Fidelity 401k Rollover Rules: What You Need to Know

Are you thinking about rolling over your 401(k) plan and wondering if Fidelity is the right place to do it? Understanding the Fidelity 401k rollover process can help you make smarter retirement decisions. This guide will walk you through everything you need to know—from what a rollover is to the exact steps you need to take, the rules that apply, and how to avoid common mistakes. Whether you’re changing jobs or retiring, this article simplifies the rollover process for you.

What Is a 401(k) Rollover?

A 401(k) rollover is the process of moving the money in your 401(k) retirement account into another retirement savings account, such as an IRA (Individual Retirement Account) or a new employer’s 401(k) plan. Rollovers are often done to consolidate accounts, reduce fees, or gain access to better investment options.

There are two main types of rollovers:

1. Direct Rollover – Money moves directly from your old 401(k) to the new account. This method avoids taxes and penalties.
2. Indirect Rollover – You receive the funds and then must deposit them into the new account within 60 days to avoid taxes and potential penalties.

Why Choose Fidelity for Your 401(k) Rollover?

Fidelity is one of the most trusted financial institutions in the U.S. It offers a variety of retirement accounts and investment options that can help grow your money. Some benefits of doing a Fidelity 401k rollover include:

• No account fees for opening an IRA
• Wide selection of low-cost mutual funds and ETFs
• Strong customer support
• Easy-to-use online tools
• Educational resources and calculators

Who Is Eligible for a Fidelity 401(k) Rollover?

You may be eligible for a Fidelity 401k rollover if:

• You’ve left your job (voluntarily or involuntarily)
• You’re retiring
• Your employer is terminating the 401(k) plan
• You want to consolidate multiple retirement accounts

If you’re still employed but want to roll over your 401(k), check with your HR department or plan administrator. Some plans allow in-service withdrawals, but these are rare.

Fidelity 401(k) Rollover Rules You Should Know

Understanding the rules will help you avoid unnecessary taxes and penalties.

1. Direct vs. Indirect Rollovers

• Direct Rollovers: Fidelity handles the transfer. No taxes withheld.
• Indirect Rollovers: You receive the check and must deposit it into your Fidelity IRA within 60 days. The IRS withholds 20% for taxes, even though you’ll get it back if you complete the rollover in time.

2. 60-Day Rule

You must complete an indirect rollover within 60 days of receiving the funds. If not, the IRS considers it a distribution and taxes it accordingly. If you’re under 59½, you’ll also pay a 10% penalty.

3. One Rollover Per Year Rule

You can only do one rollover per year across all your IRAs. This doesn’t apply to direct rollovers from a 401(k) to an IRA.

4. Tax Implications

• Traditional 401(k) to Traditional IRA: No taxes
• Traditional 401(k) to Roth IRA: Taxable event; you’ll pay taxes on the transferred amount

5. Required Minimum Distributions (RMDs)

Once you hit age 73, you must take RMDs unless your funds are in a Roth IRA. You cannot roll over an RMD.

Step-by-Step: How to Do a Fidelity 401(k) Rollover

Step 1: Open a Fidelity IRA

Go to Fidelity.com and open either a Traditional IRA or Roth IRA, depending on your tax preference.

Step 2: Contact Your Old 401(k) Provider

Tell them you want a direct rollover to Fidelity. Ask for the proper forms or request the transfer online if available.

Step 3: Choose How You Want to Invest

Use Fidelity’s investment tools or talk to an advisor to select your IRA’s investment mix.

Step 4: Complete the Rollover

Fidelity will provide you with the details you need to complete the rollover. If doing a direct rollover, the funds will go straight into your Fidelity IRA.

Step 5: Confirm the Transfer

Check your Fidelity account to ensure the funds have been deposited correctly. Save any paperwork for your records.

Frequently Asked Questions

Can I roll over more than one 401(k) into my Fidelity IRA?

Yes. You can consolidate multiple 401(k) accounts into one IRA at Fidelity to simplify your investments.

Will I be taxed for a Fidelity 401k rollover?

It depends. A Traditional to Traditional rollover is tax-free. Rolling into a Roth IRA triggers taxes but offers future tax-free withdrawals.

How long does a Fidelity 401k rollover take?

Generally, it takes 5–10 business days, depending on your previous plan administrator.

Is there a fee to roll over a 401(k) into Fidelity?

No. Fidelity doesn’t charge rollover or account-opening fees.

Benefits of Rolling Over to Fidelity

1. Low-Cost Investment Options

Fidelity offers zero-expense-ratio index funds, making it ideal for long-term investors.

2. User-Friendly Platform

The website and mobile app make it easy to track investments and make changes.

3. Access to Financial Advisors

Fidelity provides free and paid advisory services depending on your account balance.

4. Retirement Planning Tools

Use calculators, budgeting tools, and planning services to prepare for your future.

Mistakes to Avoid

❌ Choosing an Indirect Rollover

Whenever possible, choose a direct rollover to avoid taxes and the risk of missing the 60-day window.

❌ Ignoring Investment Strategy

Don’t just park the money in cash. Invest it wisely to maximize growth.

❌ Not Updating Beneficiaries

Make sure your beneficiary info is up to date in your new Fidelity account.

❌ Missing RMDs

If you’re 73 or older, remember to take required minimum distributions or face a hefty penalty.

Final Thoughts

A Fidelity 401k rollover can be a smart move if you want more control over your retirement savings, access to better investment options, and lower fees. Just make sure you understand the rules, follow the steps carefully, and plan your investments based on your retirement goals. With Fidelity’s strong reputation, user-friendly tools, and wide selection of low-cost funds, rolling over your 401(k) can be both simple and beneficial.