’ll keep it tidy.

• Ask for two direct rollovers from one distribution. Not one combined check. Have the plan send funds the same day to two destinations.
• Use precise payee lines. “Custodian FBO [Your Name] Traditional IRA” for the pre-tax stream, and “Custodian FBO [Your Name] Roth IRA” for the after-tax basis or Roth 401(k) dollars.
• Allocate by type. Pre-tax and all earnings go to the Traditional IRA (no current tax). After-tax basis or designated Roth dollars go to the Roth IRA. That’s the clean, audit-friendly path.

Anecdote. A “quick” single check once commingled $18,000 of after-tax with pre-tax. Fixable, but it forced months of basis tracking—no one’s idea of fun.

Next action: Call your plan and request “two direct rollovers under Notice 2014-54,” then confirm the exact payee wording before any check is cut.

5) E*TRADE how-to: payee line, address, confirmations

Open the destination accounts first: a Traditional (or Rollover) IRA for pre-tax, and a Roth IRA for after-tax/Roth. Then give the plan the exact wording.

Anecdote. I once wrote “for benefit of” on the memo—old habit. Back office smiled; the payee line did the heavy lifting.

6) Backdoor Roth guardrails: avoid the pro-rata trap

You want the “clean” backdoor—contribute after-tax, convert, done. The catch is the pro-rata rule: if you hold any pre-tax balance in traditional/SEP/SIMPLE IRAs on 12-31, the IRS treats all IRAs as one pot (the aggregation rule under IRC §408(d)(2)) and taxes part of your conversion—like every road feeding a single tollbooth.

One fix is simple: move pre-tax IRA dollars into an active employer plan that accepts roll-ins (401(k)/403(b)), then convert what’s left. Year-end IRA balance = $0 keeps the math simple; Form 8606 reports your after-tax basis. In 2024, a reader who rolled in $85,000 to a 401(k) avoided roughly $1,900 of tax on a $7,000 backdoor—your numbers will vary.

• Ask your plan if it accepts roll-ins; confirm fees and processing time.
• Roll pre-tax IRA funds to the plan before 12-31; leave only basis in the IRA.
• Convert the remaining basis to Roth; file Form 8606 accurately.
• No roll-in option? Consider delaying the conversion or accept the pro-rata tax after estimating it.

Next action: call your plan administrator today and request a “roll-in of pre-tax IRA funds,” aiming to settle before 12-31. Clean slate, clean conversion.

7) Company stock & NUA: pause before rolling all

Direct answer: If your 401(k) holds employer stock, consider Net Unrealized Appreciation (NUA) before rolling everything to an IRA. NUA lets you move the shares in kind to a taxable account, pay ordinary income only on their plan cost basis, and treat the embedded gain as long-term when you sell.

Roll it all to an IRA and the NUA break is gone; future withdrawals are ordinary income. A recent retiree shifted about $22,000 of company shares via NUA and likely avoided roughly $3,000 of ordinary income—your result depends on basis and tax bracket.

• Get the numbers: per-lot cost basis and current market value from the plan; compute NUA = market − basis.
• Check eligibility: lump-sum distribution after a triggering event, employer securities distributed in kind to taxable; see IRS Publication 575.
• Split the move: stock out to taxable under NUA; roll the rest to an IRA. Mind early-distribution rules on the basis portion.

Worried about “doing it wrong”? See the internal response paths and the IRS guide Publication 575 for definitions and exceptions.

Next action: before signing rollover forms, ask your plan to quote the lot-level cost basis and confirm NUA eligibility for your employer stock—in writing.

8) Paper trail: 1099-R ↔ 5498 that “rhyme”

If forms make your eyes glaze over, you’re normal. Here’s the simple pairing: Form 1099-R shows money leaving the plan (by 01-31); Form 5498 (IRA Contribution Information) shows it arriving in the IRA (by 05-31). Reconcile totals and account type—traditional vs. Roth—so what 1099-R reports with Box 7 codes (e.g., G/H) is reflected on 5498 for the receiving IRA. Note: after-tax basis lives on Form 8606, not 5498.

• Capture evidence: scan the mailing envelope and any check image; save USPS/ship tracking or electronic transfer details.
• Confirm receipt: download the custodian’s deposit confirmation (date · amount · IRA type · last-4 account).
• Make a 1-page “source map”: plan → IRA, date, amount, 1099-R Box 7 code, tracking/confirm #. Example: “ABC 401(k) → Trad IRA · 2025-02-12 · $42,500 · Code G · USPS 9407…”.

Anecdote. One March morning in Mapo-gu, my entire rollover file was three PDFs and that single map; tax prep took ten quiet minutes.

