Moving your retirement savings is a significant financial decision, and it's fantastic that you're taking the initiative to consolidate your assets! Transferring your ADP 401(k) to Fidelity can offer a host of benefits, from greater investment flexibility to simplified account management. This lengthy guide will walk you through every step of the process, ensuring you understand each phase and can confidently make the switch.
Let's dive in!
The Ultimate Guide to Transferring Your ADP 401(k) to Fidelity
Ready to take control of your retirement savings? This comprehensive guide will help you navigate the process of rolling over your ADP 401(k) into a Fidelity account. We'll cover everything from initial considerations to finalizing your investments.
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| How To Transfer Adp 401k To Fidelity |
Step 1: Understanding Your ADP 401(k) and the "Why"
Before you initiate any transfer, it's crucial to have a clear understanding of your current ADP 401(k) plan and why you're considering this move. This initial assessment will help you make informed decisions throughout the process.
Sub-heading 1.1: Why Roll Over Your 401(k)?
There are several compelling reasons why individuals choose to roll over an old 401(k):
Consolidation: If you've changed jobs multiple times, you likely have several old 401(k) accounts scattered across different providers. Consolidating them into one Fidelity IRA or 401(k) simplifies your financial life, making it easier to track and manage your retirement assets.
Expanded Investment Options: Employer-sponsored 401(k) plans often have a limited selection of investment choices. Fidelity, on the other hand, typically offers a much wider array of investment vehicles, including individual stocks, bonds, ETFs, and a vast selection of mutual funds, giving you more control and diversification opportunities.
Lower Fees: While some 401(k) plans have competitive fees, others can have higher administrative or fund-related expenses. Rolling over to an IRA at Fidelity might lead to lower overall costs, allowing more of your money to grow.
Enhanced Control and Flexibility: With an IRA at Fidelity, you typically have more direct control over your investments and can make changes more easily. You also have more flexibility with distribution options in retirement compared to a 401(k).
Better Customer Service & Tools: Fidelity is known for its robust online platform, comprehensive research tools, and readily available customer support, which can significantly enhance your retirement planning experience.
Sub-heading 1.2: Gather Essential ADP 401(k) Information
To ensure a smooth transfer, gather the following details about your ADP 401(k):
QuickTip: Skim the intro, then dive deeper.
Account Number: This is your primary identifier for your ADP 401(k) account.
Account Statements: Recent statements will show your current balance, investment holdings, and plan details.
Plan Administrator Contact Information: This includes phone numbers and potentially online portal access for ADP Retirement Services. You'll likely need to contact them to initiate the rollover.
Plan Type: Determine if your ADP 401(k) is a Traditional 401(k) (pre-tax contributions) or a Roth 401(k) (after-tax contributions). This is crucial for selecting the correct receiving account at Fidelity.
Eligibility for Rollover: In most cases, you can roll over your 401(k) after leaving a company. Confirm with ADP if your account is eligible for a distribution or rollover. There might be a waiting period (e.g., two weeks) after your employment ends.
Current Mailing Address: Ensure your mailing address on file with ADP is up-to-date, as they may send a physical check for the rollover.
Step 2: Choosing Your Fidelity Destination Account
Once you've decided to move forward, the next critical step is to select the appropriate account at Fidelity to receive your funds. This choice largely depends on the type of 401(k) you have and your future financial goals.
Sub-heading 2.1: Fidelity Rollover IRA vs. Other Options
For most people transferring an old 401(k), a Fidelity Rollover IRA is the most common and often the best choice.
Rollover IRA (Traditional): If your ADP 401(k) is a Traditional 401(k) (pre-tax contributions), you will generally open a Traditional Rollover IRA at Fidelity. This maintains the tax-deferred status of your money, meaning you won't pay taxes until you withdraw in retirement.
Roth IRA: If you have a Roth 401(k) (after-tax contributions), you should roll it over into a Roth IRA at Fidelity to maintain its tax-free growth and withdrawal benefits.
Combining Traditional and Roth: If your ADP 401(k) has both pre-tax and after-tax (Roth) contributions, you'll need to open both a Traditional Rollover IRA and a Roth IRA at Fidelity to properly separate the funds.
New Employer's 401(k): While possible, rolling an old 401(k) into a new employer's 401(k) plan is often less flexible than an IRA and depends on whether your new employer's plan accepts rollovers. Carefully compare the investment options and fees before choosing this route.
Cashing Out: Avoid cashing out your 401(k) unless it's an absolute last resort. Cashing out typically triggers immediate income taxes and a 10% early withdrawal penalty if you're under 59½.
Sub-heading 2.2: Opening Your Fidelity Account
Opening an account at Fidelity is generally straightforward.
Online Application: Visit the Fidelity website (Fidelity.com) and navigate to their IRA or retirement accounts section. Look for options to "Open an Account" or "Start a Rollover."
