Ready to take control of your retirement savings? Rolling over your 401(k) to Fidelity can be a smart move, offering greater flexibility, diverse investment options, and potentially lower fees. It might seem like a daunting task, but we're here to guide you through it, step-by-step.
What is a 401(k) Rollover?
Simply put, a 401(k) rollover is the process of moving your retirement funds from an old employer's 401(k) plan into a new retirement account, often an Individual Retirement Account (IRA) at a financial institution like Fidelity. This isn't a withdrawal; it's a transfer of your assets, maintaining their tax-deferred status and allowing them to continue growing for your future.
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| How To Rollover 401k In Fidelity |
Why Consider Rolling Over to Fidelity?
Fidelity is a leading financial services provider known for:
Wide Range of Investment Options: From mutual funds and ETFs to individual stocks and bonds, Fidelity offers a vast selection to help you diversify your portfolio.
Lower Fees: Often, old 401(k) plans can have higher administrative fees or limited, more expensive investment choices. Rolling over to Fidelity can help you reduce these costs.
Consolidation and Simplicity: Consolidating multiple old 401(k)s into one Fidelity IRA makes it easier to manage your retirement savings and track your progress.
Expert Guidance and Tools: Fidelity provides extensive educational resources, planning tools, and access to financial advisors to help you make informed decisions.
Control and Flexibility: With a rollover IRA, you have more control over your investment choices and can tailor your portfolio to your specific financial goals and risk tolerance.
Now, let's get into the nitty-gritty of how to get this done.
Your Step-by-Step Guide to Rolling Over Your 401(k) to Fidelity
Step 1: Let's Get Started! Do You Even Need to Rollover? And Where Do You Want Your Money to Go?
Before you pick up the phone or click a single button, let's figure out your current situation and ideal outcome.
Sub-heading 1.1: Assessing Your Current 401(k) Situation
Is your old 401(k) with Fidelity already? If your former workplace plan was already with Fidelity, the process is often simpler and can be done largely through NetBenefits®. This is a direct internal rollover.
Is your old 401(k) with a different provider? This is the more common scenario and requires a bit more coordination between your old provider and Fidelity. This will typically be a direct external rollover.
Confirm Eligibility: In most cases, you can roll over your 401(k) once you've left your employer. Some plans might have specific rules, so it's always good to check.
Sub-heading 1.2: Deciding Where to Roll Your Money
Tip: Read at your own pace, not too fast.
This is a crucial decision with tax implications. You generally have two primary options when rolling over a 401(k) to Fidelity:
Rollover IRA (Traditional IRA):
Best for: Most traditional 401(k)s. This maintains the pre-tax, tax-deferred status of your funds. You won't pay taxes on the money until you withdraw it in retirement.
Consideration: If you have pre-tax money in your 401(k), a Traditional IRA is typically the default and most straightforward option to avoid immediate taxes.
Roth IRA:
Best for: Roth 401(k)s, or if you want to convert pre-tax 401(k) funds to Roth (this is a taxable event).
Consideration: Contributions to a Roth IRA are made with after-tax money, and qualified withdrawals in retirement are tax-free. If you roll over a traditional 401(k) into a Roth IRA, you'll pay taxes on the entire amount rolled over in the year of the rollover. This can be beneficial if you expect to be in a higher tax bracket in retirement.
Special Note for Mixed Funds: If your 401(k) has both pre-tax and after-tax (Roth) contributions, you'll generally need to open two separate IRAs at Fidelity – a Traditional IRA for the pre-tax portion and a Roth IRA for the after-tax portion.
Step 2: Preparation is Key! Gathering Your Information and Opening Your Fidelity Account
Once you've decided on the destination for your funds, it's time to get organized.
Sub-heading 2.1: Essential Information You'll Need
Before contacting anyone, have the following details ready:
Your Social Security Number.
Your previous employer's name and the name of your old 401(k) plan provider (e.g., Vanguard, Empower, etc.).
Your old 401(k) account number and your most recent statement. This will have important details about your current investments.
Your current mailing address (make sure it's updated with your old 401(k) provider!).
If you have a new employer 401(k) at Fidelity and want to roll into it, you'll need its plan details.
Sub-heading 2.2: Opening Your Fidelity Rollover IRA (if you don't have one)
If you don't already have a Fidelity Rollover IRA, you'll need to open one.
Online: Visit Fidelity.com and look for options to "Open an Account" or "Rollover an Old 401(k)." The online application is generally straightforward and will guide you through the process. You'll specify whether you want a Traditional Rollover IRA or a Roth IRA.
By Phone: You can also call Fidelity directly. Their representatives are well-versed in the rollover process and can assist you with opening the correct account.
