The Great Migration: Rolling Over Your TIAA Account to Fidelity
Feeling overwhelmed by managing multiple retirement accounts from different employers? You're not alone! Many people find themselves with retirement savings scattered across various providers like TIAA and Fidelity. Consolidating these accounts into one, such as a Fidelity IRA, can offer a more streamlined investment strategy, easier management, and potentially a wider array of investment options.
This comprehensive guide will walk you through the process of rolling over your TIAA account to Fidelity, step-by-step. Let's get started on simplifying your financial future!
Step 1: Are You Ready to Take Control of Your Retirement Savings?
Before we dive into the nitty-gritty, let's consider why you might want to make this move. Do you want to:
Simplify your financial life by having all your retirement assets in one place?
Gain access to a broader selection of investment vehicles at Fidelity, potentially including different ETFs, mutual funds, or individual stocks?
Benefit from Fidelity's robust online tools and research capabilities?
Potentially reduce overall fees by consolidating your accounts?
If you answered yes to any of these, then rolling over your TIAA account to Fidelity could be a smart move for you!
Understanding the "Why" Behind the Rollover
It's crucial to understand that a rollover isn't just about moving money; it's about potentially optimizing your retirement strategy. TIAA often holds annuity contracts or employer-specific plans, while Fidelity offers a vast brokerage platform. Moving your funds can give you greater control and flexibility.
Step 2: Gather Your Essential Information and Documents
Preparation is key to a smooth rollover. Before you even pick up the phone or fill out a form, make sure you have the following information readily available:
From Your TIAA Account:
Your TIAA account number(s): This is crucial for identifying your specific retirement plan.
Statements for the last 12 months: These statements will show your current holdings, account type, and any other relevant details.
Type of TIAA account: Is it a 403(b), 401(a), 401(k), traditional IRA, Roth IRA, or another plan type? This is important because it dictates what kind of Fidelity account you can roll it into.
Contact information for TIAA customer service: You might need to call them to confirm details or initiate certain actions. (TIAA: 1-800-842-2776)
Any specific withdrawal or transfer rules for your TIAA plan. Some TIAA contracts, especially annuities, might have unique payout options or surrender charges you'll want to be aware of. For instance, the Transfer Payout Annuity (TPA) for TIAA Traditional balances might involve payments over 9 years.
From Your Fidelity Account (or what you plan to open):
Your Fidelity account number (if you have one already).
The type of Fidelity account you want to roll into: Most likely, this will be a Rollover IRA (for pre-tax funds) or a Roth IRA (for Roth funds). If you're rolling into a new employer's Fidelity 401(k) or 403(b), you'll need the details of that plan.
Contact information for Fidelity's rollover specialists. (Fidelity: 1-800-343-0860)
General Information:
Your Social Security Number (SSN) or Tax Identification Number (TIN).
Your current mailing address and contact details.
Step 3: Choose Your Rollover Method: Direct vs. Indirect
This is a critical decision that can have significant tax implications. There are two primary ways to move your funds:
Option A: The Preferred Path – Direct Rollover (Trustee-to-Trustee Transfer)
What it is: In a direct rollover, TIAA sends your funds directly to Fidelity. The money never touches your hands. This is generally the recommended method as it avoids potential tax headaches.
Benefits:
No tax withholding: Because you don't take possession of the money, TIAA is not required to withhold 20% for federal income tax.
No 60-day rule: You don't have to worry about depositing the funds within a strict timeframe.
Avoids early withdrawal penalties: If you are under 59½, a direct rollover ensures you won't incur a 10% early withdrawal penalty.
How it works: You initiate the rollover with Fidelity, and Fidelity then works with TIAA to transfer the funds.
Option B: The Less Recommended Path – Indirect Rollover (60-Day Rollover)
What it is: In an indirect rollover, TIAA sends a check for your retirement funds to you. You then have 60 days from the date you receive the funds to deposit them into your Fidelity rollover account.
Risks and Drawbacks:
20% Mandatory Tax Withholding: TIAA is legally required to withhold 20% of your taxable distribution for federal income tax, even if you intend to roll over the entire amount. While you can reclaim this withholding when you file your taxes, you'll need to make up the difference from your own savings to roll over the full amount within 60 days.
Strict 60-Day Deadline: If you miss this deadline, the entire distribution becomes taxable income, and you could face a 10% early withdrawal penalty if you're under 59½.
One Rollover Per Year Rule: The IRS generally limits indirect rollovers to once every 12 months per IRA account. This rule does not apply to direct rollovers.
