Opening a Roth IRA at Fidelity and funding it

To invest in a Roth IRA through Fidelity, you first open an account on Fidelity's website or by calling 1-800-343-3548, then fund it with money, then choose what investments to buy inside that account. Fidelity does not charge an account opening fee. You can fund a Roth IRA by transferring money from a bank account, rolling over money from another retirement account, or mailing a check.

The annual contribution limit for a Roth IRA in 2024 is $7,000 if you are under 50, or $8,000 if you are 50 or older. This limit applies across all Roth IRAs you own, not per account. You can contribute only if you have earned income (from a job or self-employment) in that year, and your income cannot exceed certain thresholds set by the IRS — these thresholds vary by filing status and change each year.

Once money is in your Roth IRA at Fidelity, you can invest it in stocks, bonds, mutual funds, exchange-traded funds (ETFs), or money market funds. Fidelity offers thousands of these investments. You can also hold cash in the account and leave it uninvested, though it will not grow.

Key Takeaways

  • You can open a Roth IRA at Fidelity online or by phone without paying an account fee, and fund it from a bank account, another retirement account, or by mailing a check.
  • The annual contribution limit is $7,000 (or $8,000 if you are 50 or older in 2024), and you can contribute only if you have earned income that year.
  • After funding the account, you choose individual investments such as stocks, ETFs, or mutual funds, or you can keep money in cash.
  • Withdrawals of money you contributed (not earnings) can be taken at any time without penalty, but earnings cannot be withdrawn tax-free until you are 59½ and have held the account for at least five years.

How to choose investments inside your Roth IRA

After you fund your Roth IRA at Fidelity, you log into your account and navigate to the investment section to buy specific investments. Fidelity's website lets you search for stocks by ticker symbol, mutual funds by name or symbol, or ETFs by category. You can also use Fidelity's research tools to read company information, fund fact sheets, and performance history before you buy.

If you do not want to pick individual investments, Fidelity offers target-date funds, which are mutual funds that automatically shift from stocks to bonds as you approach retirement. You choose the fund based on your expected retirement year — for example, a 2050 target-date fund is designed for someone retiring around 2050. Fidelity also offers index funds, which track a broad market index like the S&P 500 and typically have lower fees than actively managed funds.

When you buy an investment, you specify how many shares or dollars' worth you want to purchase. Fidelity will execute the trade when ready during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays) or place it as a pending order outside market hours. You can hold dozens of different investments in one Roth IRA, or concentrate in just a few.

Understanding contribution limits and income restrictions

The IRS sets an annual contribution limit for Roth IRAs that applies to all your Roth IRAs combined. In 2024, the limit is $7,000 per year if you are under 50, or $8,000 if you are 50 or older. This limit changes each year based on inflation. You can contribute the full amount only if your earned income for that year is at least equal to what you contribute.

The IRS also phases out your ability to contribute based on your modified adjusted gross income (MAGI). For 2024, if you file as single, the phase-out range begins at $146,000 and ends at $161,000 — meaning you cannot contribute the full amount if your income falls in that range, and cannot contribute at all if your income exceeds $161,000. If you are married filing jointly, the range is $230,000 to $240,000. These income limits change each year. You can check your MAGI on your tax return or ask a tax professional.

If your income exceeds the limit, you cannot contribute to a Roth IRA directly, but you may be able to use a backdoor Roth strategy, which involves contributing to a traditional IRA and then converting it to a Roth IRA. This strategy has its own rules and tax consequences, so consult a tax professional before attempting it.

Withdrawing money from your Roth IRA

A key feature of the Roth IRA is that you can withdraw the money you contributed (called your basis) at any time without penalty or taxes, even before age 59½. This is different from a traditional IRA, where withdrawals before 59½ are typically taxed and penalized. At Fidelity, you can request a withdrawal online or by phone, and the money is usually sent to your bank account within one to three business days.

Earnings (the investment gains inside your account) are subject to different rules. You cannot withdraw earnings tax-free until you are 59½ and have held the Roth IRA for at least five years. If you withdraw earnings before meeting both conditions, you owe income tax on the earnings plus a 10% penalty. The five-year rule applies to each Roth IRA separately — if you open a second Roth IRA, the five-year clock starts over for that account.

There are a few exceptions to the early withdrawal penalty on earnings: you can withdraw without penalty if you use the money to buy your first home (up to $10,000 lifetime), pay for may have access to education expenses, cover medical insurance after job loss, or pay for a disability or medical hardship. You still owe income tax on the earnings in these cases, but not the 10% penalty.