Step 3: Making the Call! Initiating the Rollover with Your Old Provider or Fidelity
This is where the actual transfer process begins. The approach differs slightly depending on whether your old 401(k) is already with Fidelity.
Sub-heading 3.1: If Your Old 401(k) is with Fidelity (Internal Rollover)
Log in to NetBenefits®: This is Fidelity's platform for workplace retirement plans.
Initiate the Rollover: Look for options like "Rollover" or "Transfer Assets" within your old 401(k) account. Since it's an internal transfer, Fidelity can often move the funds directly from your old 401(k) to your new Fidelity IRA without additional paperwork or checks. This is the fastest and simplest method.
Confirm Investment Instructions: You may be asked how you want the funds invested in your new Fidelity IRA. If you haven't decided yet, they might go into a default money market fund until you choose specific investments.
QuickTip: Use posts like this as quick references.
Sub-heading 3.2: If Your Old 401(k) is NOT with Fidelity (External Rollover)
This typically involves a direct rollover (also known as a trustee-to-trustee transfer), which is highly recommended to avoid taxes and penalties.
Contact Your Old 401(k) Provider:
Call the customer service number on your old 401(k) statement.
Inform them you want to initiate a direct rollover to a Fidelity IRA.
They may require you to fill out a "Distribution Request Form" or a "Rollover Form."
Crucial Point: Emphasize that the check should be made payable to Fidelity Management Trust Company (or FMTC), FBO [Your Name] and mailed directly to Fidelity. This ensures it's a direct rollover, avoiding the 20% mandatory tax withholding that occurs with an indirect rollover (where the check is made out to you).
Ask if they require a "Letter of Acceptance" (LOA) from Fidelity. If they do, Fidelity can provide this.
Get the Mailing Address: Confirm the exact mailing address where Fidelity wants the check sent. It's usually:
Regular Mail: Fidelity Management Trust Company, PO Box 770001, Cincinnati, OH 45277-0037
Overnight Mail: Fidelity Management Trust Company, 100 Crosby Parkway KC1H, Covington, KY 41015-0037
Ask if they will liquidate your current investments or if they can be transferred "in kind." Often, they will liquidate your assets into cash before sending the check.
Notify Fidelity (Optional, but Recommended): While your old provider handles the outbound transfer, you can inform Fidelity that a rollover is coming. This can help them process the incoming funds more quickly.
Step 4: The Waiting Game and Deposit! Receiving and Depositing the Funds
The timeline for rollovers can vary.
Sub-heading 4.1: Receiving the Check
If your old provider sends the check directly to Fidelity (direct rollover), you won't see the check.
If, for some reason, the check is sent to you (an indirect rollover), it will be made out to "Fidelity Management Trust Company FBO [Your Name]".
Important Note on Indirect Rollovers: If the check is made out directly to you, and not to Fidelity FBO your name, then it's an indirect rollover. In this scenario, your old provider will withhold 20% for taxes. You must deposit the full original amount (including the 20% withheld, which you'll need to make up from other funds) into your Fidelity IRA within 60 days to avoid it being considered a taxable distribution and potentially incurring early withdrawal penalties. You can only perform one indirect rollover per rolling 12-month period. For these reasons, direct rollovers are almost always preferred.
Sub-heading 4.2: Depositing the Funds into Your Fidelity IRA
If Fidelity receives the check directly: Fidelity will process the check and deposit the funds into your designated Rollover IRA. You'll typically see the funds reflected in your account within a few business days of Fidelity receiving the check.
If you receive the check:
Mobile Check Deposit: The fastest way is often through the Fidelity Investments mobile app. Just snap a picture of the check.
Mail: You can mail the check to Fidelity with a deposit slip.
In-person: Visit a Fidelity Investor Center if one is convenient for you.
Step 5: Power Up Your Future! Investing Your Rolled-Over Funds
Congratulations! Your funds are now at Fidelity. But the journey isn't over. Your money is likely sitting in a money market fund, earning minimal returns. Now it's time to put it to work.
Sub-heading 5.1: Reviewing Your Investment Options
Fidelity offers a wealth of investment choices. Consider your:
Risk Tolerance: How comfortable are you with market fluctuations?
Time Horizon: When do you plan to retire?
Financial Goals: What are you saving for?
QuickTip: Read again with fresh eyes.
Sub-heading 5.2: Making Your Investment Choices
Fidelity's Tools and Resources: Utilize Fidelity's online tools to research mutual funds, ETFs, stocks, and other investments. They offer screeners, research reports, and model portfolios.
Fidelity Go® or Robo-Advisors: If you prefer a hands-off approach, Fidelity Go® can build and manage a diversified portfolio for you based on your risk profile.
Financial Advisor: For personalized guidance, consider consulting a Fidelity financial advisor who can help you create a comprehensive investment strategy.
Rebalance Your Portfolio: As your investments grow and market conditions change, it's wise to periodically review and rebalance your portfolio to ensure it remains aligned with your goals.
Step 6: Don't Forget the Details! Confirming and Tracking
Verify the Transfer: Once the process is complete, log in to your Fidelity account to confirm that the full amount of your 401(k) has been successfully transferred and invested as you intended.
Update Beneficiaries: Ensure your beneficiaries are up-to-date on your new Fidelity IRA. This is incredibly important for estate planning.
Tax Forms: Keep an eye out for tax forms (e.g., Form 1099-R from your old provider for the distribution and Form 5498 from Fidelity for the rollover contribution). These are essential for tax season. Consult a tax professional if you have any questions about reporting these transactions.
Frequently Asked Questions (FAQs)
How to choose between a Traditional and Roth IRA for my 401(k) rollover at Fidelity?
The choice depends on your current tax situation and your expectations for future tax rates. If you believe you're in a higher tax bracket now, a Traditional IRA rollover offers tax-deferred growth. If you expect to be in a higher tax bracket in retirement, a Roth IRA (where qualified withdrawals are tax-free) might be better, though you'll pay taxes on the rollover amount now. Fidelity's IRA Comparison tool can help.
How to avoid taxes and penalties when rolling over my 401(k) to Fidelity?
Always opt for a direct rollover (trustee-to-trustee transfer). This means the funds are sent directly from your old 401(k) provider to Fidelity. If the check is made out to you personally, it's an indirect rollover, and your old provider will withhold 20% for taxes. You then have 60 days to deposit the full original amount (making up the 20% from other funds) into your Fidelity IRA to avoid it being treated as a taxable distribution and incurring a 10% early withdrawal penalty (if you're under 59.5).
How to find my old 401(k) if I've lost track of it?
Start by contacting the HR or benefits department of your former employer. They should be able to provide you with the contact information for their 401(k) plan administrator. You can also check your old pay stubs or W-2 forms for clues. Fidelity also has resources on their website to help you locate old 401(k)s.
How to know if my old 401(k) has company stock and what to do with it?
Reminder: Save this article to read offline later.
Check your old 401(k) statements. If you have employer stock, be aware of "Net Unrealized Appreciation" (NUA) rules. Rolling over employer stock directly into an IRA can eliminate the NUA tax benefit. It's highly recommended to consult a tax advisor if your 401(k) contains company stock to understand your best options.
How to roll over an old 401(k) to my new employer's 401(k) at Fidelity?
If your new employer's 401(k) plan is administered by Fidelity and allows incoming rollovers (not all do), you can typically initiate this through NetBenefits®. Check your new plan's Summary Plan Description (SPD) or contact your new employer's benefits department or Fidelity's Workplace associates to confirm eligibility and the process.
How to handle mixed pre-tax and Roth funds in my 401(k) rollover?
If your old 401(k) has both pre-tax and Roth contributions, you will generally need to open two separate IRAs at Fidelity: a Traditional IRA for the pre-tax funds and a Roth IRA for the Roth funds. This ensures proper tax treatment of each portion.
How to understand the fees associated with rolling over to Fidelity?
Fidelity generally doesn't charge fees for opening a rollover IRA or for the rollover process itself. However, you will incur fees associated with the investments you choose within your Fidelity IRA (e.g., expense ratios of mutual funds, trading commissions for certain investments). Compare these to the fees in your old 401(k) to ensure you're making a cost-effective move.
How to track the progress of my 401(k) rollover to Fidelity?
Once you've initiated the rollover, both your old provider and Fidelity should provide you with updates. You can often track the transfer status online through their respective portals. If you initiated the rollover by phone, you can call their customer service lines for updates. Most direct rollovers take 1-3 weeks.
How to invest my rolled-over funds once they are in my Fidelity account?
After the funds arrive, they will likely sit in a money market fund. You'll need to actively choose your investments. Fidelity offers a wide array of options: self-directed investing (choose your own stocks, bonds, mutual funds, ETFs), managed accounts like Fidelity Go®, or working with a Fidelity financial advisor for personalized advice.
How to ensure my beneficiaries are correctly set up after the rollover?
Once your funds are in your new Fidelity IRA, it's crucial to log in to your Fidelity account and designate or confirm your beneficiaries. Beneficiary designations on an IRA supersede a will, so ensure they reflect your current wishes. You can usually do this online or by filling out a beneficiary designation form.
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