We know saving for retirement is a top priority for many investors. No matter where you are in the planning process, you may have questions. We can help. Check out the questions we've already answered, or if you're a Fidelity customer, submit your own. We'll post replies to selected questions on a weekly basis.
Ken and Sarah answer your questions
For more than 60 years, through all kinds of market conditions, Fidelity has been helping people like you pursue their financial goals. Ken Hevert and Sarah Walsh, who lead our Ask Fidelity team, have spent decades helping investors understand retirement strategies. They can help put Fidelity’s expertise to work for you.
Q&A for Answers to Customer Retirement Questions Category
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Thank you for your question regarding the security of your assets here at Fidelity. I’d be happy to discuss the various levels of insurance for coverage of your Fidelity accounts.
All Fidelity brokerage accounts are covered by SIPC, which is the Securities Investor Protection Corporation. SIPC covers up to $500,000 in securities, including a $250,000 limit for cash held in a brokerage account.
In addition to these coverage amounts through SIPC, Fidelity provides its customers with additional “excess of SIPC” coverage which would be used only when SIPC coverage limits are reached. Of course, SIPC and excess of SIPC coverage doesn’t cover investment losses in Fidelity accounts due to market fluctuation.
Another type of insurance coverage on Fidelity accounts is called FDIC insurance. The Federal Deposit Insurance Corporation is a U.S. government agency that insures cash deposits at member banks up to $250,000 per account. Fidelity adds an additional amount of coverage to this through our deposit sweep program. This program maximizes your eligibility for FDIC insurance by allocating cash in excess of $245,000 to multiple banks. Generally, at least five additional banks are available for these deposits, making customers eligible for as much as $1,250,000 of FDIC insurance. Accounts with this type of FDIC coverage include:
• Fidelity® Cash Management Accounts
• Fidelity retirement accounts such as Traditional, Rollover, Roth, SEP, and SIMPLE IRAs held with Fidelity
• Fidelity Health Savings Accounts
You can learn more about coverage for your accounts by visiting the following page on Fidelity.com.
You’ll find additional details about SIPC, excess of SIPC, FDIC insurance and other types of protection on Fidelity accounts. https://www.fidelity.com/why-fideli...
Thank you again for your question. I hope you’ll find this information helpful.
I just set up an IRA account where I transfered my 401k from a previous job it. Do I need to do anything else, or how do I make it grow? Does interest build on it? I wasnt sure how it works. Should I be putting some money in it every week? thanks for your help!
Thank you for your question regarding saving in a new IRA. Rolling money into an IRA from a former employer’s 401(k) plan is one of the steps in the process to continue building your retirement nest egg, but certainly not the only one. Just as you did when you began saving in your 401(k), there are a few additional steps you need to take to continue saving for retirement now that you’ve completed your rollover to an IRA.
1. Depending on your age and income level, you may have the opportunity to put up to $5,500 a year in tax-deductible contributions into your IRA ($6,500 for savers over 50 years of age). At Fidelity, you can set up your IRA to automatically draw contributions into it on a monthly, quarterly, or annual basis from an external bank account or another nonretirement account you hold with Fidelity. The total amount of these contributions can’t exceed the annual totals noted above. This is an important first step to continuing to save and potentially grow your tax-deferred savings in your IRA.
2. Choose the investments for your IRA. Typically, in an IRA, there are more investment options available to you than there were in your old workplace plan. Selecting investments that are right for you will depend on a number of factors: your age, how far away you are from retiring, and your overall tolerance for risk. Some people feel they do not have the time or the expertise to choose their own investments, and if that’s the case with you, I would suggest you consider one of our Fidelity Freedom® Funds. These are single-fund investment strategies targeted to the year you anticipate retiring. The portfolio is aggressive while you are a long way from retirement, and becomes more conservative as you reach the year of retirement. You can read more about these here: https://www.fidelity.com/mutual-fun...
3. Finally, once you’ve set up your account to receive regular contributions and you’ve invested your cash based on what you feel is appropriate for your unique situation, you’ll want to regularly check to ensure that your asset allocation stays in line with your retirment goals. “Asset allocation” refers to which portions of your investments make up equity, debt, and cash in your IRA. Asset allocation can also be dependent on age and your investment risk tolerance. It’s important to review your investments from time to time, typically twice a year, to ensure that the assets in your IRA still align with your chosen asset allocation.
Below are a couple of links to some pages on Fidelity.com that have additional detailed information on how to set up regular contributions to your IRA, how to select investments in your IRA, and how to stay aligned with your chosen asset allocation for your IRA and other accounts you may have.
Taking these steps will help you continue growing your retirement savings so that you may meet your goals for retirement when that time comes for you. I hope you find this information helpful.
Important Additional Information:
Fidelity Freedom Funds are designed for investors who anticipate retiring in or within a few years of the fund's target retirement year at or around age 65 and plan to gradually withdraw the value of their account in the fund over time. Except for the Freedom Income Fund, the funds' asset allocation strategy becomes increasingly conservative as the funds approach the target date and beyond. Ultimately, the funds are expected to merge with the Freedom Income Fund. The investment risk of each Freedom Fund changes over time as the fund's asset allocation changes. These risks are subject to the asset allocation decisions of the investment adviser. Pursuant to the adviser's ability to use an active asset allocation strategy for the Freedom Funds, investors may be subject to a different risk profile compared to the fund's neutral asset allocation strategy shown in its glide path. The funds are subject to the volatility of the financial markets, including that of 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. No target date fund is considered a complete retirement program and there is no guarantee any single fund will provide sufficient retirement income at or through retirement. Principal invested is not guaranteed at any time, including at or after the funds' target dates.
If you visit the Retirement Distribution Center on Fidelity.com/RDC you will see your estimated MRD amount. Open the link for your IRA, and you will see the details of the estimated MRD. As long as those are correct, the estimate will be accurate and you can distribute that amount from the account two ways—taking one-time distributions yourself, or by signing up for automatic withdrawals.
Enrolling in our automatic withdrawal program is a great way to make sure you don’t forget to take your MRD, because the penalties for doing that are significant. If you enroll in automatic withdrawals for your MRD, then each year we will recalculate your MRD for you and distribute that amount over the schedule you prefer. There are other instructions you choose that include which holdings to sell, and what federal and state tax withholding you want.
If you have any questions, you can call our retirement representatives at 800-544-4774 to assist you with your MRD.
Thank you for your question. Generally, pension lump sum payments are similar to 401(k) lump sum withdrawals in that they are eligible to be rolled into an IRA. To be sure that this option does apply to your unique situation, your first step should be to contact the plan administrator of your pension to verify this payment can be rolled.
If your pension is eligible for a rollover, ask your former employer for a trustee-to-trustee transfer, which means the cash will go directly from your pension into your IRA. If your pension manager is not able to facilitate a direct rollover, and the lump sum check is issued to you, it must be deposited within 60 days of being distributed. The financial consequences of missing that 60-day window are major—the lump sum would likely be taxed as regular income and you would lose the opportunity to roll the entire amount into your IRA. You may want to review your particular situation with a tax advisor.
Thank you again for your question. I hope this information is helpful to you.
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