When it might be used (rarely advisable for most): Sometimes, circumstances might necessitate an indirect rollover, but for a TIAA to Fidelity transfer, a direct rollover is almost always superior.
Recommendation: Always aim for a direct rollover unless specifically advised otherwise by a tax professional due to unique circumstances.
Step 4: Initiate the Rollover with Fidelity
Fidelity will typically lead the charge in pulling your assets from TIAA.
Sub-heading: Opening a Fidelity Rollover IRA (if you don't have one)
Online Application: Visit the Fidelity website and navigate to their IRA section. You'll likely choose to open a "Rollover IRA" for pre-tax funds or a "Roth IRA" if your TIAA account contains Roth contributions. The online process is generally straightforward.
Information Needed: Be prepared to provide your personal details, SSN, and potentially bank account information for initial funding (though the rollover itself will be the primary funding).
Choosing Investments: As you open the account, you'll typically be asked about your investment preferences. You don't have to decide everything immediately, as the funds will likely sit in a "core position" (like a money market fund) until you choose specific investments.
Sub-heading: Starting the Transfer Request with Fidelity
Contact Fidelity's Rollover Team: This is often the most efficient way to start. Call them directly at 1-800-343-0860. Tell them you want to roll over a TIAA retirement account to Fidelity.
Fidelity's Transfer Form: Fidelity will provide you with a "Transfer/Rollover/Exchange Form" or a similar document. This form authorizes Fidelity to request the assets from TIAA on your behalf.
Complete the Form Carefully:
Your Information: Fill in your personal details accurately.
Previous Investment Provider Information: Provide TIAA's name, your TIAA account number(s), and the type of TIAA plan (e.g., 403(b), Traditional IRA).
Fidelity Account Information: Specify the Fidelity account you want the funds rolled into.
Liquidation Instructions: Indicate whether you want to roll over the full balance or a partial amount. If it's a partial amount, specify the dollar figure or percentage.
Investment Instructions: You might have the option to specify how you want the funds invested once they arrive at Fidelity, or they may default to your core position.
Sign and Date: Ensure you sign and date the form. An unsigned form will cause delays.
Attach Required Documents: You will almost certainly need to include a recent statement from your TIAA account (dated within the last 12 months) with your Fidelity transfer form. This helps Fidelity and TIAA verify the account.
Step 5: TIAA's Role and Potential Hurdles
Once Fidelity submits the request, TIAA will process it. This phase can sometimes involve a few specific considerations:
Sub-heading: TIAA's Internal Processing
Verification: TIAA will verify the request from Fidelity. They may also review their own plan rules for your specific account to ensure the rollover is permissible and to identify any unique aspects, such as surrender charges on annuity contracts.
Potential for TIAA Forms: While Fidelity initiates the pull, some TIAA plans or contracts may require you to complete their own distribution or transfer forms. TIAA might mail these to you, or you may need to download them from the TIAA website (e.g., F10794 for Transfer Payout Annuity or F10463 for Transfer or Rollover Authorization). If TIAA requires their own form, ensure you complete it accurately and return it to TIAA.
Employer Authorization (for employer-sponsored plans): If your TIAA account is an active or inactive employer-sponsored plan (like a 403(b) or 401(k)), your former employer or plan administrator might need to authorize the distribution. Fidelity or TIAA will usually inform you if this is required. Contacting your former HR department early on can prevent delays.
Sub-heading: Addressing TIAA Annuities and Restrictions
TIAA Traditional Annuity: If your TIAA account includes a TIAA Traditional Annuity, be aware that these have specific payout rules. Transfers of TIAA Traditional balances are often processed as a "Transfer Payout Annuity" (TPA), which involves 10 annual payments over 9 years. This is a significant detail to confirm with TIAA and understand fully before proceeding. You may only be able to roll over the annual payment received, not the entire balance at once.
Surrender Charges/Fees: Certain annuity contracts within TIAA may have surrender charges if you transfer funds out before a specified period. Always ask TIAA if any such charges apply to your specific contract.
Step 6: Monitoring and Confirmation
The rollover process can take some time, typically anywhere from 2 to 6 weeks, depending on the responsiveness of both institutions and any complexities with your TIAA account (especially annuities).
Fidelity's Status Updates: Fidelity will often provide online status updates for your transfer. Log in to your Fidelity account or call their customer service to check the progress.
Confirmation from Both Sides:
You should receive confirmation from TIAA that the funds have been released.
You should receive confirmation from Fidelity that the funds have been received and deposited into your designated account.
