How to Close Your Fidelity 401k Account
Closing a Fidelity 401k account is typically not recommended unless you have a specific need or objective in mind. Nonetheless, circumstances may arise that require you to close your account. This article will guide you through the process of closing your Fidelity 401k account and answer some frequently asked questions related to this topic.
Closing your Fidelity 401k account is a straightforward process that can be completed either online or by contacting Fidelity directly. Follow these steps to close your account:
1. Evaluate your options: Consider the potential consequences and implications of closing your 401k account, such as taxes, penalties, and lost investment opportunities. It is advisable to consult a financial advisor to get a comprehensive understanding of the impact on your retirement savings.
2. Gather necessary information: Collect all the relevant information related to your Fidelity 401k account, such as your account number, Fidelity username, and password. Ensure you have access to these details before proceeding.
3. Online closure process: If you decide to close your account online, log in to your Fidelity account and navigate to the “Withdrawals” section. Follow the instructions provided, and submit the required details and documentation, if any. Fidelity may require you to provide additional information for security purposes.
4. Contact Fidelity: If you prefer to close your account over the phone or in person, call Fidelity’s customer service or visit a local branch. A representative will guide you through the closure process and assist with any documentation required.
5. Distribution options: Select how you want to receive your funds. You may choose a direct deposit, a check mailed to your address, or a transfer to your new retirement account.
6. Confirm the closure: After submitting your request, review the provided information to ensure accuracy. Once you are satisfied, confirm the closure. Fidelity will process your request accordingly.
7. Tax considerations: Keep in mind that withdrawing funds from your 401k account may result in tax consequences. Consult with a tax advisor to understand the potential tax implications and strategies to minimize the impact.
8. Review your retirement strategy: Closing your 401k account could signify a shift in your retirement plan. Take this opportunity to reassess your financial goals and develop a new strategy that aligns with your current circumstances.
FAQs:
1. Can I close my Fidelity 401k account at any time?
Yes, you can close your Fidelity 401k account at any time, although it is generally recommended to maintain the account until retirement.
2. Are there any penalties for closing my Fidelity 401k account?
If you are under the age of 59½ and withdraw funds from your 401k account, you may be subject to early withdrawal penalties and taxes.
3. Can I roll over my Fidelity 401k into another retirement account instead of closing it?
Yes, you have the option to roll over your Fidelity 401k into another retirement account, such as an IRA or a new employer’s 401k plan.
4. What happens to my employer’s contributions if I close my Fidelity 401k?
The employer contributions made to your Fidelity 401k account typically become vested over time. However, you may forfeit any unvested employer contributions if you close your account prematurely.
5. Will I receive a tax form if I close my Fidelity 401k account?
Yes, you will receive Form 1099-R from Fidelity, which outlines the distribution you received and any taxes withheld.
6. Can I reopen my Fidelity 401k account after closing it?
No, once your Fidelity 401k account is closed, it cannot be reopened. You may consider other retirement savings options available to you.
7. How long does it take to close a Fidelity 401k account?
The closure process typically takes a few business days. However, the exact timeframe may vary depending on various factors, such as the accuracy of the provided information and any necessary paperwork.
8. Will closing my Fidelity 401k account affect my credit score?
No, closing your 401k account does not impact your credit score since retirement accounts are not associated with credit activity.
9. Can I close my Fidelity 401k account if I’m still employed with the same company?
In most cases, you cannot close your Fidelity 401k account while still employed with the company that sponsors the plan. However, you may be able to withdraw funds due to certain financial hardships or through a loan program if available.
10. What should I do with the funds if I close my Fidelity 401k account?
Consider reinvesting the funds into another tax-advantaged retirement account to continue growing your savings for retirement.
11. Will I lose any benefits by closing my Fidelity 401k account?
By closing your Fidelity 401k account, you may lose access to retirement planning tools and resources provided by Fidelity. However, you can still seek guidance from other financial advisors or institutions.
12. Is there a fee for closing my Fidelity 401k account?
Fidelity does not typically charge a fee for closing a 401k account, but it is essential to review your account terms and conditions to verify if any fees may apply.