How Do You Roll Over a 401(k) to a Fidelity IRA?


Quick Answer

In order to roll over a 401(k) to a Fidelity IRA, first choose the type of IRA, and set up the account, according to Fidelity. Then, you must request a direct rollover of funds from your existing 401(k) plan to your Fidelity IRA account.

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Full Answer

The most important thing is for the funds to be deposited into your IRA by your 401(k) plan via direct rollover rather than having a check issued to you. If a distribution from a retirement plan is paid to you, it is subject to mandatory withholding and is subject to early distribution penalties, according to the IRS. IRS guidelines state that a check made payable to an IRA account or delivered directly from one account trustee to the other is not be subject to withholding.

The type of IRA account chosen also carries serious tax implications, explains Fidelity. Individuals have the option to choose between a Roth IRA and a traditional IRA. While contributions to a Roth IRA are taxed, withdrawals are not. With a traditional IRA, withdrawals are taxed, but contributions are not. Which account type to choose is largely a matter of personal preference, and a financial professional is able to advise you on which type is best suited to your specific situation.

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