Closing a Fidelity 401k account can be a straightforward process if you follow the necessary steps and guidelines. This article will guide you through the process of closing your Fidelity 401k account and provide answers to some related frequently asked questions.
Steps to Close a Fidelity 401k Account
1. Evaluation of account: Consider the implications of closing your 401k account and ensure it aligns with your financial goals and circumstances.
2. Research and understand terms: Familiarize yourself with the terms and conditions of your Fidelity 401k account to clearly understand any restrictions, penalties, or fees associated with account closure.
3. Reach out to Fidelity: Contact Fidelity, the service provider for your 401k account, through their customer service helpline or online portal. Ensure you have your account details ready when you connect with them.
4. Consult with your employer: Communicate with your employer’s human resources department to understand any specific paperwork or guidelines related to closing your 401k account.
5. Obtain required forms: Fidelity will provide you with the necessary forms to initiate your account closure. You may need to fill out an account termination form or other relevant documents.
6. Beneficiary details: If you have named beneficiaries for your 401k account, ensure to review and update the beneficiary information as necessary.
7. Finalize investment allocations: Determine how you want the remaining funds in your account to be distributed. Consider options such as a direct rollover to another retirement account or a lump-sum distribution.
8. Review tax implications: Understand the tax consequences of closing your 401k account, as it may have an impact on your overall tax liability. Consulting a tax advisor could be beneficial in this regard.
9. Submit the necessary forms: Complete any required account closure forms and submit them to Fidelity as per their guidelines. Ensure you provide accurate information and follow all instructions carefully.
10. Confirm completion: After submitting the forms, keep a record of the confirmation or reference number provided by Fidelity, as it will serve as proof of the closure request.
11. Monitor your account: Stay vigilant and monitor your account until the closure process is complete. Contact Fidelity if you have any concerns or questions during this time.
12. Review post-closure information: Once your account is closed, you should receive a final statement from Fidelity. Ensure all necessary paperwork is stored safely for future reference if required.
Frequently Asked Questions (FAQs)
1. Can I close my Fidelity 401k account online?
No, you cannot close your Fidelity 401k account solely online. Contact Fidelity through their customer service channels to initiate the account closure process.
2. Will I be charged any fees for closing my account?
Depending on your specific Fidelity 401k plan, there may be certain fees or penalties associated with closing your account. Review the terms and conditions or consult with Fidelity to understand any applicable charges.
3. Can I transfer my 401k funds to another retirement account?
Yes, you may have the option to directly transfer your 401k funds to another qualifying retirement account. Consult with Fidelity and your new account provider for guidance on the transfer process.
4. What happens to my employer’s contributions if I close my 401k account?
Typically, employer contributions to your 401k account become vested over a period of time. If you close your account before the vesting period elapses, you may forfeit a portion of your employer’s contributions.
5. How long does it take to close a Fidelity 401k account?
The timeframe for closing a Fidelity 401k account may vary. It could take a few weeks to process your closure request, depending on the complexity of your account and Fidelity’s procedures.
6. Can I change my mind after initiating the account closure?
In some cases, you may be able to cancel or modify your account closure request, but it is best to contact Fidelity as soon as possible to discuss your situation.
7. What if I still have outstanding loans on my 401k account?
If you have any outstanding loans on your 401k account, you will need to repay them before closing the account. Failure to repay could result in tax implications and penalties.
8. Will I receive a tax form after closing my 401k account?
Yes, you should receive a tax form, such as a Form 1099-R, from Fidelity documenting the distribution of your 401k funds. It is important to report this information correctly on your tax return.
9. Can I close my Fidelity 401k account after leaving my job?
Yes, you can close your Fidelity 401k account even after leaving your job. The process is similar to closing the account while still employed, but you may need to coordinate with your former employer and Fidelity.
10. What happens to my investments if I close my 401k account?
If you choose a direct rollover or transfer your funds to another qualifying retirement account, your investments can continue to grow tax-deferred. If you opt for a lump-sum distribution, you will receive the value of your investments minus any taxes or penalties.
11. Can I reopen a closed Fidelity 401k account in the future?
No, once you close your Fidelity 401k account, it cannot be reopened. However, you can explore other retirement savings options available to you.
12. Should I seek professional advice before closing my 401k account?
Yes, seeking advice from a financial advisor or tax professional is recommended, as they can provide personalized guidance based on your specific financial situation and goals when it comes to closing your 401k account.