So, you've decided to take control of your retirement savings and roll over your old 401(k) to Fidelity – excellent choice! This is a smart move that can offer greater control, more investment options, and potentially lower fees. It might seem a little daunting at first, but with this step-by-step guide, you'll navigate the process with ease. Let's get started!
Your Guide to a Seamless 401(k) Rollover to Fidelity
Rolling over your 401(k) involves transferring your retirement funds from your old employer's plan to an Individual Retirement Account (IRA) at Fidelity, or even to a new 401(k) at Fidelity if your new employer's plan allows it. For most people, a rollover to an IRA offers the most flexibility.
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| How To Roll Over A 401k To Fidelity |
Step 1: Let's Get Organized! Gather Your 401(k) Information
Before you even think about picking up the phone or clicking a button, take a moment to collect all the necessary details about your old 401(k). This will make the entire process smoother and prevent unnecessary delays.
What to Look For:
Your Old 401(k) Provider: Who holds your money? Is it Fidelity, Vanguard, Principal, Empower, or another company? Check old statements or contact your former HR department if you're unsure.
Account Number(s): Have your 401(k) account number(s) readily available.
Account Type: Is it a Traditional 401(k) (pre-tax contributions) or a Roth 401(k) (after-tax contributions)? This is crucial for determining the type of IRA you'll open at Fidelity. If you have both pre-tax and after-tax money, you might need to open two separate IRAs (a Traditional IRA and a Roth IRA).
Contact Information for Your Old Provider: Find their customer service phone number and/or their website login details.
Eligibility for Rollover: Most plans allow rollovers after you leave an employer, but it's good to confirm. Sometimes there's a waiting period.
Any Outstanding Loans: If you have an outstanding loan against your 401(k), you'll need to address this before rolling over. It's best to repay it to avoid it being considered a taxable distribution.
Step 2: Open Your Fidelity IRA (or Identify Your Existing One)
If you don't already have an IRA at Fidelity, now's the time to open one. If you do, make sure you know your account number and can log in.
Sub-heading: Choosing the Right IRA Type
Traditional IRA/Rollover IRA: If your old 401(k) was a Traditional 401(k) (pre-tax contributions), you'll want to open a Traditional IRA or a specifically designated "Rollover IRA" at Fidelity. These are generally treated the same for tax purposes. This keeps your money growing tax-deferred.
Roth IRA: If your old 401(k) was a Roth 401(k) (after-tax contributions), you'll open a Roth IRA. This ensures your qualified withdrawals in retirement are tax-free.
Mixed Accounts: If your 401(k) has both pre-tax and after-tax contributions (e.g., a Traditional 401(k) with Roth contributions), you might need to open both a Traditional IRA and a Roth IRA to ensure proper tax treatment. It's always best to consult a tax advisor in this scenario.
Tip: Skim only after you’ve read fully once.
How to Open Your Fidelity Account:
Fidelity makes this process straightforward. You can typically open an account online in just a few minutes. Visit the Fidelity website and look for options to open a new IRA.
Pro-Tip: While opening, consider what kind of investments you want to hold in your new IRA. Fidelity offers a vast array of choices, from self-directed investing to managed portfolios.
Step 3: Initiate the Rollover with Your Old 401(k) Provider
This is where the magic happens! You'll instruct your old 401(k) provider to transfer your funds to your new Fidelity IRA.
Sub-heading: Direct Rollover is Your Best Bet
The most important thing to aim for is a direct rollover. This means your old 401(k) provider sends the money directly to Fidelity. This avoids any tax withholding and the dreaded 60-day rule.
If your old 401(k) is already with Fidelity (NetBenefits):
This is the easiest scenario! You can often complete the entire rollover process online through your NetBenefits® account. The money can be directly transferred internally with minimal hassle. Look for options like "Rollover to IRA" or "Transfer funds" within your NetBenefits portal.
If your old 401(k) is not with Fidelity:
Call your old provider: This is often the most effective way to initiate the rollover. Be prepared to provide your new Fidelity IRA account number and Fidelity's receiving instructions.
Request a "Direct Rollover": Emphasize that you want a direct rollover to your Fidelity IRA.
Check Payable To: The check from your old provider should be made payable to "Fidelity Management Trust Company (or FMTC), FBO [Your Name]" (FBO stands for "For the Benefit Of"). This is critical to avoid tax implications.
Mailing Address: Ask them for the exact mailing address where the check should be sent. Fidelity has specific addresses for rollovers.
Forms: Your old provider might require you to fill out specific distribution or rollover forms. Be diligent in completing these accurately. They might also ask for a Letter of Acceptance (LOA) from Fidelity, which Fidelity can provide.
Step 4: Deposit the Funds into Your Fidelity IRA
Once your old 401(k) provider sends the check (which, ideally, is a direct rollover check payable to Fidelity), you'll need to ensure it gets deposited into your Fidelity account.
Sub-heading: Options for Depositing Your Rollover Check
Directly to Fidelity (Preferred): In a direct rollover, the check might be sent directly to Fidelity. You just need to monitor your Fidelity account to ensure the funds arrive.
Mobile Check Deposit: If you receive the check at your home (which can happen, even with direct rollovers, if your old provider mails it to you), the fastest and easiest way to deposit it is often through the Fidelity Investments mobile app. Simply endorse the check (if required) and use the app to photograph and deposit it.
Mail the Check: You can mail the check directly to Fidelity. Ensure it's sent to the correct address for rollover checks. You can find this on Fidelity's website or by calling their customer service.
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
Visit a Fidelity Investor Center: If you have a Fidelity office nearby, you can visit in person, and a representative can assist you with the deposit.
QuickTip: Absorb ideas one at a time.
Crucial Note: The 60-Day Rule!
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If, for any reason, the check is made payable directly to you (this is an "indirect rollover"), you have 60 days from the date you receive the check to deposit it into your Fidelity IRA. If you miss this deadline, the money will be considered a taxable distribution and could be subject to income taxes and a 10% early withdrawal penalty (if you're under 59½). Your old plan provider is also required to withhold 20% for taxes if they make the check out to you. To avoid this headache, always push for a direct rollover!
Step 5: Invest Your Funds!
Once the funds land in your Fidelity IRA, they will initially be held in a cash position. Don't leave them there! The whole point of a rollover is to continue growing your retirement savings.
Sub-heading: Making Your Money Work for You
Review Your Investment Strategy: Consider your risk tolerance, time horizon, and financial goals.
Explore Fidelity's Investment Options: Fidelity offers a vast range of investment vehicles:
Mutual Funds: Including their popular low-cost index funds (e.g., FZROX, FXAIX).
ETFs (Exchange-Traded Funds): Diversified and often low-cost.
Stocks and Bonds: For individual security selection.
Managed Accounts: If you prefer Fidelity to handle the investment decisions for you.
Diversify: Ensure your investments are diversified across different asset classes to manage risk.
Rebalance Regularly: Periodically review your portfolio and rebalance it to stay aligned with your financial objectives.
Step 6: Monitor and Consolidate
Congratulations! You've successfully rolled over your 401(k). Now it's time for ongoing management.
Confirm the Rollover: Check your Fidelity account statements and online portal to ensure the full amount has been received and accurately recorded.
Consolidate Statements: If you had multiple old 401(k)s, consider rolling them all into your single Fidelity IRA for easier management.
Update Beneficiaries: Make sure the beneficiaries on your new Fidelity IRA are up-to-date. This is a crucial, often overlooked, step.
Frequently Asked Questions (FAQs)
Here are 10 common questions about 401(k) rollovers to Fidelity, with quick answers:
Tip: Use the structure of the text to guide you.
How to know if I'm eligible for a 401(k) rollover?
Generally, you are eligible for a rollover after you leave your employer. Other events like reaching age 59½, disability, or death can also trigger eligibility. Contact your old 401(k) plan administrator to confirm.
How to avoid taxes and penalties during a 401(k) rollover?
Always opt for a direct rollover where the funds are transferred directly from your old plan to your Fidelity IRA. If you receive a check, ensure it's made out to "Fidelity Management Trust Company FBO [Your Name]" and deposit it within 60 days.
How to roll over a Roth 401(k) to Fidelity?
You will roll over a Roth 401(k) into a Roth IRA at Fidelity. This is a tax-free transfer, maintaining the tax-free growth and withdrawals of your Roth funds.
How to handle a 401(k) with both pre-tax and after-tax contributions?
You will likely need to open both a Traditional IRA (for the pre-tax portion) and a Roth IRA (for the after-tax portion) at Fidelity to maintain the correct tax treatment. Consult a tax advisor for guidance.
How to find my old 401(k) provider?
Check old statements, your former employer's HR department, or use online services designed to help locate lost retirement accounts.
Tip: Don’t just glance — focus.
How to deposit the rollover check into my Fidelity IRA?
The easiest ways are typically using the Fidelity mobile app's mobile check deposit, mailing the check to Fidelity's specified rollover address, or visiting a Fidelity Investor Center.
How to invest my rolled-over funds once they are at Fidelity?
Once the funds are in your Fidelity IRA cash balance, you can log into your account online or via the app and choose from their wide range of investment options, including mutual funds, ETFs, stocks, or managed portfolios, based on your risk tolerance and goals.
How long does a 401(k) rollover to Fidelity take?
The timeline can vary. If your old 401(k) is already with Fidelity, it can be very quick (a few days). If it's with another provider and involves mailing a check, it could take a few weeks from initiation to funds being available for investment.
How to get help from Fidelity during the rollover process?
Fidelity has dedicated rollover specialists. You can call their customer service line (often available on their website), or visit a local Fidelity Investor Center for in-person assistance.
How to avoid common rollover mistakes?
Always ensure the check is made payable to Fidelity FBO you, deposit it within 60 days if you receive it, understand the tax implications of Roth conversions, and don't forget to invest the cash once it arrives in your Fidelity account.
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