What happens when you transfer a 401(k) to Fidelity

A 401(k) rollover to Fidelity moves money from your current retirement account into a Fidelity IRA or, in some cases, into a Fidelity 401(k) if your new employer uses Fidelity as the plan custodian. The money itself does not get taxed during the transfer if you do it correctly — the account straightforward changes custodians. You keep the same money, the same tax-deferred status, and the same ability to invest it, but now Fidelity holds and manages the account instead of your previous provider.

The process takes between one and four weeks depending on whether you do a direct rollover (custodian to custodian) or an indirect rollover (money comes to you first). A direct rollover is simpler and safer because the money never touches your hands, so there is no risk of missing the 60-day important date that applies to indirect rollovers.

You need to know whether you left a job and have an old 401(k) sitting with a former employer's plan, or whether you still work somewhere and want to move an active 401(k). The steps differ slightly, and some employers do not allow in-service rollovers while you are still employed there.

Key Takeaways

  • A direct rollover from your current 401(k) custodian to Fidelity avoids taxes and the 60-day important date risk that comes with indirect rollovers.
  • You must contact your current 401(k) plan administrator or custodian first to request a rollover and get the paperwork started on their end.
  • Fidelity will give you rollover instructions and may provide a form for your current custodian to complete, or you may need to request one from your plan administrator.
  • The transfer typically takes one to four weeks; during that time your money sits in a holding account and is not invested.
  • If you receive a check instead of a direct transfer, you have 60 days to deposit it into a Fidelity IRA or face taxes and penalties on the full amount.

Confirm your 401(k) is portable and find your plan details

Before you contact anyone, confirm that your 401(k) can be rolled over. If you left your job, your old 401(k) is almost always portable — you can move it. If you still work at the company that sponsors your 401(k), ask your HR or benefits department whether your plan allows in-service rollovers. Some employer plans do not allow this while you are still employed.

Gather the account details from your current 401(k) provider. You will need your account number, the name of the plan, and the name of the custodian (the company holding the money — often Vanguard, Fidelity, Charles Schwab, or your employer's benefits administrator). You can find this information on your most recent statement or by logging into your account online.

If you no longer have access to your account or cannot find the statement, contact your former employer's HR department or benefits office. They can tell you the plan name, custodian, and your account number. If the company no longer exists or you cannot reach them, the Department of Labor maintains a database called the Abandoned Plan Search that can help you locate old 401(k)s.

Open a Fidelity IRA or confirm your Fidelity 401(k) account

Decide what type of account you want at Fidelity. If you are rolling over a traditional 401(k), you will typically open a traditional IRA at Fidelity. If you are rolling over a Roth 401(k), you will open a Roth IRA. The tax treatment stays the same — traditional money stays traditional, Roth stays Roth.

If your new employer uses Fidelity as the 401(k) custodian, you may be able to roll your old 401(k) directly into your new employer's plan instead of opening an IRA. Check with your new employer's benefits office first to see if this option is available and whether there are any restrictions.

To open a Fidelity IRA, go to Fidelity's website or call 1-800-343-3548. You will need your Social Security number, date of birth, and basic contact information. The account opens when ready, though you will not fund it until the rollover completes. If you already have a Fidelity account, you can add an IRA to it without opening a new login.

Request the rollover from your current custodian

Contact your current 401(k) custodian or plan administrator and tell them you want to do a direct rollover to Fidelity. You can do this by phone, email, or through their online portal. Have your Fidelity account information ready — specifically your Fidelity account number and the account type (traditional IRA, Roth IRA, or 401(k)).

Ask your current custodian for their rollover form or request that they accept Fidelity's rollover form. Fidelity provides a form called the Rollover Request Form that you can read from their website or request by phone. Your current custodian may have their own form instead. Either way, the form instructs them to send the money directly to Fidelity — this is the direct rollover method.

On the form, you will specify the amount to roll over. You can roll over the entire balance or a partial amount, though most people roll over everything. The form also asks whether you want the money sent as a check or via electronic transfer. Electronic transfer is faster and safer.

Submit the completed form to your current custodian. Keep a copy for your records. Ask them for a confirmation number or reference number so you can track the rollover status.

Monitor the transfer and invest the money once it arrives

After your current custodian sends the rollover, the money typically arrives at Fidelity within one to four weeks. During this time, the money sits in a cash sweep account or money market fund at Fidelity and earns a small amount of interest. You cannot invest it until it lands in your Fidelity account.

You can check the status of your rollover by logging into your Fidelity account online or by calling Fidelity at 1-800-343-3548. Fidelity can tell you whether they have received the money and when it will be available to invest.

Once the money arrives and clears, you can invest it however you want within your IRA or 401(k). You can buy individual stocks, mutual funds, exchange-traded funds (ETFs), or keep it in cash. Fidelity offers thousands of investment options. If you are not sure what to invest in, Fidelity's robo-advisor service, called Go, can build a portfolio for you based on your age and risk tolerance.

What to do if you receive a check instead

If your current custodian sends you a check instead of transferring the money directly to Fidelity, you have 60 days from the date you receive it to deposit the money into your Fidelity IRA. This is called an indirect rollover. If you miss this important date, the IRS treats the money as a distribution, which means you owe income tax on the full amount plus a 10% early withdrawal penalty if you are under 59½.

To deposit the check, you can mail it to Fidelity with a deposit slip, deposit it through Fidelity's mobile app if you have one, or bring it to a Fidelity branch in person. Include a note with your Fidelity account number so they know which account to credit. Fidelity will confirm receipt and tell you when the money is available to invest.

If you receive a check and realize you cannot deposit it within 60 days, contact Fidelity when ready. In rare cases, the IRS may grant an extension, but you have to request it through the IRS, not through Fidelity. Do not wait until after the 60 days have passed.

Taxes and withholding during a rollover

A direct rollover from a traditional 401(k) to a traditional IRA is not a taxable event. The money moves without any tax withheld, and you do not report it on your tax return as income. The same applies to Roth-to-Roth rollovers.

An indirect rollover (when you receive a check) is different. Your current custodian is required to withhold 20% of the amount for federal income tax, even though you plan to roll it over. For example, if your balance is $100,000, they will send you a check for $80,000 and withhold $20,000. To avoid taxes, you must deposit the full $100,000 into your Fidelity IRA within 60 days — which means you have to cover the $20,000 from your own pocket. The $20,000 withheld is held by the IRS and credited against your taxes when you file.

Do not roll over a traditional 401(k) into a Roth IRA through a direct rollover unless you understand the tax consequences. A traditional-to-Roth conversion is taxable in the year it happens. If you want to convert, do it intentionally and plan for the tax bill, rather than by accident during a rollover.

Frequently Asked Questions

Can I roll over a 401(k) while I still work at the company?

It depends on your plan. Some employer 401(k) plans allow in-service rollovers, and some do not. Contact your HR or benefits department and ask whether your plan permits in-service rollovers to an IRA. If it does not, you will have to wait until you leave the job or until you reach age 59½ in some cases.

What if my old 401(k) has less than $1,000?

You can still roll it over to Fidelity. There is no minimum amount required. Some custodians charge a fee for small balances, so check your statement to see if there are any fees that might reduce the amount you roll over.

How long does a rollover take?

A direct rollover typically takes one to four weeks from the time your current custodian sends the money. An indirect rollover (check) can be deposited when ready once you receive it, but you have only 60 days to do so. Call Fidelity if you have not seen the money after four weeks.

Do I have to roll over my entire 401(k) balance?

No. You can roll over part of your balance and leave the rest with your current custodian. However, most people roll over everything because it simplifies record-keeping and gives you more control over your investments in one place.

What happens to my old 401(k) after the rollover?

Once the money is transferred out, your old account is closed. If you rolled over the entire balance, there is nothing left. If you did a partial rollover, the remaining balance stays with your current custodian in a separate account.