Your Ultimate Guide to Rolling Over Your Vanguard Retirement Account to Fidelity
Have you recently left a job and are now wondering what to do with your old 401(k) or other retirement plan at Vanguard? You're not alone! Many people choose to consolidate their retirement savings into one account for better visibility and control. Rolling over your Vanguard account to Fidelity is a popular and often straightforward process, but it's crucial to do it correctly to avoid taxes and penalties.
So, are you ready to take control of your financial future and simplify your retirement savings? Let's get started with this comprehensive, step-by-step guide!
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| How To Roll Over From Vanguard To Fidelity |
Step 1: Get Prepared and Understand Your Options
Before you even think about moving your money, you need to do a little homework. This is the most important step to ensure a smooth transition.
Sub-heading: Confirm Key Details of Your Vanguard Account
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Is your account eligible for a rollover? In most cases, you can't roll over a 401(k) while you are still employed by the company that sponsors the plan. You will typically need to have separated from service.
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What kind of account is it? This is a critical question. Is it a Traditional 401(k) (pre-tax contributions) or a Roth 401(k) (post-tax contributions)? You'll need to know this to open the correct type of account at Fidelity.
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Is your contact information up to date? Make sure your mailing address and phone number on file with Vanguard are current. This is vital, especially if they send a physical check.
Sub-heading: Choose the Right Destination at Fidelity
You'll be moving your money into a Fidelity IRA (Individual Retirement Account). The type of IRA you open at Fidelity must match the tax treatment of your Vanguard account to avoid a taxable event.
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For a Traditional 401(k) (pre-tax funds): You will need to open a Fidelity Rollover IRA or a Traditional IRA. This allows your money to continue to grow tax-deferred.
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For a Roth 401(k) (post-tax funds): You must open a Fidelity Roth IRA. This ensures your qualified withdrawals in retirement remain tax-free.
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If you have both pre-tax and Roth assets in your Vanguard account: You may need to open two separate IRAs at Fidelity – a Rollover IRA for your pre-tax money and a Roth IRA for your after-tax contributions.
Tip: Read aloud to improve understanding.
Step 2: Open Your New Fidelity Rollover IRA
Now that you know what kind of account you need, it's time to open it. This is a quick and easy process you can do entirely online.
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Visit the Fidelity website. Navigate to the "Open an Account" section and select "IRA."
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Choose the correct IRA type. Based on your homework in Step 1, select either a Rollover IRA, a Traditional IRA, or a Roth IRA.
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Complete the online application. You will need to provide your personal information, such as your Social Security number, date of birth, and contact details. You might also be asked for your employment information.
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Get your new account number. Once your application is submitted, you will receive a new Fidelity account number. Keep this number handy! You will need it in the next step.
Step 3: Initiate the Rollover from Vanguard
This is where you tell Vanguard to send your money to Fidelity. You have two main options for the transfer: a direct rollover or an indirect rollover. The direct rollover is almost always the preferred and safest method.
Sub-heading: The Recommended Method: Direct Rollover
In a direct rollover, the money goes directly from your Vanguard account to your new Fidelity IRA. This is the cleanest way to do it and helps you avoid any risk of accidentally missing the 60-day deadline (more on that below).
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Contact Vanguard. You can often initiate this process online through your Vanguard portal or by calling their customer service line for retirement plans. Be prepared to be on the phone for a little while and have your new Fidelity account number ready.
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Request a Direct Rollover. Tell the representative that you want to do a "direct rollover" of your retirement account to a Fidelity IRA.
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Provide your Fidelity account details. You'll need to give them your new Fidelity IRA account number and the mailing address for Fidelity's transfer department. The check will be made payable to "Fidelity Management Trust Company (or FMTC), FBO [Your Name]."
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Complete any required paperwork. Vanguard may require you to fill out a distribution form. Be sure to follow their instructions carefully. If they ask for a "Letter of Acceptance" from Fidelity, you can typically generate one online from your Fidelity account or contact Fidelity to have them provide it.
Sub-heading: The Alternative Method: Indirect Rollover
In an indirect rollover, Vanguard sends the money to you, and then you have a 60-day window to deposit it into your new Fidelity IRA.
