Rolling over a 401(k) to a Fidelity IRA costs nothing, takes one to three weeks, and triggers no taxes or penalties when done as a direct rollover. Fidelity has no account minimum on rollover IRAs, supports fractional share investing from $1, and gives you access to ZERO expense ratio index funds that are unavailable anywhere else. It’s consistently ranked among the best rollover destinations alongside Schwab and Vanguard.
Why Roll Over Your 401(k) to Fidelity?
Most 401(k) plans offer a limited menu of 10–30 funds, often with higher expense ratios than what’s available in a retail IRA. Rolling over gives you access to thousands of investment options. Fidelity stands out for:
- ZERO expense ratio index funds — FZROX and FZILX charge literally 0.00%; no other major brokerage matches this
- Fractional shares — invest as little as $1 in any stock or ETF; useful if you receive a rollover in an awkward dollar amount
- Free robo-advisor under $25,000 — Fidelity Go manages your rollover portfolio for free if the balance is under $25K
- 24/7 customer service — live agents available at any hour; helpful if your rollover has issues
- $0 ACAT-out fee — you can move away from Fidelity later at no cost
- Cash bonuses — Fidelity periodically offers cash bonuses for rollovers; check fidelity.com for current promotions
Direct vs Indirect Rollover
Always request a direct rollover. Here’s why it matters:
| Feature | Direct rollover | Indirect rollover |
|---|---|---|
| Check payable to | Fidelity on your behalf | You personally |
| Employer withholds 20% taxes | No | Yes — mandatory |
| Risk of penalty | None | 10% penalty if missed 60-day deadline |
| Time to complete | 7–21 business days | Up to 60 days |
| Recommended? | Yes | Avoid |
In an indirect rollover, your employer is required by law to withhold 20% of the distribution for federal taxes. To complete the rollover without owing taxes, you must deposit the full original balance — including the withheld 20%, which you’d need to replace from savings — into the IRA within 60 days. If you can’t cover the shortfall, that amount is treated as taxable income plus a 10% early withdrawal penalty if you’re under 59½.
The IRS allows only one indirect rollover per year across all IRAs. There is no limit on direct rollovers.
Step-by-Step: Roll Over a 401(k) to Fidelity
Step 1: Open a Fidelity Rollover IRA
Go to fidelity.com and open a Rollover IRA. For a Roth 401(k), open a Roth IRA instead.
- No minimum deposit required
- No setup fees
- Approval typically within 1 business day online
If you already have a Fidelity IRA (Traditional or Roth), you can roll over directly into it — no new account needed. You can also open the account at an Investor Center for in-person guidance.
Step 2: Gather Your Old Account Details
Before calling your former employer, have the following ready:
- Your new Fidelity IRA account number (visible on fidelity.com after opening)
- Name and contact number of your old plan administrator (on your last 401k statement)
- Whether your 401(k) is Traditional or Roth
Step 3: Contact Your Old Plan Administrator
Call your former employer’s HR department or benefits administrator and ask to initiate a direct rollover to Fidelity. Many plans now offer an online rollover request form — check the plan’s participant website before calling.
Provide the plan administrator:
- Your Fidelity IRA account number
- Custodian name: Fidelity Management Trust Company (or Fidelity Brokerage Services LLC, depending on your account type)
- The rollover mailing address Fidelity provides
Step 4: Receive and Deposit the Rollover Check
The check should be made payable to:
Fidelity Management Trust Company FBO [Your Full Name] Account: [Your Fidelity IRA Account Number]
If the plan mails the check to your home address:
- Mobile deposit — fastest option; deposit directly via the Fidelity app
- Mail to Fidelity — use the address on the rollover instructions at fidelity.com
- Investor Center drop-off — take the check to your nearest Fidelity Investor Center
Do not deposit the rollover check into your personal bank account — that converts it to an indirect rollover, triggering the 20% withholding issue.
Step 5: Invest the Funds
Your rollover arrives as uninvested cash. Log in to fidelity.com or the app and place buy orders:
Option A — ZERO fund portfolio (lowest cost possible):
- FZROX — Fidelity ZERO Total Market Index Fund (0.00% expense ratio, US stocks)
- FZILX — Fidelity ZERO International Index Fund (0.00% expense ratio, international stocks)
Note: ZERO funds cannot be transferred in-kind to another brokerage. If there’s a chance you’ll move your account later, consider comparable ETFs (VTI, VXUS) instead.
Option B — Target-date index fund:
- Choose the Fidelity Freedom Index fund closest to your expected retirement year (e.g., FIPFX for 2050). Expense ratios are around 0.12%.
Option C — Fidelity Go (robo-advisor):
- For balances under $25,000, Fidelity Go manages the portfolio for free. For larger balances, it costs 0.35% per year. See the Fidelity Go guide for details.
Timeline
| Stage | Typical timeframe |
|---|---|
| Open Fidelity IRA | 1 business day |
| Old plan processes request | 3–10 business days |
| Check mailed/wired to Fidelity | 1–5 business days |
| Fidelity credits account | 1–2 business days after receipt |
| Total (typical) | 7–21 business days |
Worked Example
David, age 50, leaves his employer with $145,000 in a traditional 401(k).
- He opens a Fidelity Rollover IRA online (free, no minimum)
- He logs into his old plan’s participant portal and requests a direct rollover to Fidelity
- The plan wires the funds electronically to Fidelity; they appear in his IRA in 6 business days
- He invests $87,000 in FZROX, $29,000 in FZILX, and $29,000 in FXNAX (bond index)
Total taxes on the rollover: $0. Total rollover fees paid to Fidelity: $0. Annual cost of the portfolio: $0 (ZERO fund expense ratios).
Common Rollover Mistakes
- Not checking if Fidelity already manages your 401(k) — many employers use Fidelity as their 401(k) recordkeeper. If so, your assets may be transferable directly to a Fidelity IRA without a check (call 800-835-5097 to confirm)
- Choosing ZERO funds if you plan to switch brokerages later — ZERO funds can’t transfer in-kind; you’d need to sell first, which is a taxable event in non-retirement accounts
- Leaving cash uninvested — the rollover deposits cash; you must buy investments
- Mixing Roth and Traditional — a Roth 401(k) must go to a Roth IRA; a Traditional 401(k) must go to a Traditional IRA
- Rolling over while still employed — most 401(k) plans prohibit in-service rollovers before age 59½; check your Summary Plan Description
See the full Fidelity review and compare rollover IRA options at the best brokerage accounts guide.
The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy