Open your Fidelity account
Already have an IRA open at Fidelity? Great — skip this step
In order to move the money out of your 401(k) account, you’ll need to have an account opened for that money to move into. If you’ve decided to move your funds to Fidelity, you have two main options:
- An IRA — an IRA is an “individual retirement account”. As the name suggests, it’s an account you open up on your own and it isn’t connected to an employer. Fidelity has a few IRA options for you to choose from (more on this later).
- A new 401(k) — if you have an active 401(k) account at Fidelity with a current employer, you may be able to transfer your old 401(k) savings into that current account. This isn’t always possible though, and you’ll need to check with your current 401(k) provider and HR person.
We’ve written a full guide on the five key differences between 401(k)s and IRAs if you’re trying to understand all of the differences.
Ultimately, most people who roll over an old 401(k) do so into an IRA for a few key reasons:
- Not tied to an employer — IRAs are generally easier to keep track of since they’re opened by you at an institution of your choice like Fidelity, Vanguard, or Betterment.
- Wider range of investment options — your 401(k) account generally has a limited set of investment options. With an IRA, you can invest your money in a wide range of stocks, ETFs and even private assets like angel investments and cryptocurrency.
- Quicker process — according to the GAO, rollovers into 401(k)s tend to be more time-consuming and administratively challenging than rollovers into IRAs.
Think of your IRA as helping you do two key tasks:
- Receive the money you’ve saved in your 401(k) at previous jobs so you can consolidate your savings and keep track of them.
- Grow that money by allocating it into investments that will increase over time.
The good news? Opening an IRA at Fidelity can be done online and should take you less than 10 minutes, if you don’t already have one.
Choosing the right IRA
Fidelity offers two IRA products: