Feeling a little overwhelmed by your 401(k) plan with Fidelity? Perhaps your financial goals have shifted, you're facing a new life stage, or you simply want more control over your retirement savings. Whatever the reason, deciding to opt out of your 401(k) or modify your contributions is a significant financial step. Don't worry, we're here to walk you through it!
This comprehensive guide will break down the process of managing your Fidelity 401(k), including how to stop contributions, explore your options for existing funds, and understand the potential implications. Let's get started!
Step 1: Understand Your "Opt-Out" Goal
Before you do anything, it's crucial to clarify what "opting out" means for you. Are you looking to:
Stop contributing new money to your 401(k) through your paycheck? This is the most common reason people look to "opt out."
Withdraw all the money from your 401(k)? This is a more complex action with significant tax implications and penalties if done before retirement age.
Move your existing 401(k) funds to another retirement account (like an IRA)? This is known as a rollover and is often a good option if you've left an employer.
Leave your money in your current Fidelity 401(k) but stop new contributions? This is also a viable option.
Your specific goal will dictate the steps you need to take. Let's assume for this guide that your primary goal is to stop contributing to your 401(k).
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| How To Opt Out Of 401k Plan Fidelity |
Step 2: Accessing Your Fidelity 401(k) Account
The vast majority of actions related to your 401(k) at Fidelity can be managed online through their NetBenefits platform.
Sub-heading: Logging into NetBenefits
Go to the Fidelity NetBenefits Website: Open your web browser and navigate to the Fidelity NetBenefits website. You can usually find this by searching "Fidelity NetBenefits" or going directly to netbenefits.fidelity.com.
Enter Your Credentials: You will need your username and password to log in. If you've forgotten them, look for the "Forgot username" or "Forgot password" links. You may need your Social Security number and other personal information to verify your identity.
Navigate to Your 401(k) Plan: Once logged in, you'll typically see a dashboard displaying all your Fidelity accounts. Locate your 401(k) plan. It might be listed under "Retirement Savings" or a similar heading. Click on it to access the details of your specific plan.
Step 3: Stopping Future 401(k) Contributions
QuickTip: Read step by step, not all at once.
This is often the simplest and most straightforward "opt-out" action.
Sub-heading: Adjusting Your Contribution Rate Online
Find the Contributions Section: Within your 401(k) plan details on NetBenefits, look for a section related to "Contributions," "Payroll Contributions," "Manage Contributions," or "Investment Elections." This is where you control how much of your paycheck goes into your 401(k).
Change Your Contribution Rate: You'll typically see options to modify your contribution percentage or a fixed dollar amount. To stop contributing, you'll need to change your contribution rate to 0% or $0 for both Traditional 401(k) and Roth 401(k) (if applicable).
Important Note: Some plans might have a minimum contribution amount. If you cannot set it to 0%, contact your HR department or Fidelity directly for clarification.
Review and Submit: Carefully review your changes to ensure you've set the contribution to zero. Look for a "Submit," "Save Changes," or "Confirm" button to finalize your election. You should receive an online confirmation or an email confirming the change.
Crucial Point: Once you stop your personal payroll contributions, you will likely no longer be eligible to receive any applicable employer match. This is a significant consideration, as an employer match is essentially "free money" for your retirement. Be sure you understand the implications of losing this.
Sub-heading: Contacting Your HR Department
In some cases, especially with older plans or if you encounter issues online, you may need to go through your employer's Human Resources (HR) department.
Reach out to HR: Contact your HR or benefits administrator. They can guide you through the specific process for your company's 401(k) plan.
Request a Change: Inform them that you wish to stop or pause your 401(k) contributions. They may provide you with a form to fill out or direct you to an internal system.
Step 4: Understanding Your Existing 401(k) Funds
Stopping contributions doesn't automatically mean your existing funds disappear. They remain in your Fidelity 401(k) account. You have several options for these funds.
Sub-heading: Option A: Leaving Funds in the 401(k)
This is a common choice, especially if you're still employed with the company or plan to return.
QuickTip: Slow down if the pace feels too fast.
Pros: Your money continues to grow tax-deferred (or tax-free for Roth 401(k) contributions). You may still have access to the plan's investment options, which could include institutional-class funds with lower fees.
Cons: You can't contribute new money, and your investment options might be more limited than an IRA. You also can't take 401(k) loans from a plan you're no longer contributing to (in most cases).
Sub-heading: Option B: Rolling Over Funds to an IRA
If you've left your employer, or if you want more control and a wider range of investment options, rolling your 401(k) into an Individual Retirement Account (IRA) is often an excellent choice.
Open an IRA: If you don't already have one, open a Traditional IRA or Roth IRA with Fidelity or another financial institution. Choose the type of IRA that aligns with your tax strategy (pre-tax 401(k) funds typically roll into a Traditional IRA, while Roth 401(k) funds roll into a Roth IRA to avoid immediate taxes).
Initiate a Direct Rollover: This is the safest and most recommended method. A direct rollover means the money goes directly from your Fidelity 401(k) to your new IRA without you ever touching the funds. This avoids potential tax withholding and penalties.
Contact Fidelity (or the new IRA provider) and state that you wish to initiate a direct rollover from your 401(k) to an IRA. They will provide the necessary forms and guidance.
Be prepared to provide: Your 401(k) account number, the details of your new IRA account (account number, routing info if applicable), and any required identification.
Understand Indirect Rollovers (Use with Caution!): An indirect rollover means you receive a check for your 401(k) balance, and you then have 60 days to deposit that money into a new IRA.
The Catch: Your 401(k) administrator is required to withhold 20% for federal income tax. If you don't roll over the entire amount (including the 20% withheld) into your IRA within 60 days, the withheld portion will be considered a taxable distribution and could be subject to early withdrawal penalties if you're under 59 ½. You'd have to make up that 20% from other funds to complete the rollover tax-free. It is strongly advised to choose a direct rollover whenever possible.
Sub-heading: Option C: Rolling Over Funds to a New Employer's 401(k)
If your new employer offers a 401(k) plan and allows incoming rollovers, this can be another option.
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Check with Your New Employer: Inquire with your new employer's HR or benefits department about their 401(k) plan and if they accept rollovers from previous plans.
Initiate the Rollover: Similar to an IRA rollover, you'll work with Fidelity and your new plan administrator to directly transfer the funds.
Sub-heading: Option D: Cashing Out Your 401(k) (Proceed with Extreme Caution!)
While possible, cashing out your 401(k) should generally be a last resort due to significant financial repercussions.
Taxes: All pre-tax contributions and earnings will be subject to ordinary income tax.
Early Withdrawal Penalty: If you are under 59 ½ years old, you will typically incur an additional 10% early withdrawal penalty from the IRS. There are very limited exceptions to this penalty (e.g., certain medical expenses, disability, Rule of 55 if you leave your job at or after age 55, qualified birth or adoption expenses, etc.), but these are specific and require careful review of IRS rules.
Lost Growth Potential: This is perhaps the most significant long-term impact. You're removing money that would have continued to grow tax-deferred (or tax-free) for your retirement, severely diminishing your future financial security.
If you are considering cashing out, it is highly recommended to speak with a qualified financial advisor and tax professional first to understand the full impact on your financial situation.
Step 5: Reviewing Your Vesting Schedule (If Applicable)
QuickTip: Stop scrolling, read carefully here.
If your employer contributes to your 401(k) (e.g., with an employer match), those contributions may be subject to a "vesting schedule." This means you only fully own the employer contributions after a certain period of employment.
Consult Your Plan Documents: Your plan documents (available through NetBenefits or your HR department) will outline your vesting schedule.
Understand What's Yours: If you leave your employer before being fully vested, you might forfeit a portion of the employer contributions. Your own contributions are always 100% vested.
This is particularly important if you are terminating employment and considering your options for existing funds.
Step 6: Seeking Professional Advice
Navigating retirement accounts can be complex, and the decisions you make can have long-lasting financial consequences.
Financial Advisor: Consider consulting a qualified financial advisor. They can help you assess your current financial situation, understand your long-term goals, and recommend the best course of action for your 401(k) funds.
Tax Professional: Always consult a tax advisor, especially if you're considering withdrawals or conversions (e.g., converting pre-tax 401(k) funds to a Roth IRA). They can help you understand the tax implications and ensure you comply with all IRS regulations.
10 Related FAQ Questions
How to Check My Fidelity 401(k) Balance?
You can easily check your Fidelity 401(k) balance by logging into your NetBenefits account online or by calling Fidelity's customer service.
How to Change My Investment Options within Fidelity 401(k)?
Once logged into NetBenefits, navigate to your 401(k) account. Look for a section like "Investments," "Change Investments," or "Asset Allocation" to adjust how your funds are invested.
How to Find My Fidelity 401(k) Plan Number?
QuickTip: Copy useful snippets to a notes app.
Your Fidelity 401(k) plan number is typically available on your online account statement on NetBenefits, or you can find it by contacting your HR department or Fidelity customer service.
How to Rollover an Old 401(k) from a Previous Employer to Fidelity?
If you have an old 401(k) from a previous employer, you can initiate a direct rollover to a Fidelity IRA by contacting Fidelity and providing details of your old plan.
How to Take a Loan from My Fidelity 401(k)?
401(k) loans are typically offered by your employer's plan. You can check your eligibility and application process on NetBenefits under a "Loans" or "Withdrawals" section, or by contacting your HR department.
How to Make a Hardship Withdrawal from My Fidelity 401(k)?
Hardship withdrawals are allowed for specific IRS-defined reasons (e.g., medical expenses, preventing eviction/foreclosure, funeral expenses). You'll need to submit documentation to Fidelity to prove the hardship. Contact Fidelity or your HR department for the specific forms and requirements.
How to Re-enroll in My Fidelity 401(k) After Opting Out?
If you previously opted out, you can typically re-enroll and resume contributions through the NetBenefits platform by adjusting your contribution rate, or by contacting your HR department.
How to Understand the Fees Associated with My Fidelity 401(k)?
Details on your 401(k) plan fees can be found in your plan documents, often accessible through NetBenefits under a "Documents" or "Statements" section. You can also request a fee disclosure from Fidelity or your HR.
How to Contact Fidelity Customer Service for My 401(k)?
You can contact Fidelity's customer service for 401(k) plans by calling the number provided on the NetBenefits website (often 1-800-343-0860), or by using their secure message center once logged in.
How to Determine if a Roth 401(k) or Traditional 401(k) is Right for Me?
The choice between a Roth 401(k) and a Traditional 401(k) depends on your current and expected future tax bracket. If you expect to be in a higher tax bracket in retirement, a Roth 401(k) (tax-free withdrawals in retirement) might be better. If you expect to be in a lower tax bracket, a Traditional 401(k) (pre-tax contributions, taxable withdrawals in retirement) might be more advantageous. Consult a financial advisor for personalized advice.
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