How to fund your Fidelity Roth IRA and pick what to invest in

To invest in a Fidelity Roth IRA, you first transfer money into the account, then use that cash to buy investments like mutual funds, stocks, or bonds. The account itself is just a container — Fidelity holds it, but you decide what goes inside. You can fund the account through a bank transfer, check, or wire, and you can do this online in minutes. Once the money lands, you log into your Fidelity account and search for the investment you want, then place an order just like buying anything else.

The main constraint is the annual contribution limit. For 2024, you can put in up to $7,000 per year if you are under 50, or $8,000 if you are 50 or older. You cannot exceed this amount across all your Roth IRAs combined, even if you have accounts at multiple firms. The money must come from earned income — wages, self-employment income, or taxable alimony — not from investments, gifts, or retirement account withdrawals.

Key Takeaways

  • You must transfer money into the Roth IRA account before you can invest it; the account itself holds no money until you send it there.
  • Annual contribution limits are $7,000 (under 50) or $8,000 (50 and older) for 2024, and this limit applies across all Roth IRAs you own.
  • Fidelity offers thousands of mutual funds, exchange-traded funds (ETFs), individual stocks, and bonds; you choose which ones to buy with your contributions.
  • You can fund the account through bank transfer, check deposit, or wire transfer, and most transfers settle within one to three business days.
  • Once money is in the account, you can buy and sell investments at any time without triggering taxes or penalties, as long as you follow Roth IRA withdrawal rules.

How to transfer money into your Fidelity Roth IRA

Log into your Fidelity account online or through the mobile app and navigate to the Transfers section. Select "Transfer funds in" and choose your funding method: bank transfer (ACH), check, or wire. For a bank transfer, you will enter your bank's routing number and your account number. Fidelity will ask you to verify the account by depositing two small amounts (usually under $1 each) into your bank account; you then log back into Fidelity and confirm those amounts. This verification takes one to two business days.

Once verified, you can transfer up to your annual limit. Bank transfers typically settle in one to three business days. If you need the money in the account faster, use a wire transfer, which usually clears the same day or next business day, though Fidelity may charge a wire fee (typically $15 to $25). You can also mail a check to Fidelity's deposit address, but this is slower and requires you to include a deposit slip with your account number.

If you are moving money from another Roth IRA at a different firm, you can request a direct transfer (also called a trustee-to-trustee transfer). Contact your old provider and ask them to send the funds directly to Fidelity. This avoids the 60-day rollover window and keeps the money in Roth status without tax consequences. Direct transfers usually take five to ten business days.

Choosing investments for your Roth IRA

Fidelity offers thousands of investment options, and you can hold multiple types in one account. The most common choices are mutual funds and exchange-traded funds (ETFs), which bundle many stocks or bonds together. Fidelity's own mutual funds and ETFs often have low fees; for example, the Fidelity Total Market Index Fund (FSKAX) tracks the entire U.S. stock market and charges 0.03% annually. You can also buy individual stocks, bonds, or target-date funds (which automatically shift from stocks to bonds as you approach retirement).

If you are new to investing, a target-date fund is often the simplest choice. You pick the fund that matches roughly when you plan to retire — for example, the Fidelity Freedom Index 2050 Fund if you think you will retire around 2050 — and the fund handles the mix of stocks and bonds for you. The fund automatically becomes more conservative over time.

To buy an investment, log into Fidelity, search for the fund or stock by name or ticker symbol, and click "Buy." Enter the dollar amount or number of shares you want, review the order, and confirm. The order executes immediately during market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays). You can buy as many different investments as you want within the same account.

Understanding Roth IRA contribution limits and deadlines

The annual contribution limit for 2024 is $7,000 if you are under 50, or $8,000 if you are 50 or older. This limit is per person, not per account — if you have a Roth IRA at Fidelity and another at a different firm, your combined contributions across both accounts cannot exceed $7,000 or $8,000. The limit resets on January 1 each year.

