Navigating Your Future: A Comprehensive Guide to Rolling Over Your Fidelity Account into Your Current 401(k) Plan
Are you considering consolidating your retirement savings? Moving an old Fidelity account into your current 401(k) plan can be a strategic move to simplify your financial life, gain better control over your investments, and potentially reduce fees. This lengthy guide will walk you through every step of the process, ensuring a smooth and tax-efficient transfer of your hard-earned retirement funds.
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| How.to.roll Fidelity Account Into Current 401k Plan |
Step 1: Are You Ready to Take Control of Your Retirement? - Assess Your Fidelity Account and Current 401(k)
Before you embark on this financial journey, it's crucial to understand the lay of the land. This initial assessment will help you determine eligibility, gather necessary information, and anticipate any potential hurdles.
Sub-heading: Understanding Your Fidelity Account
First, let's look at your Fidelity account. Do you have a Fidelity 401(k) from a previous employer, or is it a Fidelity IRA (Individual Retirement Account) that you opened yourself? The process can differ slightly depending on the account type.
Fidelity 401(k): If you're rolling over an old 401(k) from a past employer that was administered by Fidelity, you'll need to confirm a few key details:
Vesting Schedule: Are your employer's contributions fully vested? Some plans require a certain period of employment before you gain full ownership of the employer-matched funds.
Account Type (Traditional vs. Roth): Is it a traditional 401(k) (pre-tax contributions, tax-deferred growth) or a Roth 401(k) (after-tax contributions, tax-free growth in retirement)? This is critical for tax implications during the rollover.
Account Balance: While not a deal-breaker, knowing your approximate balance is helpful for planning.
Eligibility for Rollover: In most cases, your 401(k) becomes eligible for a rollover a couple of weeks after you leave your employer. Confirm this with Fidelity or your former employer's HR department.
Up-to-Date Contact Information: Ensure your mailing address and other contact details are current on your Fidelity account.
Fidelity IRA: If you have a Fidelity IRA (Traditional or Roth) and want to roll it into your current 401(k), the primary consideration is whether your current 401(k) plan accepts IRA rollovers. Not all plans do, so this is your first point of inquiry with your current employer's plan administrator. Also, Roth IRAs generally cannot be rolled into a 401(k). Only pre-tax IRA assets are typically eligible for a "reverse rollover" into a 401(k).
Sub-heading: Investigating Your Current 401(k) Plan
Now, turn your attention to your current employer's 401(k) plan. This is your destination, so you need to ensure it's a welcoming one!
Does it Accept Rollovers? This is the single most important question. Contact your current 401(k) plan administrator (often through your HR department or the plan's online portal) and explicitly ask if they accept rollovers from external retirement accounts.
Types of Rollovers Accepted: Do they accept rollovers from both traditional and Roth accounts? If your Fidelity account is a Roth 401(k), ensure your current 401(k) plan has a "designated Roth account" to receive it without tax implications.
Fees and Investment Options: Compare the fees and investment options available in your current 401(k) to your Fidelity account. While consolidation is often a driver for rollovers, ensure you're not moving to a plan with significantly higher fees or limited investment choices that don't align with your financial goals.
Plan Administrator Contact: Get the direct contact information (phone number, email, or online portal instructions) for your current 401(k) plan's rollover department. You'll need this later.
Required Documentation: Ask what specific forms or information they require for an incoming rollover. This might include a "Letter of Acceptance" or other internal paperwork.
Step 2: Charting Your Course - Choosing Your Rollover Method
There are two primary methods for rolling over retirement funds: a direct rollover and an indirect rollover. For most people, a direct rollover is the preferred and safest option to avoid potential tax headaches.
Sub-heading: Direct Rollover (Recommended)
QuickTip: Reading carefully once is better than rushing twice.
In a direct rollover, the funds are transferred directly from Fidelity to your current 401(k) plan provider. You never physically receive the money, minimizing the risk of tax penalties.
How it Works: Fidelity sends the funds (usually via check made payable to your new 401(k) plan or a wire transfer) directly to your current 401(k) administrator.
Benefits:
No Tax Withholding: Your funds aren't subject to the mandatory 20% federal income tax withholding that occurs with indirect rollovers.
No 60-Day Rule Concern: You don't have to worry about depositing the funds within 60 days to avoid penalties.
Simpler Process: Less room for error as you don't handle the funds directly.
Ideal For: Almost all situations where a rollover is desired.
Sub-heading: Indirect Rollover (Use with Caution)
An indirect rollover involves you receiving a check for your retirement funds. You then have 60 days from the date you receive the check to deposit the entire amount into your new 401(k) plan.
How it Works: Fidelity will send you a check for your account balance. However, by law, they are required to withhold 20% for federal income taxes.