Provide Personal Information: You'll need to provide your personal details, including your Social Security number, address, and employment information.
Select Account Type: Choose the appropriate IRA type (Traditional or Roth) based on your ADP 401(k) type.
Funding (Initial Deposit, if any): While the rollover will fund the account, you might have the option to make a small initial deposit to get started, though it's not usually required for a rollover.
Account Number: Once your Fidelity account is open, make sure to note down your new Fidelity account number. You'll need this when you contact ADP.
Step 3: Initiating the Rollover from ADP
This is the core of the transfer process. You'll need to contact ADP to request the distribution of your 401(k) funds.
QuickTip: Repeat difficult lines until they’re clear.
Sub-heading 3.1: Contacting ADP Retirement Services
There are typically a few ways to initiate a rollover with ADP:
Online Portal: Log in to your ADP 401(k) account online. Look for options like "Distributions," "Withdrawals," "Roll Over Money," or "Move Assets." The exact wording may vary, but you're looking for an option to move funds out of the plan or to another institution.
Phone Call: This is often the most reliable method, especially if you have questions or need to clarify details. Call ADP Retirement Services directly. Their general participant services number is 1-800-695-7526. Be prepared to provide your account information.
Tip for the Call: Have your ADP 401(k) account statement and your new Fidelity account number handy. Set aside 30 minutes in a quiet place.
Rollover Form: Some plans might require you to fill out a specific rollover authorization form from ADP. You might find this on their website or they can mail it to you.
Sub-heading 3.2: Requesting a Direct Rollover (Highly Recommended!)
When speaking with ADP (or selecting options online), you will be asked about the type of rollover. Always request a Direct Rollover.
Direct Rollover: In a direct rollover (also known as a trustee-to-trustee transfer), ADP will send the funds directly to Fidelity. The check will typically be made payable to "Fidelity Investments FBO [Your Name]" or similar.
Why is this preferred? A direct rollover avoids the mandatory 20% federal tax withholding that occurs with an indirect rollover (explained below). It also ensures the funds go directly into your retirement account, minimizing the risk of missing the 60-day rollover window.
Indirect Rollover (60-Day Rollover): If you choose an indirect rollover, ADP will send the check directly to you, made out in your name. You then have 60 days from the date you receive the check to deposit the full amount into your Fidelity IRA.
The Catch: With an indirect rollover, ADP is legally required to withhold 20% of your balance for federal income taxes. If you want to roll over the entire original balance, you'll need to contribute the 20% from your own funds to make up the difference. You'll get the withheld 20% back when you file your taxes, but it can be a hassle. Avoid this option unless absolutely necessary.
Sub-heading 3.3: Providing Fidelity's Details to ADP
ADP will need to know where to send the funds. Provide them with:
The full legal name of the receiving institution: Fidelity Investments
Your Fidelity account number for the new Rollover IRA (or Roth IRA).
Fidelity's mailing address for rollovers. While ADP usually has this on file, it's good to have it ready. You can typically find this on Fidelity's website or by calling their rollover support line (often 1-800-343-3548).
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Step 4: Tracking and Depositing Your Rollover Check
After you've initiated the rollover with ADP, the waiting game begins. The funds usually arrive via a physical check.
Sub-heading 4.1: Anticipating the Check's Arrival
Tip: Don’t just scroll to the end — the middle counts too.
Processing Time: Rollovers typically take anywhere from 2 to 4 weeks to complete, but this can vary. ADP will process the distribution, and then Fidelity will process the deposit.
Mailing Address: The check will be sent to the mailing address you have on file with ADP. Ensure this address is accurate.
Check Details: The check should be made payable to "Fidelity Investments FBO [Your Name]" for a direct rollover. If, for some reason, it's made out to you personally (an indirect rollover), remember the 60-day rule and the 20% withholding.
Sub-heading 4.2: Depositing the Check with Fidelity
Once you receive the check:
Do NOT Cash It: Do not attempt to cash or deposit the check into your personal bank account if it's a direct rollover check (made out to Fidelity). This will complicate the process and could lead to tax implications.
Mobile Deposit (Easiest): Many financial institutions, including Fidelity, offer mobile check deposit via their mobile app. This is often the quickest and most convenient way to deposit the check. Take clear photos of the front and back of the check.
Mail the Check: If mobile deposit isn't an option or you prefer, you can mail the check directly to Fidelity.
Important: Write your Fidelity account number clearly on the check's memo line.
Fidelity's mailing address for rollovers can be found on their website or by calling their customer service.
In-Person Deposit: If you have a Fidelity Investor Center near you, you can deposit the check in person.
Step 5: Confirming and Investing Your Funds at Fidelity
Congratulations! Your funds have arrived at Fidelity. Now it's time to confirm the transfer and strategically invest your money.
