Where your Fidelity straightforward IRA contributions go by default

When you set up a Fidelity straightforward IRA and start making contributions, the money does not automatically spread across different investments. Instead, Fidelity places new contributions into a default money market fund until you tell it where else to put the money. This means your contributions sit in a very conservative, low-growth account unless you take action to move them.

The default fund changes based on which Fidelity straightforward IRA plan you opened. Some employers choose the Fidelity Government Money Market Fund; others use the Fidelity Treasury Money Market Fund. Both are extremely safe but earn very little interest. If you want your contributions invested in stocks, bonds, or other funds, you need to set up an allocation — a plan that tells Fidelity how to divide each new contribution among the investments you choose.

Key Takeaways

  • Fidelity straightforward IRA contributions land in a money market fund by default, which is safe but earns minimal returns.
  • You can change where new contributions go by setting up an allocation through your Fidelity account online or by phone.
  • Allocations explore only to contributions made after you set them up; money already in the default fund stays there unless you move it separately.
  • You can choose from thousands of Fidelity mutual funds, exchange-traded funds (ETFs), and individual stocks, or keep some money in the money market fund.
  • Your allocation can be a single investment or split across multiple funds in any percentage you choose.

Setting up an allocation through your Fidelity account online

Log into your Fidelity account at fidelity.com using your username and password. Navigate to your straightforward IRA account by clicking on the account name or account number. Look for a section labeled "Allocations," "Investment Allocation," or "Contribution Allocation" — the exact wording varies depending on which Fidelity platform you use.

Click the option to create or edit your allocation. Fidelity will show you a list of available investments. You can search by fund name, ticker symbol, or fund type. Select the investments you want and enter the percentage of each new contribution you want to go to that investment. The percentages must add up to 100 percent. For example, you could direct 60 percent to a stock index fund and 40 percent to a bond fund, or put 100 percent into a single fund.

Review your choices and click "Submit" or "Confirm." Fidelity will send you a confirmation email. Your new allocation takes effect for contributions made after the date you submit it. Money that was already in your account before you set up the allocation remains in the default money market fund unless you move it separately.

Changing your allocation by phone

If you prefer to speak with someone, call Fidelity's straightforward IRA customer service line. The phone number appears on your account statements and on the Fidelity website. Have your account number and Social Security number ready when you call.

Tell the representative that you want to set up or change your contribution allocation. They will ask you which investments you want to use and what percentage of each new contribution should go to each one. The representative will enter your allocation into the system and confirm it back to you before hanging up. You will receive written confirmation in the mail within a few business days.

Understanding the difference between allocations and transfers

An allocation controls where new contributions go from the moment they arrive in your account. A transfer moves money that is already sitting in one investment to a different one. These are two separate actions.

If you have money in the default money market fund and you want it invested elsewhere, you need to do a transfer in addition to setting up an allocation. You can transfer money from the money market fund to any other available investment at any time, with no limit on how many transfers you make per year. Use the same "Allocations" or "Investments" section of your Fidelity account to request a transfer, or call customer service to move the money by phone.

What investments are available in a Fidelity straightforward IRA

Fidelity straightforward IRAs can hold thousands of investments. You can choose from Fidelity's own mutual funds, including index funds that track the stock market or bond market. You can also invest in ETFs from Fidelity and other companies, individual stocks, and bonds. The exact list of available investments depends on which Fidelity straightforward IRA product your employer chose, so check with your employer or call Fidelity to confirm what is available to you.

Many people use a straightforward allocation: a single target-date fund that automatically becomes more conservative as you approach retirement, or a mix of a stock index fund and a bond index fund. Others build more complex allocations with multiple funds. There is no rule about what you must choose — the allocation is entirely up to you.

When your allocation takes effect and what happens to old contributions

Your allocation applies only to contributions made after you set it up. If you submit an allocation on March 15, contributions made on March 16 and later will follow your new allocation. Any money that arrived before March 15 stays in whatever investment it was in — usually the default money market fund.

This means you may end up with money spread across multiple investments even if you only want one. To consolidate everything, you can request a transfer of the money in the money market fund to your chosen investment. Fidelity allows unlimited transfers within a straightforward IRA, so you can move money as often as you want without penalty or tax consequences.

Frequently Asked Questions

Can I change my allocation after I set it up?

Yes. You can change your allocation at any time through your Fidelity account online or by calling customer service. The new allocation takes effect for contributions made after you submit the change. Money already invested in your old allocation stays where it is unless you transfer it.

What if I do not set up an allocation — where does my money go?

Your contributions go into the default money market fund that came with your straightforward IRA plan. This is a safe place for money to sit, but it earns very little. Most people set up an allocation so their contributions are invested in funds with more growth potential.

Can I invest in individual stocks in my straightforward IRA?

Yes, if your employer's Fidelity straightforward IRA plan allows it. Not all plans include individual stocks as an option. Check with your employer or call Fidelity to find out whether you can buy individual stocks and whether they count toward your allocation or are held separately.

Do I pay a fee to set up or change my allocation?

Fidelity does not charge a fee to set up or change your allocation. Some of the funds available in your straightforward IRA may have their own expense ratios, which are annual fees built into the fund. These are deducted from the fund's returns and are not a separate charge to you.

What happens to my allocation if I leave my job?

Your allocation stays in place as long as your straightforward IRA remains with Fidelity. If you roll your straightforward IRA into another retirement account at a different company, you will need to set up a new allocation with that company. The money in your current Fidelity account will not automatically move; you will need to request a rollover transfer.