Transferring money between retirement accounts

If you have money in another retirement account — such as a traditional IRA, a 401(k) from a former employer, or a SEP IRA — you can move it to a Roth IRA at Fidelity. This is called a rollover or conversion. Fidelity can handle the paperwork and coordinate with your old account provider to move the money directly to your new Roth IRA.

A direct rollover (also called a trustee-to-trustee transfer) moves money straight from the old account to Fidelity without you touching it. This is the simplest route and avoids tax withholding. You can request a direct rollover by calling Fidelity at 1-800-343-3548 and providing information about your old account.

If you receive a check from your old account instead, you have 60 days to deposit it into your Roth IRA at Fidelity. If you miss the 60-day window, the IRS treats it as a withdrawal and you owe taxes and penalties. Converting a traditional IRA or 401(k) to a Roth IRA triggers income taxes in the year of conversion, because you are moving pre-tax money into an after-tax account. Consult a tax professional before converting, as the tax bill can be substantial.

Fees and costs at Fidelity

Fidelity does not charge an annual account maintenance fee for a Roth IRA. However, you may pay fees depending on what investments you choose inside the account. Fidelity's own mutual funds and ETFs typically have low expense ratios (the annual cost as a percentage of your investment), often 0.03% to 0.50% per year. Some Fidelity funds charge no expense ratio at all.

If you buy individual stocks, Fidelity does not charge a commission per trade. If you buy mutual funds or ETFs from other companies (not Fidelity's own), you may pay a transaction fee, though many popular ETFs and funds are commission-free. You can see the fee before you buy by looking at the fund's fact sheet or the trade confirmation screen.

If you trade frequently, you may also pay bid-ask spreads (the difference between the buy and sell price), though this is not a direct fee — it is built into the price. For most long-term investors, these spreads are negligible. Fidelity's website shows the expense ratio and any transaction fees for each investment before you purchase.

Setting up automatic contributions

Fidelity allows you to set up automatic monthly or periodic contributions to your Roth IRA, which can help you invest consistently without having to remember to transfer money each time. You can set this up online by linking your bank account and choosing a contribution amount and frequency. Fidelity will pull money from your bank account on the date you specify and deposit it into your Roth IRA.

Automatic contributions are useful if you want to dollar-cost average — investing a fixed amount regularly regardless of market conditions — rather than trying to time the market. You can change or cancel automatic contributions at any time through your Fidelity account settings. If you do not have enough money in your bank account on the scheduled date, the contribution will fail, so make sure your account has sufficient funds.

Frequently Asked Questions

Can I invest in cryptocurrency or alternative investments in a Fidelity Roth IRA?

Fidelity offers a self-directed brokerage option that allows you to hold alternative investments such as cryptocurrency, but this requires opening a separate self-directed account within your Roth IRA. Standard Roth IRAs at Fidelity are limited to stocks, bonds, mutual funds, ETFs, and money market funds. Contact Fidelity to learn whether a self-directed option is right for your situation.

What happens to my Roth IRA if I change jobs?

Your Roth IRA at Fidelity is separate from your employer's retirement plan, so changing jobs does not affect it. If your new employer offers a 401(k), you can roll that 401(k) into your Roth IRA at Fidelity, but this triggers taxes on any pre-tax money in the 401(k). Your existing Roth IRA contributions and earnings remain in the account and continue to grow.

Can I have both a Roth IRA and a traditional IRA at Fidelity?

Yes, you can own both types of accounts at Fidelity. However, your annual contribution limit applies across all IRAs combined — if you contribute $4,000 to a Roth IRA, you can contribute only $3,000 to a traditional IRA that year (assuming the $7,000 limit). The tax treatment and withdrawal rules differ between the two, so track your contributions carefully or consult a tax professional.

How do I know if I have held my Roth IRA for five years?

Fidelity tracks your account opening date and displays it in your account summary. The five-year rule starts on January 1 of the year you opened the account, not on the exact day you opened it. So if you opened a Roth IRA on December 15, 2024, the five-year period ends on January 1, 2030. Fidelity will show this date in your account information.

Can I withdraw money from my Roth IRA to pay for education expenses?

Yes, you can withdraw earnings from your Roth IRA without the 10% early withdrawal penalty if you use the money for may have access to education expenses (tuition, fees, books, room and board for yourself or a family member attending college). You still owe income tax on the earnings, but not the penalty. You can withdraw your contributions at any time without tax or penalty, regardless of how you use the money.