To initiate a 401(k) rollover to an IRA at Fidelity, start by gathering your current 401(k) account information and opening an IRA account with Fidelity. Contact your previous 401(k) plan provider to request a direct rollover of your funds into your new Fidelity IRA. Ensure you specify the exact amount and type of investments you want to transfer. Fidelity will handle the rest of the process, including contacting your previous plan provider to verify the instructions and facilitating the transfer. Once the funds are received, they will appear in your Fidelity IRA account, allowing you to invest and manage them as you wish. Remember to follow the IRS regulations regarding rollover timeframes and tax implications to ensure a smooth and compliant transition.
Benefits of Rolling Over a 401(k) to an IRA
There are several benefits to rolling over a 401(k) to an IRA, including:
- More investment options: IRAs offer a wider range of investment options than 401(k) plans, giving you more control over your retirement savings.
- Lower fees: IRAs typically have lower fees than 401(k) plans, which can save you money over time.
- More flexibility: IRAs offer more flexibility in terms of when and how you can withdraw your money, giving you more control over your retirement income.
- Estate planning benefits: IRAs can be used for estate planning purposes, such as passing on your retirement savings to your heirs.
Steps to Roll Over a 401(k) to an IRA
To roll over a 401(k) to an IRA, you will need to:
- Choose an IRA provider: There are many different IRA providers to choose from, so it is important to compare their fees, investment options, and customer service before making a decision.
- Open an IRA account: Once you have chosen an IRA provider, you will need to open an account.
- Request a rollover from your 401(k) plan: You can request a rollover from your 401(k) plan by contacting your plan administrator. The administrator will provide you with a form to complete.
- Complete the rollover form: The rollover form will ask you to provide information about your IRA account and your 401(k) plan. You will also need to specify how much money you want to roll over.
- Submit the rollover form: Once you have completed the rollover form, you will need to submit it to your 401(k) plan administrator. The administrator will then process the rollover and send the money to your IRA account.
Tax Implications of Rolling Over a 401(k) to an IRA
Rolling over a 401(k) to an IRA is a tax-free event. However, if you withdraw money from your IRA before reaching age 59½, you may be subject to a 10% early withdrawal penalty. Additionally, if you roll over a 401(k) with after-tax contributions, those contributions will be taxed when you withdraw them from your IRA.
Comparison of 401(k)s and IRAs
The following table compares the key features of 401(k)s and IRAs:
| Feature | 401(k) | IRA |
|---|---|---|
| Contribution limits | $20,500 ($27,000 with catch-up contributions) | $6,500 ($7,500 with catch-up contributions) |
| Investment options | Limited to options offered by your plan | Wide range of investment options available |
| Fees | Typically higher than IRAs | Typically lower than 401(k)s |
| Flexibility | Limited flexibility in terms of when and how you can withdraw your money | More flexibility in terms of when and how you can withdraw your money |
| Estate planning benefits | Limited estate planning benefits | Can be used for estate planning purposes |
## How to Roll Over 401(k) to Fidelity
Rolling over your 401(k) to Fidelity allows you to consolidate your retirement savings and access Fidelity’s investment platform. Here’s how to do it:
### Fidelity’s Rollover Process
1. **Open a Fidelity account:** Create an IRA or brokerage account at Fidelity.
2. **Initiate a direct transfer:** Contact your current 401(k) plan administrator and request a direct transfer of funds to your Fidelity account.
3. **Complete the paperwork:** Fidelity will provide you with a form to complete and return, authorizing the transfer.
4. **Wait for the transfer:** The transfer process typically takes 1-2 weeks.
### Using the ‘Rollover Wizard’
Fidelity’s online “Rollover Wizard” simplifies the process:
1. **Log in:** Access your Fidelity account online.
2. **Select “Rollover Wizard”:** Find the Rollover Wizard option under the “Accounts & Trading” tab.
3. **Provide details:** Enter information about your old 401(k) and new Fidelity account.
4. **Review and submit:** Double-check the details and submit the request.
### Table: Rollover Options
| Option | Pros | Cons |
|—|—|—|
| **Direct transfer:** | Funds are transferred directly, minimizing taxes and potential delays. | Requires cooperation from old plan administrator. |
| **Indirect transfer:** | You receive a check from your old plan, which you then deposit into your Fidelity account. | Requires paying taxes on the distribution before depositing funds. |
### Tips
* Compare investment options and fees between your old 401(k) and Fidelity before rolling over.
* Consider tax implications, such as the 10% early withdrawal penalty if you’re under 59½.
* Seek professional advice if you have complex financial circumstances or a large 401(k) balance.
How to Roll Over a 401(k) to Fidelity
Step 1: Open an IRA Account with Fidelity
Visit Fidelity’s website or visit a local branch to open an Individual Retirement Account (Traditional or ROTH). You can choose a specific investment strategy or work with a representative to create a portfolio that meets your financial goals.
Step 2: Request a Rollover from Your Current Plan
Contact your current 401(k) plan provider and request a rollover distribution. You can either have the funds directly transferred to your new Fidelity IRA or have them issued as a check made out to you.
Step 3: Complete the Rollover Form
Fide Haven provides a 401(k) Rollover Distribution Form to facilitate the transfer. Complete the form and submit it to your previous plan provider, specifying the amount you want to roll over and the Fidelity IRA account information.
Step 4: Wait for the Rollover to Process
The rollover process can take several weeks. You will receive a confirmation from Fidelity once the funds are transferred into your account.
Tax Implications of Rolling Over a 401(k) to an IRA
Rolling over a 401(k) to an IRA generally does not trigger any immediate taxes. However, there are some important tax implications to keep in mind:
| Tax Type | When Applicable | Description |
|—|—|—|
| Income Tax | If you withdraw funds from the IRA before reaching age 59.5 | Withdrawals before age 59.5 may be subject to a 10% early-withdrawal penalty |
| Income Tax | If you roll over funds from a traditional 401(k) to a ROTH IRA | Taxes are deferred until you withdraw funds from the ROTH IRA |
| Required Minumum Distributions (RMDs) | After reaching age 72 | You must start taking RMDs from traditional IRAs and 401(k)s |
| Estate Tax | Upon your passing | Inherited IRAs may be subject to estate taxes |
Direct vs. Indirect Rollover Methods
There are two primary methods for rolling over a 401(k) to an IRA with Fidelity: direct and indirect.
- Direct Rollover: With a direct rollover, the funds are transferred directly from your 401(k) plan to your IRA. This is the simplest and most common method, and it ensures that no taxes are withheld from the distribution.
- Indirect Rollover: With an indirect rollover, you first receive a distribution from your 401(k) plan and then roll over the funds to your IRA within 60 days. This method is more complex and requires you to pay taxes on the distribution unless you complete the rollover within the 60-day window.
Choosing the Right Rollover Method
The best rollover method for you depends on your individual circumstances. If you are confident that you can complete an indirect rollover within the 60-day window, it may be the more cost-effective option. However, if you are not sure if you can complete the rollover in time, a direct rollover is the safer choice.
Steps to Rollover 401k to Ira Fidelity
- Gather your information: You will need your 401(k) account number, your IRA account number, and your routing and account numbers for your checking or savings account.
- Contact Fidelity: You can initiate the rollover process by calling Fidelity at 1-800-492-4141 or visiting their website.
- Provide your information: You will need to provide Fidelity with your 401(k) and IRA account numbers, as well as the amount of money you want to roll over.
- Choose a rollover method: You will need to choose whether to do a direct or indirect rollover.
- Complete the transaction: Once you have provided all the necessary information, Fidelity will process the rollover transaction.
Taxes on Rollover Distributions
Generally, rollover distributions are not taxable. However, if you take an indirect rollover, you will be responsible for paying taxes on the distribution unless you complete the rollover within the 60-day window.
| Rollover Method | Tax Withholding |
|---|---|
| Direct Rollover | No |
| Indirect Rollover | Yes, if not completed within 60 days |
Well, there you have it! You’re now a pro at rolling over your 401(k) to an IRA with Fidelity. We hope this simple guide made the process a breeze for you. Remember, the key is to plan ahead, read the instructions carefully, and follow through with each step. And if you have any more questions, don’t hesitate to reach out to Fidelity for assistance. Thanks for reading, and we’ll catch you later for more financial wisdom!