Yes, you can convert Fidelity Cash to a money market fund in your account

Fidelity Cash (also called SPAXX or the Fidelity Government Money Market Fund, depending on your account type) is a sweep vehicle — a place where uninvested cash sits by default. You can move that cash into a money market fund through your Fidelity account in a few minutes, either online or by phone. The process is straightforward because both are cash-equivalent investments held in the same account.

The reason you might want to do this is yield. Fidelity Cash often pays a lower rate than standalone money market funds Fidelity offers. If rates have risen and you want better returns on cash you are not investing elsewhere, moving to a dedicated money market fund can make sense. The trade-off is that some money market funds have minimum balances or small transaction fees, though many Fidelity options do not.

Key Takeaways

  • You can move Fidelity Cash to a money market fund online through your account dashboard or by calling Fidelity at 1-800-343-3548.
  • Money market funds typically offer higher yields than Fidelity Cash but may have minimum balance requirements or small fees depending on the fund.
  • The transfer happens within one business day and does not trigger a taxable event if you are moving cash within the same account type.
  • If you hold the account in a retirement plan like an IRA or 401(k), check whether the money market fund you want is on your plan's investment menu first.

How to move cash online through your Fidelity account

Log into your Fidelity account and go to the Positions or Holdings page. Find the Fidelity Cash or SPAXX line item and click on it. You will see an option to "Exchange" or "Sell" — select the exchange option, which moves the cash to another fund without selling it as a taxable transaction.

Enter the dollar amount you want to move and select the money market fund you want to buy. Fidelity offers several: Fidelity Government Money Market Fund (SPAXX), Fidelity Treasury Money Market Fund (VMFXX), and others depending on your account type. Choose the one that matches your goals — government-backed funds are more conservative, while prime money market funds may yield slightly more but hold corporate debt. Confirm the transaction, and the move will settle the next business day.

If you cannot find the exchange option or are unsure which fund to pick, call Fidelity directly at 1-800-343-3548. A representative can walk you through the process and explain the differences between the available money market funds in your specific account.

Money market fund options at Fidelity and what they hold

Fidelity offers several money market funds, and which ones are available depends on whether you hold a brokerage account, IRA, or employer retirement plan. The most common are SPAXX (government money market), VMFXX (Treasury money market), and SNSXX (prime money market). Each invests in different types of short-term debt, which affects both safety and yield.

Government and Treasury money market funds hold only U.S. government securities or cash, making them the most conservative choice. Prime money market funds hold a mix of government securities, corporate debt, and bank obligations, which typically means a slightly higher yield but a tiny bit more risk. Current yields for all three change daily and are posted on Fidelity's website — check them before you decide, because the difference in yield can matter if you are holding a large cash balance.

Minimum balances and fees to watch for

Most Fidelity money market funds do not have minimum balance requirements for existing Fidelity customers, but some do charge small annual fees (typically 0.42% or less). SPAXX, one of the most popular, has no minimum and a low expense ratio. Check the fund's fact sheet on Fidelity's website before you transfer to confirm the current fee and any balance minimums that apply to your account type.

If you are moving a small amount of cash, the fee may outweigh the yield benefit. For example, if you have $1,000 in cash and a money market fund yields 5% but charges a 0.50% fee, your net return is 4.50%. Compare that to what Fidelity Cash is currently paying — if the difference is less than 0.50%, staying in Fidelity Cash may make more sense.

Tax implications when moving cash between funds

Moving cash from Fidelity Cash to a money market fund within the same account type (brokerage to brokerage, or IRA to IRA) is not a taxable event. You are not selling an investment or withdrawing money — you are simply moving cash from one place to another within your account. No 1099 form is issued, and you do not owe taxes on the transfer itself.

However, if you are moving cash out of a retirement account like a traditional IRA or 401(k) and into a taxable brokerage account, that is a withdrawal and may have tax consequences. If you are unsure whether your transfer crosses account types, ask Fidelity before you move the money.

What happens if you need the cash back quickly

Money market funds are designed to be liquid — you can sell your shares and get the cash back within one business day, just like Fidelity Cash. There is no lock-up period or penalty for moving money out. If you think you might need the cash within a few weeks or months, a money market fund is still appropriate because you can access it on short notice without cost.

The only scenario where this matters is if you are in a retirement account and your plan has restrictions on how often you can move money between funds. Some employer 401(k) plans limit exchanges to once per month or quarter. Check your plan documents or call Fidelity to confirm before you transfer.

Frequently Asked Questions

Will moving to a money market fund lock up my money?

No. Money market funds are liquid investments. You can sell your shares and move the cash back to Fidelity Cash or withdraw it within one business day, with no penalty or holding period.

What is the difference between SPAXX and VMFXX?

SPAXX (government money market) holds U.S. Treasury securities and cash. VMFXX (Treasury money market) holds only Treasury securities. VMFXX is slightly more conservative but may yield less. Both are very safe. Check current yields on Fidelity's website to see which pays more right now.

Can I set up automatic transfers from Fidelity Cash to a money market fund?

Fidelity does not offer automatic recurring exchanges between funds. You will need to move cash manually each time, either online or by phone. If you receive regular deposits, you can set up a standing order to invest new deposits into a money market fund instead of letting them sit in Fidelity Cash.

Do I need to report this transfer on my taxes?

No, moving cash between funds within the same account type is not a taxable event. You only report income from the interest or dividends the money market fund pays you, which Fidelity will report on a 1099-INT or 1099-DIV at year-end.

What if my retirement plan does not offer the money market fund I want?

Retirement plans like 401(k)s and IRAs have limited investment menus. If the money market fund you want is not available, call Fidelity to see what options are available in your specific plan. You may be able to move cash to a different conservative fund, or you may need to keep it in the default sweep vehicle.