Invest Your Funds: Once the funds arrive at Fidelity, they will likely be held in a cash position (your "core position"). You will then need to actively choose how to invest these funds according to your financial goals and risk tolerance.
Step 7: Post-Rollover Review and Investment Strategy
Congratulations! You've successfully rolled over your TIAA account to Fidelity. Now, it's time to ensure your new, consolidated retirement savings are working effectively for you.
Sub-heading: Verify Account Balance and Holdings
Cross-Reference: Compare the final amount transferred to Fidelity with the amount that left TIAA.
Check Investment Allocation: Confirm that your funds are invested as you intended. If they are in a core cash position, take the necessary steps to allocate them to specific investments like mutual funds, ETFs, or stocks.
Sub-heading: Re-evaluate Your Investment Strategy
Consolidation Benefits: With all your funds in one place, you have a clearer picture of your overall asset allocation.
Diversification: Review your portfolio to ensure it's adequately diversified across different asset classes (stocks, bonds, real estate, etc.) and sectors.
Risk Tolerance: Reassess your risk tolerance and adjust your investments accordingly. Fidelity offers various tools and resources to help with portfolio analysis and goal planning.
Fees and Expenses: While Fidelity typically has no annual fees for IRAs, be mindful of the expense ratios of the mutual funds or ETFs you choose.
Beneficiaries: Don't forget to update your beneficiaries on your new Fidelity account. This is a crucial step that is often overlooked.
Related FAQ Questions (How to...)
Here are 10 common "How to" questions related to rolling over retirement accounts, with quick answers:
1. How to determine if my TIAA account is eligible for rollover?
Quick Answer: Most TIAA employer-sponsored plans (like 403(b), 401(k), 401(a)) and IRAs are eligible for rollover. Contact TIAA directly or refer to your plan documents to confirm your specific account's eligibility and any unique rules.
2. How to choose between a Traditional IRA and a Roth IRA for my rollover?
Quick Answer: If your TIAA funds were pre-tax (like a traditional 403(b) or 401(k)), roll them into a Traditional IRA to maintain their tax-deferred status. If your TIAA funds were Roth (post-tax), roll them into a Roth IRA to maintain their tax-free growth and withdrawals. Converting pre-tax funds to a Roth IRA will trigger immediate taxes on the converted amount.
3. How to find the necessary forms for a TIAA to Fidelity rollover?
Quick Answer: Start by contacting Fidelity directly (1-800-343-0860). They will provide their "Transfer/Rollover/Exchange Form." TIAA might also require a separate internal distribution form, which you can typically find on their website or by calling them (1-800-842-2776).
4. How to ensure I avoid taxes and penalties during the rollover?
Quick Answer: Choose a direct rollover (trustee-to-trustee transfer). This ensures the money never comes into your possession, avoiding mandatory 20% tax withholding and the 60-day rule penalty.
5. How to track the progress of my TIAA to Fidelity rollover?
Quick Answer: Log in to your Fidelity account online. Many financial institutions provide a "Transfers & Rollovers" or "Activity" section where you can view the status. You can also call Fidelity's customer service for updates.
6. How to invest my funds once they arrive at Fidelity?
Quick Answer: Once the funds are in your Fidelity rollover IRA, they will likely sit in a core cash position. Log in to your Fidelity account, navigate to your new IRA, and then use their investment tools to select mutual funds, ETFs, stocks, or other investments that align with your financial goals and risk tolerance.
7. How to handle a TIAA Traditional Annuity when rolling over?
Quick Answer: TIAA Traditional Annuities often have specific payout options, such as the "Transfer Payout Annuity" (TPA) which pays out over 10 annual installments over 9 years. You may only be able to roll over the annual payment as it is distributed, not the entire balance at once. It is crucial to speak with a TIAA representative directly about your specific contract.
8. How to update my beneficiaries after rolling over to Fidelity?
Quick Answer: Log in to your Fidelity account, navigate to your new IRA, and look for a section related to "Beneficiaries" or "Account Profile." You will need to explicitly designate your primary and contingent beneficiaries for your Fidelity account.
9. How to get help if I encounter issues during the rollover process?
Quick Answer: Don't hesitate to call the dedicated rollover teams at both Fidelity (1-800-343-0860) and TIAA (1-800-842-2776). They are there to guide you through the process and resolve any complications.
10. How long does it typically take to complete a TIAA to Fidelity rollover?
Quick Answer: The entire process can take anywhere from 2 to 6 weeks. The timeframe depends on how quickly both TIAA and Fidelity process the request, as well as any specific requirements or complexities related to your TIAA account (e.g., employer authorization, annuity payout schedules).