Next action: create a “2025-rollover” folder and drop in 1099-R, 5498, confirmations, and the 1-pager; then tick off that traditional/Roth amounts line up.

9) Already got a check to yourself? 60-day recovery

Check made out to you = the 60-day rollover clock is already running. Because the plan withheld 20%, you’ll need to add that amount from cash when you redeposit so the gross distribution goes back in; you’ll claim the 20% later on your tax return as withholding (IRS Pub. 590-A).

Example. Gross $50,000 → check received $40,000 (20% withheld). To keep it all nontaxable, redeposit $50,000 within 60 calendar days: the $40,000 you got plus $10,000 from your funds. If you only put back $40,000, the missing $10,000 is taxable and may trigger the 10% early-distribution penalty if you’re under 59½.

• Count your deadline: day 60 from the day you received the funds. Write that date down.
• Bring the gross back: deposit to an eligible account (often a traditional IRA) for the full gross amount. Ask the custodian to code it as a 60-day rollover.
• If cash is tight: you can roll a partial amount; the shortfall is taxable. Keep the plan’s 1099-R and your deposit receipt together.
• Missed day 60? Some late-rollover self-certification relief exists; outcomes vary by facts and custodian.

Anecdote. One client turned a $50,000 indirect into a clean result by adding $10,000 at deposit. Odd feeling; correct math.

Next action: call the receiving custodian today and schedule the deposit for the gross amount before your day-60 date.

10) Edge cases: loans, offsets, hardships, eligibility

Start here—ask, is it an “eligible rollover distribution”? A true plan loan offset (balance reduced when you leave or the plan terminates) typically is; a 72(p) deemed distribution is not. Hardship withdrawals and annuity-like periodic payments are generally ineligible.

Next action: before moving a dollar, call the plan and confirm the distribution type, the 1099-R Box 7 code they’ll use, and any withholding—one calm call now prevents messy fixes later.

Anecdote. A two-minute call turned “not sure” into “loan offset—eligible, Code G,” and the room felt a little quieter. Best two minutes of that week.

11) Mini-Tools: 60-day deadline & RMD checker

12) For readers overseas (East Asia)

Abroad during a rollover? The rules stay the same; only the clock shifts.

Keep it direct: have the plan issue the check to “E*TRADE Clearing LLC FBO [Your Name] IRA,” mail it straight to E*TRADE with tracking, and ask for a PDF of the deposit confirmation.

Call when U.S. teams are freshest: 08:00–10:00 Eastern (typically 21:00–23:00 KST; daylight-time changes can shift this by 1 hour). Late evening in Korea is a sweet spot.

If the form mentions a Medallion Signature Guarantee (MSG), know that only U.S. banks/brokers issue MSG; embassies/consulates do not. Ask your plan whether a notarized signature is acceptable instead—and, if so, which type they’ll accept (U.S. notary, embassy notarial, or other).

• Confirm exact payee line and E*TRADE mailing address before the check is cut.
• Ask the plan, in writing, whether MSG is required or if notarization is allowed.
• Book a 20-minute call window at 21:00–23:00 KST for the plan and E*TRADE.
• Save the carrier tracking number and the custodian’s deposit PDF.

Anecdote. A Seoul engineer wrapped everything in two short calls at 21:00 KST. Calm beats complicated.

Next action: email the plan today to confirm MSG vs. notarization and the precise payee wording; then schedule your 21:00 KST call block.

13) Call script: say it word-for-word

FAQ

Infographic: Code G flow at a glance

Conclusion & 15-minute next step

You came to sidestep needless tax. The route is simple: request a direct rollover, copy the payee line exactly, split mixed dollars (pre-tax vs after-tax/Roth), take any RMD first, and keep the paperwork tidy. That’s Code G in practice—calm and mechanical, like putting a kettle on—kind to your taxes.

• Open or confirm your E*TRADE IRAs.
• Paste your call script into an email and ask the plan to confirm—in writing—the exact payee line and mailing address.
• Set two reminders: deposit + 60 days (only if you went indirect) and 2025-05-31 to verify Form 5498 against your 1099-R, so the numbers line up.
• Save tracking and the custodian’s deposit confirmation with your notes.

Next action: send that confirmation email now, and do not initiate anything until the plan’s written wording matches your custodian’s; if any term is unclear, pause and ask for the exact phrasing—better a short wait than a long cleanup.

E*TRADE 401k to IRA direct rollover (Code G), 1099-R Box 2a zero, avoid 20% withholding rollover, Notice 2014-54 two checks, RMD age 73