Fidelity does allow fractional shares in Roth IRAs, and you can buy them through most of their trading platforms

Yes, Fidelity lets you purchase fractional shares inside a Roth IRA account. This means you can invest any dollar amount — say $50 or $237 — into a stock without having to buy a whole share first. Fractional shares are available on Fidelity's web platform, mobile app, and through their automated investing service called Fidelity Go.

Fractional share investing became standard at most brokers around 2019 and 2020. At Fidelity, there is no minimum purchase amount and no extra fee to buy fractional shares. You pay the same commission (which is zero) as you would for a whole share. The main limitation is that not every stock or fund is available as a fractional share — Fidelity restricts fractional purchases to stocks priced above $1 per share and certain exchange-traded funds (ETFs).

Key Takeaways

  • Fidelity allows fractional share purchases in Roth IRAs with no minimum dollar amount and no extra commission.
  • You can buy fractional shares through Fidelity's website, mobile app, or through Fidelity Go, their robo-advisor service.
  • Fractional shares are available for stocks priced above $1 and most ETFs, but not for penny stocks or certain mutual funds.
  • Fractional shares count toward your annual Roth IRA contribution limit just like whole shares do, so a $50 fractional purchase uses $50 of your limit.

How to buy fractional shares on Fidelity's website or app

The process is the same whether you use a computer or phone. Log into your Fidelity account, navigate to your Roth IRA, and search for the stock or ETF you want to buy. When you enter the order, type in a dollar amount instead of a number of shares. For example, type "$100" rather than "5 shares." Fidelity will calculate how many fractional shares that buys at the current market price and show you the exact amount before you confirm.

Orders for fractional shares settle during regular market hours, just like whole share orders. If you place an order after the market closes, it will execute at the next market open. There is no separate process or waiting period — fractional shares trade the same way whole shares do.

Fractional shares and your Roth IRA contribution limit

The IRS contribution limit for a Roth IRA is based on dollars, not on the number of shares you own. In 2024, the limit is $7,000 per year for most people under age 50 (the limit varies by year, so check the current year's rules). Whether you buy one whole share or ten fractional shares, the dollar amount you invest counts toward that limit.

This means fractional shares are actually useful for staying within your limit precisely. If you have $3,500 left to invest this year and want to buy a stock that costs $450 per share, you can buy exactly $3,500 worth of fractional shares instead of being forced to either buy fewer shares or go over your limit.

When Fidelity does not offer fractional shares

Fidelity restricts fractional share purchases to stocks trading above $1 per share. Penny stocks — shares that trade for less than $1 — cannot be bought as fractional shares. Additionally, some mutual funds and closed-end funds do not support fractional purchases, though most ETFs do.

If you try to buy a fractional share in a security that does not support them, Fidelity's platform will show you an error message and ask you to enter a whole number of shares instead. You can check whether a specific security supports fractional shares by searching for it in your account and looking at the order screen.

Selling fractional shares and tax reporting

Selling fractional shares works the same way as selling whole shares. You can sell any amount of a position, whether it is a whole share or a fraction. When you sell, Fidelity calculates your gain or loss based on the price you paid versus the price you sold at, and reports that to the IRS on your tax forms at the end of the year.

Because a Roth IRA is a tax-sheltered account, you do not pay taxes on gains inside the account, and you do not report individual trades to the IRS. Fidelity does not send you a 1099 form for Roth IRA activity. The only tax reporting that matters is when you withdraw money from the account — and even then, may have access to withdrawals are tax-free.

Fidelity Go and fractional shares

If you use Fidelity Go, Fidelity's automated investing service, fractional shares are built in. Fidelity Go invests your money across a mix of ETFs chosen based on your age and risk tolerance. Because it uses ETFs and fractional shares, it can invest every dollar you contribute without leaving cash sitting idle. You can set up automatic monthly contributions, and Fidelity Go will buy fractional shares each time.

Fidelity Go charges a management fee of 0.35% per year on accounts with less than $25,000, and no fee on accounts with $25,000 or more. This is separate from any commissions (which remain zero for all stock and ETF trades).

Frequently Asked Questions

Can I set up automatic investments using fractional shares in my Roth IRA?

Yes. You can set up automatic monthly or weekly contributions to your Roth IRA, and Fidelity will buy fractional shares each time. This is especially useful if you are investing a small amount regularly — say $200 per month — because fractional shares let you invest the exact amount without waiting to accumulate enough for a whole share.

Do fractional shares have different trading hours than whole shares?

No. Fractional shares trade during the same hours as whole shares — 9:30 a.m. to 4 p.m. Eastern time on trading days. If you place an order after hours, it executes at the next market open at the market price at that time.

What happens to my fractional shares if I transfer my Roth IRA to another broker?

When you transfer a Roth IRA to another broker, your fractional shares transfer as well. The receiving broker will either keep them as fractional shares or round them to whole shares and cash out the remainder, depending on that broker's policies. Fidelity will tell you what to expect before the transfer completes.

Can I buy fractional shares of index funds in my Roth IRA?

Most index-tracking ETFs support fractional shares, so yes. However, some index mutual funds do not. Check the specific fund's details on Fidelity's website — if it supports fractional shares, you will see that option when you place an order.