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IRA FAQs: Benefits and Rules

  • How does an IRA benefit me?

    Many people are unsure of how much they need to save for retirement, and may fall short of their retirement savings goals. Opening a Fidelity IRA may help you accumulate money you'll need in retirement.1

  • Should I save in my 401(k) or my IRA?

    At Fidelity, we believe that you should consider contributing the full amount of 401(k) elective deferral contributions required to receive the maximum employer match offered in your workplace retirement plan as your first priority, rather than leaving that money on the table. 401(k) deferrals are an easy way to start early and contribute regularly, with the convenience of payroll deductions.

    For many savers, the simplicity and discipline of payroll deductions make the logical next step to maximize your 401(k) elective deferrals up to the 402(g) annual deferral limit, $17,500 for 2013 and 2014 ($23,500 if 50 years or older). You could then open an IRA or another tax-advantaged retirement savings vehicle.

  • Are there income limits to contribute to an IRA?

    There are no income limits for Traditional IRAs,2 however there are income limits for tax deductible contributions.

    There are income limits for Roth IRAs. As a single filer, you can make a full contribution to a Roth IRA if your income is less than $112,000 ($112,000 - $127,000 for a partial contribution) in 2013 and $114,000 ($114,000 - $129,000 for a partial contribution) in 2014. If you are married filing jointly, you can make a full contribution to a Roth IRA if your income is less than $178,000 ($178,000 - $188,000 for a partial contribution) in 2013 and $181,000 ($181,000 - $191,000 for a partial contribution) in 2014.

  • How much can I contribute to my IRA?

    You can contribute up to the lesser of 100% of your earned income or $5,500 for both 2013 and 2014. Once you reach age 50, contribution limits on IRAs increase by another $1,000, allowing those who may have put off starting to save for retirement to “catch up” on their savings by contributing an amount over the standard contribution limit.

    To see how much you may be able to contribute this year, use the IRA Contribution Calculator.

  • If I qualify to contribute to both a Traditional IRA and Roth IRA, which one should I save in?

    If you qualify for Roth IRA contributions, you should consider it. Having a mix of both pretax and Roth contributions can help create additional flexibility in retirement to respond to a great unknown—future tax rates. For people who expect income in retirement to be as high or higher than their current level, others who expect their tax rate in retirement to be higher than today, or younger people who expect steady income growth over their careers, Roth IRA contributions may be the better choice. But if you believe that your tax rates will be lower in retirement than they are now, you may want to prioritize pretax vehicles like the Traditional IRA. Our IRA Evaluator allows you to answer a few questions and find out which one might be right for you.

  • How much money do I need to open a Fidelity IRA?

    There is no minimum dollar amount required to open a Fidelity IRA. Some mutual funds may have minimums required to purchase; review each fund’s prospectus for details.

  • What does a Fidelity IRA have to offer?

    We make investing easier by offering guidance at more than 150 Investor Centers, by phone at 800-343-3548 or online at Fidelity.com. We also offer a broad range of investment choices and easy access to sophisticated online tools—like our Fund EvaluatorSM.

  • How do I open a Fidelity IRA?
    Open the IRA you are interested in online. It takes just a few minutes.1
  • Where should I invest my money?

    We offer many options for investing your IRA assets, including stocks, bonds, CDs, ETFs, and mutual funds. For many investors, Fidelity’s Freedom® Funds are an easy way to invest for retirement. Simply tell us when you expect to retire and we can show you a fund that may be appropriate for that time horizon.3

  • Can someone help me with my investing?

    Yes, Fidelity can help in a number of ways, which can give you as much or as little involvement in the management of your portfolio as you want. You can choose from one-on-one guidance from a Fidelity representative or use our online tools, such as Portfolio Review.

    We also offer professional money management through Portfolio Advisory Service®.4

  • How can I contribute to my Fidelity IRA?

    You can learn about contributing to your account by visiting the Contributing to your IRA page. Another way to put your savings on autopilot is by investing a set amount on a monthly or quarterly basis with automatic investments.

  • Can I withdraw money from my IRA?

    Under certain conditions, you can withdraw money from your IRA without penalty. The rules vary depending on the type of IRA you have. Generally, for a Traditional IRA, distributions prior to age 59½ are subject to a 10% penalty in addition to federal and state taxes unless an exception applies.5 Starting at age 59½, you can begin taking money out of your IRA without penalty, but you will still be responsible for taxes that might be due. Starting at age 70½, minimum required distributions (MRDs) begin—you can calculate how much you will be required to take using this MRD Calculator.

    For a Roth IRA, you can take a penalty-free, federal tax-free distribution of contributions at any time. Provided you have met the five-year aging requirement, and one of the following conditions, you may also take a tax-free and penalty-free distribution of earnings:

    • Over age 59½
    • Death or disability
    • First-time home purchase

    Note: There are no MRDs for Roth IRAs during the lifetime of the original owner.

    Please review Withdrawing from your IRA for more information.

  • Can I convert my existing Traditional IRA to a Roth IRA?

    Yes, most investors, regardless of their income, can convert eligible retirement savings to a Roth IRA. Please speak with your tax advisor about your specific situation and whether this may make sense for you.

  • Can I transfer my IRA from another institution?

    Yes, visit IRA Transfer for a quick overview of the online process.

  • Can I roll over my old 401(k) from a previous employer to my Roth or Traditional IRA?

    Generally, yes. Contact our rollover specialists, and they'll guide you through the entire process—from beginning to end. Call 800-343-3548 to get started.

Questions?

More information

Fidelity does not provide legal or tax advice and the information provided above is general in nature and should not be considered legal or tax advice. Consult with an attorney or tax professional regarding your specific legal or tax situation.

Portfolio Review is an educational tool.

Guidance provided by Fidelity is educational in nature, is not individualized, and is not intended to serve as the primary or sole basis for your investment or tax-planning decisions.

1. You must be at least 18 to open an IRA at Fidelity.
2. For a Traditional IRA, full deductibility of a contribution for 2012 is available to active participants whose 2012 Modified Adjusted Gross Income (MAGI) is $92,000 or less (joint) and $58,000 or less (single); partial deductibility for MAGI up to $112,000 (joint) and $68,000 (single). In addition, full deductibility of a contribution is available for working or nonworking spouses who are not covered by an employer-sponsored plan whose MAGI is less than $173,000 for 2012; partial deductibility for MAGI up to $183,000.

For 2014 full deductibility of a contribution is available to active participants whose 2014 Modified Adjusted Gross Income (MAGI) is $96,000 or less (joint) and $60,000 or less (single); partial deductibility for MAGI up to $116,000 (joint) and $70,000 (single). In addition, full deductibility of a contribution is available for working or nonworking spouses who are not covered by an employer-sponsored plan whose MAGI is less than $181,000 for 2014; partial deductibility for MAGI up to $191,000.
3. Freedom Funds are managed by Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company. The funds are designed for investors expecting to retire around the year indicated in each fund's name. Except for the Freedom Income Fund, the funds' asset allocation strategy becomes increasingly conservative as it approaches the target date and beyond. Ultimately, they are expected to merge with the Freedom Income Fund. The investment risks of each Freedom Fund change over time as its asset allocation changes. They are subject to the volatility of the financial markets, including equity and fixed income investments in the U.S. and abroad and may be subject to risks associated with investing in high yield, small cap, commodity-linked and foreign securities. Principal invested is not guaranteed at any time, including at or after their target dates.
4. Fidelity Portfolio Advisory Service® is a service of Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company. This service provides discretionary money management for a fee.
Brokerage services provided by Fidelity Brokerage Services LLC. Custody and other services provided by National Financial Services LLC. Both are Fidelity Investments companies and members of NYSE and SIPC.
5. Exceptions include: first-time home purchase, qualified educational expenses, death, disability, unreimbursed medical expenses, health insurance if you are unemployed.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information.  Read it carefully.
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