In general, yes, but there are some important exceptions. You cannot roll over required minimum distributions (RMDs). You also cannot roll over hardship distributions from your 401(k) plan, or certain periodic payments you receive from the plan. Most other distributions are eligible for rollover.

A rollover of regular 401(k) assets to a Roth IRA is similar to a conversion of a traditional IRA to a Roth IRA (and it's often referred to as a conversion). You'll need to pay taxes on the amount you roll over to the Roth IRA, except to the extent your distribution includes your own after-tax contributions (you receive those back tax free).

Your rollover can be either direct (the 401(k) plan transfers the funds directly to your Roth IRA for you) or indirect (the plan distributes the funds to you, and then you roll the funds over to the IRA within 60 days). A direct rollover is almost always the best way to transfer the funds. If you choose to make an indirect rollover, you run the risk of missing the 60-day deadline. More importantly, the plan will be required to withhold 20% of the taxable portion of your distribution for federal income taxes. If you want to roll over the full amount of your distribution, you'll need to come up with other funds to make up for the 20% that was withheld (you'll get credit for those withheld funds when you file your income tax return).

Qualified distributions from your Roth IRA will be tax free. To be qualified, your distribution must satisfy a five-year holding period and must be made after you reach age 59½, become disabled, or have qualifying first-time homebuyer expenses (up to $10,000 lifetime). The five-year holding period begins on January 1 of the year you first opened any Roth IRA (either by a regular contribution, rollover, or conversion).

(Note: special rules apply if you inherit a 401(k) plan account or IRA.)