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Request the distribution. Contact Vanguard and request a rollover check to be made payable to you.
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Receive the check. Vanguard will send the check to your mailing address on file.
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Deposit the check within 60 days! This is the most crucial part of an indirect rollover. You must deposit the full amount into your new Fidelity IRA within 60 calendar days of receiving the check. If you miss this deadline, the IRS will treat the distribution as a taxable withdrawal, and you could be subject to income taxes and a 10% early withdrawal penalty if you are under age 59½.
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Consider the 20% mandatory tax withholding. Vanguard is legally required to withhold 20% of your pre-tax distribution for federal income tax when you do an indirect rollover. You will need to make up this 20% with other funds when you deposit the full amount into your IRA to avoid it being considered a taxable withdrawal. You will get the withheld amount back as a tax credit when you file your income tax return.
Tip: Don’t skip the small notes — they often matter.
Step 4: Deposit the Funds into Your Fidelity IRA
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If you chose a direct rollover, Fidelity will handle the deposit once they receive the check from Vanguard. If you did an indirect rollover, you're responsible for depositing the check.
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Mobile Check Deposit: The easiest and fastest way to deposit the check is often using the Fidelity mobile app.
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Mail the Check: You can mail the check to Fidelity with your account number clearly written on it.
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Visit a Branch: If there's a Fidelity Investor Center nearby, you can deposit the check in person.
Step 5: Invest Your Funds!
Congratulations! Your money is now at Fidelity. The final and most important step is to invest it. Leaving the money in cash will not help it grow for retirement.
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Explore Fidelity's investment options. Fidelity offers a wide range of investment choices, from mutual funds and ETFs to individual stocks and bonds.
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Consider a target-date fund. If you want a hands-off approach, a target-date fund is an excellent option that automatically adjusts its asset allocation as you get closer to retirement.
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Rebalance your portfolio. Now is a great time to review your overall investment strategy and ensure your new IRA aligns with your risk tolerance and long-term goals.
10 Related FAQs
How to find my Vanguard 401(k) account number?
You can find your account number on your most recent statement or by logging into your account online at the Vanguard website.
How to avoid taxes and penalties during a rollover?
Tip: Reading twice doubles clarity.
To avoid taxes and penalties, ensure the rollover is completed within 60 days (for an indirect rollover) and that the funds are transferred to an account with the same tax status (e.g., Traditional to Traditional, Roth to Roth).
How to know if I have a Traditional or Roth 401(k)?
Check your Vanguard account statements or contact your former employer's HR department. If your contributions were made with pre-tax dollars, it's a Traditional 401(k). If they were made with after-tax dollars, it's a Roth 401(k).
How to handle an indirect rollover check with 20% withholding?
If Vanguard sends you a check, they will withhold 20% for taxes. To roll over the full amount and avoid a taxable event, you must add the 20% from other funds and deposit the full original balance into your Fidelity IRA. You will receive the withheld amount as a tax credit on your tax return.
How to get a Letter of Acceptance (LOA) from Fidelity?
Fidelity can provide a Letter of Acceptance if Vanguard requires one. You can typically request this online or by calling Fidelity's customer service for rollovers.
How long does a Vanguard to Fidelity rollover take?
QuickTip: Scan quickly, then go deeper where needed.
A direct rollover can take anywhere from 2 to 4 weeks to complete, depending on the firms' processing times. An indirect rollover is faster but requires you to act within 60 days.
How to handle company stock in my 401(k)?
If you hold company stock in your 401(k), you should consult a tax professional. You may have the option to roll it over or take a distribution, which can have significant tax implications.
How to invest the money once it's in my Fidelity IRA?
Once the funds are in your Fidelity IRA, you need to purchase investments. You can buy Fidelity mutual funds, ETFs, or other securities. You can also opt for a managed account service like Fidelity Go.
How to check the status of my rollover?
You can check the status of your rollover by logging into your Fidelity and Vanguard accounts online or by calling their respective customer service teams.
How to decide if a rollover is the right choice for me?
Consider factors like investment options, fees, services, and creditor protection. While a rollover can offer more investment flexibility and a consolidated view, it's a personal decision. You may also be able to leave your money in your old 401(k) or roll it into a new employer's plan.
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