Sub-heading 5.1: Verifying the Rollover
Check Your Fidelity Account: Log in to your Fidelity account online. You should see the transferred funds appear in your new Rollover IRA or Roth IRA. It might initially show as a cash balance.
Confirmation Statements: Fidelity will likely send you a confirmation statement (electronic or physical) once the funds are fully processed and available.
Sub-heading 5.2: Investing Your Funds
This is where you get to put your money to work! Your rollover funds will initially be held in cash within your Fidelity account. You need to actively invest them.
Explore Investment Options: Fidelity offers a vast range of investment choices. Take advantage of their research tools and resources to understand the various options available, such as:
Mutual Funds: Professionally managed portfolios of stocks, bonds, or other securities.
Exchange-Traded Funds (ETFs): Similar to mutual funds but trade like stocks on an exchange.
Individual Stocks and Bonds: For those who prefer to pick their own securities.
Target Date Funds: A popular option for retirement savings, these funds automatically adjust their asset allocation over time as you get closer to your target retirement date.
Consider Your Risk Tolerance and Goals: Your investment choices should align with your personal risk tolerance, financial goals, and time horizon until retirement.
Seek Guidance if Needed: If you're unsure about how to invest, Fidelity offers various resources:
Fidelity representatives can provide general guidance.
Fidelity Go® is a robo-advisor service that can manage your investments for you based on your risk profile.
Consider consulting with a Fidelity financial advisor for personalized advice, especially for larger balances or complex situations.
Implement Your Investment Strategy: Once you've decided on your investments, place buy orders within your Fidelity account to allocate your funds.
Step 6: Reviewing and Monitoring
Tip: Context builds as you keep reading.
The rollover isn't a one-and-done event. Ongoing review and monitoring are key to successful retirement planning.
Regularly Review Your Portfolio: Periodically check your Fidelity account to monitor your investments' performance and ensure they are still aligned with your financial goals.
Rebalance as Needed: Over time, your asset allocation may drift from your target due to market fluctuations. Rebalancing involves adjusting your investments to bring them back to your desired allocation.
Stay Informed: Keep an eye on market conditions and any changes to your personal financial situation that might necessitate adjustments to your investment strategy.
Update Beneficiaries: Don't forget to update the beneficiaries on your new Fidelity IRA account. This is a crucial step to ensure your assets are distributed according to your wishes.
Frequently Asked Questions (FAQs)
Here are 10 common questions about transferring your ADP 401(k) to Fidelity, with quick answers:
1. How to start the ADP 401(k) rollover process?
Quick Answer: Begin by contacting ADP Retirement Services (online or by phone at 1-800-695-7526) and informing them you wish to initiate a 401(k) rollover.
2. How to choose between a Traditional and Roth IRA for my rollover?
Quick Answer: Roll over a Traditional ADP 401(k) to a Traditional IRA to maintain tax-deferred growth. Roll over a Roth ADP 401(k) to a Roth IRA for tax-free withdrawals in retirement.
3. How to ensure a direct rollover to avoid tax withholding?
Quick Answer: When speaking with ADP, explicitly request a "direct rollover" or "trustee-to-trustee transfer" to have the funds sent directly to Fidelity, avoiding the mandatory 20% tax withholding.
4. How to find Fidelity's mailing address for rollover checks?
Quick Answer: You can find Fidelity's mailing address for rollovers on their official website (Fidelity.com) or by calling their customer service/rollover support line (800-343-3548).
5. How to deposit the rollover check into my Fidelity account?
Quick Answer: The easiest way is via mobile check deposit using the Fidelity app. Alternatively, you can mail the check to Fidelity (with your account number written on it) or deposit it at a Fidelity Investor Center.
6. How to invest the funds once they arrive at Fidelity?
Quick Answer: Once the funds appear in your Fidelity account (initially as cash), log in and actively select investments from their wide range of options (mutual funds, ETFs, stocks, etc.) that align with your financial goals.
7. How to handle a rollover if my ADP 401(k) has both pre-tax and Roth contributions?
Quick Answer: You will need to open both a Traditional Rollover IRA and a Roth IRA at Fidelity and ensure ADP segregates and sends the respective funds to the correct account types.
8. How to determine if I should roll over to an IRA or my new employer's 401(k)?
Quick Answer: A Rollover IRA generally offers more investment options and flexibility. Rolling to a new 401(k) might keep your savings consolidated if the new plan allows it and offers competitive fees and investments. Compare both options carefully.
9. How to get help if I encounter issues during the rollover process?
Quick Answer: For issues with your ADP 401(k), contact ADP Retirement Services. For questions related to your Fidelity account or the receiving end of the rollover, contact Fidelity's customer support (800-343-3548).
10. How to update beneficiaries on my new Fidelity IRA?
Quick Answer: After the rollover is complete and your funds are invested, log in to your Fidelity account online and navigate to the beneficiary designation section to add or update your beneficiaries. This is a critical step!
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