Challenges and Risks:
20% Mandatory Withholding: This is the biggest pitfall. If your $10,000 account is rolled over indirectly, you'll receive a check for $8,000. To avoid taxes and penalties, you must deposit the full $10,000 into your new 401(k) within 60 days. This means you'll need to make up the $2,000 difference from other savings. You'll get the 20% back as a tax credit when you file your taxes, but you need to have the cash on hand upfront.
60-Day Deadline: Missing this deadline means the entire amount becomes a taxable distribution, and if you're under 59.5, you'll also face a 10% early withdrawal penalty.
When it Might Be Used: Rarely preferred for a 401(k) to 401(k) rollover. It's sometimes used for IRA to IRA rollovers, but even then, direct transfers are generally better.
For this guide, we will focus on the direct rollover method as it is overwhelmingly the most recommended and tax-efficient approach.
Step 3: Making the Call - Initiating the Rollover with Fidelity
With your research complete and your method chosen, it's time to contact Fidelity and begin the transfer.
Sub-heading: Contacting Fidelity's Rollover Department
Gather Your Information: Have your Fidelity account number(s) ready. If it's a former 401(k), also have any statements handy.
Call Fidelity: Call Fidelity's dedicated retirement plan customer service line. For workplace plans (401k, 403b, etc.), the number is typically 800-835-5095. For other Fidelity accounts, you can find the relevant number on their website (
fidelity.com/customer-service/phone-numbers/overview State Your Intention Clearly: Inform the representative that you wish to perform a direct rollover of your Fidelity account into your current employer's 401(k) plan. Be precise with the terminology to avoid misunderstandings.
Provide New 401(k) Details: You will need to provide them with the receiving institution's information for your current 401(k) plan. This usually includes:
The name of your current 401(k) plan administrator (e.g., Vanguard, Empower, your employer's name, etc.)
The plan's mailing address for rollovers.
Your current 401(k) plan account number.
Any specific instructions or forms provided by your new 401(k) plan administrator (like a Letter of Acceptance, if required).
Sub-heading: Completing Fidelity's Paperwork
Rollover Authorization Form: Fidelity will likely require you to fill out and sign a "Rollover Authorization Form." This form will ask for details about your Fidelity account and the receiving 401(k) plan.
Understanding Tax Withholding (for informational purposes only): Even if you're doing a direct rollover, the form might mention tax withholding options. Double-check that you're not electing to have taxes withheld, as this defeats the purpose of a direct rollover. If it's a direct rollover, the 20% withholding should not apply.
Spousal Consent (if applicable): In some cases, particularly with employer-sponsored plans, spousal consent might be required for distributions, even rollovers. Be prepared for this if it applies to your situation.
Return the Paperwork: Follow Fidelity's instructions for submitting the completed forms. This might involve mailing, faxing, or uploading them securely online.
Step 4: The Waiting Game - Tracking Your Rollover
Once you've initiated the rollover with Fidelity, it's time to monitor the progress.
QuickTip: Stop scrolling if you find value.
Sub-heading: Confirmation from Fidelity
Processing Time: A direct rollover typically takes anywhere from 3 to 7 business days to process, though it can sometimes take up to two weeks.
Confirmation: Fidelity should send you a confirmation once the distribution is processed and the funds are sent to your new 401(k) provider. This might be an email, a letter, or a notification in your online account.
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Sub-heading: Verifying Receipt with Your Current 401(k) Provider
Contact Your New Plan: After a few business days, contact your current 401(k) plan administrator to confirm they have received the funds.
Confirmation of Deposit: They should be able to confirm the deposit of the rollover funds into your account.
Default Investments: Be aware that your new 401(k) plan might have a default investment option for incoming rollovers. This means your funds could be sitting in a money market fund or similar low-risk investment until you provide specific investment instructions.
Step 5: Investing in Your Future - Allocating Your Rolled-Over Funds
Receiving the funds in your current 401(k) is a significant milestone, but the process isn't complete until those funds are properly invested according to your financial goals and risk tolerance.
Sub-heading: Reviewing Your Investment Options
Access Your Account: Log in to your current 401(k) plan's online portal.
Explore Available Funds: Review the investment options available within your plan. These are typically a curated list of mutual funds, index funds, or target-date funds.
Consider Your Financial Goals: Think about your time horizon, risk tolerance, and diversification needs. Do you want aggressive growth, moderate growth, or a more conservative approach?
Sub-heading: Allocating Your Investments
Make Your Choices: Select the specific funds and the percentage of your rolled-over assets you want to allocate to each.
Submit Your Instructions: Follow the online instructions or contact your plan administrator to submit your investment choices.
Confirm Investment: Double-check that your funds have been invested as instructed. It may take a day or two for the transactions to settle.
Step 6: Peace of Mind - Record Keeping and Final Checks
The rollover is complete! Now, it's important to keep good records and ensure everything is in order.
