How to rollover your 401(k) to Fidelity - Empathic Finance | Mike Pumphrey, AFC® (2024)

FAQs

How do I rollover my 401k to Fidelity? ›

If you're thinking about a rollover to your current 401(k) plan, you'll want to ensure it's a better fit than your old plan. If it's not, then a rollover into an IRA could make a lot of sense, since you'll be able to invest in anything that trades in the market. Otherwise, maybe it makes sense to keep your old 401(k).

There is no cost to open and no annual fee for Fidelity's Traditional, Roth, SEP, and Rollover IRAs. A $50 account close out fee may apply. Fund investments held in your account may be subject to management, low balance and short term trading fees, as described in the offering materials.

There's more than one way to do a rollover, but a direct rollover is by far the simplest and will help you avoid mistakes. Your 401(k) plan administrator will send a check for your account balance directly to your IRA provider, who will deposit the money in your IRA.

If you have a workplace plan with Fidelity, you can do the entire rollover through your NetBenefits^® account. You don't need any additional paperwork and the money will be transferred within a few days. It takes 3-5 weeks, or longer, to complete transfers from workplace plans not held at Fidelity.

The cons: You'll need to liquidate your current 401(k) investments and reinvest them in your new 401(k) plan's investment offerings, which will take time and some research. The money will be subject to your new plan's withdrawal rules, so you may not be able to withdraw it until you leave your new employer.

Option 4: Roll over the funds into an IRA.

Most of the time, transferring the money from your old 401(k) into an IRA is your best option. That's because a rollover IRA gives you the most control over your investments. You see, an IRA gives you potentially thousands of mutual funds to choose from.

There is usually no transfer fee charged when you roll over your 401(k) into a new tax-advantaged retirement account. Account fees for your new account might be higher than the ones for your old account. Rolling over a 401(k) to an IRA is often the way to go to reduce fees.

How long do I have to rollover my 401k from a previous employer? ›

There are a few things to remember when you go to rollover your 401(k) from a previous employer. If your previous employer disburses your 401(k) funds to you, you have 60 days to rollover those funds into an eligible retirement account. Take too long, and you'll be subject to early withdrawal penalty taxes.

The safest place to put your retirement funds is in low-risk investments and savings options with guaranteed growth. Low-risk investments and savings options include fixed annuities, savings accounts, CDs, treasury securities, and money market accounts. Of these, fixed annuities usually provide the best interest rates.

This rollover transaction isn't taxable, unless the rollover is to a Roth IRA or a designated Roth account from another type of plan or account, but it is reportable on your federal tax return. You must include the taxable amount of a distribution that you don't roll over in income in the year of the distribution.

Escaping the Fidelity Recordkeeping Fee can be achieved through strategic actions such as closing the account, seeking fiduciary services, and considering alternatives to minimize financial obligations. Closing the account is a straightforward approach to avoid the fee entirely.

If you don't roll over your payment, it will be taxable (other than qualified Roth distributions and any amounts already taxed) and you may also be subject to additional tax unless you're eligible for one of the exceptions to the 10% additional tax on early distributions.

To roll over your 401(k) or do an IRA Transfer to a self-directed IRA, you'll need a copy of your ID to open an account and a recent statement for the account you are moving. It's important to open the self-directed IRA before moving the funds.

If your old plan sends the rollover check made out to you instead of your new plan administrator, your old plan is required to withhold 20% of your balance in taxes, and you only have 60 days to deposit that money into a tax-advantaged retirement account, like a 401(k), or you could face early withdrawal penalties.

Rolling over your 401(k), whether into an IRA or your new company plan, may take a bit of administrative work, but it isn't difficult to do. In both cases, you reach out to the new plan provider or the investment firm you plan to work with and let them know you will be rolling over assets from an old plan.