Keep All Documentation: Save copies of all correspondence, forms, and confirmations from both Fidelity and your current 401(k) plan. This includes statements showing the withdrawal from Fidelity and the deposit into your 401(k).
Annual Statements: Ensure the rolled-over funds are reflected accurately on your subsequent 401(k) statements.
Tax Reporting: While a direct rollover is generally non-taxable, it is a reportable event. Fidelity will typically issue a Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.) and your new 401(k) plan may issue a Form 5498 (IRA Contribution Information) if applicable. Consult a tax professional to understand how to properly report this on your tax return, though for direct rollovers, it usually results in a non-taxable event.
Benefits of Rolling Over to Your Current 401(k)
Consolidation: Simplifies your financial life by having fewer accounts to track and manage.
Potential for Lower Fees: Your current 401(k) plan might offer institutional-class funds with lower expense ratios than an IRA or old 401(k).
Streamlined Management: Easier to oversee your retirement savings as a single, cohesive portfolio.
Potential for Loans: Some 401(k) plans allow you to take a loan against your vested balance, which is generally not an option with IRAs.
Creditor Protection: 401(k) assets generally have strong creditor protection under federal law (ERISA).
"Rule of 55": If you leave your job in or after the year you turn 55, you may be able to access your 401(k) funds without the 10% early withdrawal penalty. This rule does not apply to IRAs.
Delaying RMDs (for some): If you continue working past age 73 (or 75 for those born in 1960 or later) and own less than 5% of the company, you may be able to delay Required Minimum Distributions (RMDs) from your current 401(k) until you retire. This is not possible with an IRA.
Tip: Look for small cues in wording.
Potential Disadvantages to Consider
Limited Investment Options: Your current 401(k) may have a more limited selection of investment options compared to an IRA, which typically offers a wider universe of choices.
Higher Fees: While sometimes lower, some 401(k) plans can have higher administrative fees or fund expense ratios than a low-cost IRA. Always compare.
Loss of "Rule of 55" (if applicable): If you're leaving a job and rolling an old 401(k) into a new 401(k), you might lose the immediate benefit of the Rule of 55 if you need to access funds penalty-free from the old plan.
Complexity for Roth Accounts: If you have Roth funds in your Fidelity account, ensure your new 401(k) can accept them as a Roth rollover to maintain their tax-free status.
10 Related FAQ Questions
How to initiate a direct rollover from Fidelity to my current 401(k)?
You initiate a direct rollover by contacting Fidelity's retirement plan customer service, informing them of your intent to perform a direct rollover, and providing them with the details of your current 401(k) plan. They will guide you through their specific paperwork.
How to find out if my current 401(k) plan accepts rollovers?
Contact your current employer's HR department or the plan administrator directly. Ask explicitly if their 401(k) plan accepts incoming rollovers from other qualified retirement plans like Fidelity.
How to know if my Fidelity account is a Traditional or Roth 401(k)?
You can find this information on your Fidelity account statements or by logging into your Fidelity online account. If you're unsure, contact Fidelity customer service to confirm your account type.
How to avoid taxes and penalties during a 401(k) rollover?
To avoid taxes and penalties, always opt for a direct rollover. This ensures the funds go directly from Fidelity to your new 401(k) plan without you taking possession of them.
QuickTip: Scan for summary-style sentences.
How long does it take for a Fidelity 401(k) rollover to complete?
A direct rollover from Fidelity to another 401(k) typically takes 3 to 7 business days to process, though it can occasionally extend to two weeks depending on both institutions.
How to invest the funds once they are in my new 401(k)?
Once the rollover funds appear in your current 401(k) account, log into your plan's online portal and select your desired investment allocations from the available fund options. If left untouched, they might default to a low-risk option.
How to handle employer stock in my Fidelity 401(k) during a rollover?
If your Fidelity 401(k) holds employer stock with Net Unrealized Appreciation (NUA), rolling it over could have specific tax implications. It's highly advisable to consult a tax advisor before rolling over highly appreciated employer stock.
How to get help if I encounter issues during the rollover process?
If you face any difficulties, contact the customer service departments of both Fidelity and your current 401(k) plan administrator. Be patient and persistent in seeking clarification and resolution.
How to track the progress of my 401(k) rollover?
Fidelity should provide confirmation when the funds are disbursed. You can then contact your current 401(k) plan administrator to confirm receipt of the funds and their deposit into your account.
How to decide if rolling my Fidelity account into my current 401(k) is the right choice for me?
Consider factors like investment options, fees, administrative complexity, creditor protection, and your long-term financial goals. If you value consolidation and the benefits offered by your current 401(k) plan outweigh the alternatives (like rolling into an IRA), it's likely a good choice. Always consider consulting a qualified financial advisor for personalized advice.
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