You can contribute for a given tax year until the tax filing deadline, which is typically April 15 of the following year. For example, you can contribute to your 2024 Roth IRA until April 15, 2025. Fidelity will ask you which tax year the contribution is for when you fund the account, so make sure you specify correctly.

There is no income limit to contribute to a Roth IRA if you have earned income, but if your income is very high, you may not be able to contribute the full amount. The phase-out ranges depend on your filing status and change each year; Fidelity's website shows the current limits. If you exceed the limit, you must withdraw the excess contribution plus any earnings by the tax deadline to avoid a 6% penalty.

What happens after you invest the money

Once you buy an investment, you own it inside the Roth IRA. The account grows tax-free, meaning you do not pay taxes on dividends, interest, or capital gains as long as the money stays in the account. You can buy and sell investments within the account as often as you want without triggering taxes or penalties — this is one of the main advantages of a Roth IRA.

You can withdraw your contributions (the money you put in) at any time without taxes or penalties. Withdrawals of earnings (the growth) before age 59½ are generally subject to taxes and a 10% penalty, unless you meet an exception like a first-time home purchase (up to $10,000 lifetime) or a may have access to disability. At age 59½, you can withdraw earnings tax-free as long as the account has been open for at least five years.

Fidelity sends you a year-end statement showing all your transactions, contributions, and account value. You can also view this information anytime in your online account. Keep records of your contributions so you know how much you can withdraw penalty-free.

Rebalancing and adjusting your investments over time

As your investments grow at different rates, your account mix may drift from what you intended. For example, if stocks rise faster than bonds, stocks might make up 70% of your account instead of the 60% you wanted. Rebalancing means selling some of the winners and buying more of the laggards to get back to your target mix. You can rebalance as often as you want inside a Roth IRA without tax consequences.

Many people rebalance once a year, often at the start of the year or on their birthday. Fidelity's website has tools to show you your current allocation and suggest rebalancing trades. If you own a target-date fund, the fund does this rebalancing automatically, so you do not have to think about it.

As you get closer to retirement, you may also want to shift toward more conservative investments — more bonds, fewer stocks — to reduce the risk of a market downturn right before you need the money. A target-date fund does this automatically; if you own individual funds, you can make the shift yourself by selling stocks and buying bonds.

Common mistakes to avoid when investing in a Roth IRA

One frequent error is contributing more than the annual limit. Keep track of contributions across all Roth IRAs you own, not just the Fidelity account. If you exceed the limit, withdraw the excess and any earnings by the tax deadline to avoid the 6% penalty.

Another mistake is leaving the account in cash. When you first open a Roth IRA, the money sits in a cash sweep account earning very little interest. You must actively choose an investment and place an order to buy it. If you are unsure what to buy, a target-date fund is a reasonable starting point.

A third error is panic-selling during market downturns. The Roth IRA is designed for long-term growth, and markets go up and down. Selling when prices are low locks in losses. If you are uncomfortable with market swings, shift toward more conservative investments, but do not abandon your strategy because of short-term volatility.

Frequently Asked Questions

Can I invest in cryptocurrency or alternative assets in a Fidelity Roth IRA?

Fidelity allows you to hold Bitcoin and Ethereum in a Roth IRA through a self-directed brokerage option, though this requires a separate account setup. Most alternative assets like private equity, hedge funds, or collectibles are not available in a standard Roth IRA due to IRS rules. Stick to stocks, bonds, mutual funds, and ETFs unless you specifically set up a self-directed account.

What if I do not have earned income — can I still contribute to a Roth IRA?

No. Contributions must come from earned income: wages, self-employment income, or taxable alimony. If you have no earned income, you cannot contribute. However, if you are married and your spouse has earned income, you may be able to contribute to a spousal Roth IRA; ask Fidelity about this option.

Do I have to invest the money right away, or can I leave it in cash?

You can leave it in cash, but it will earn almost no interest. The cash sweep account at Fidelity typically pays a very low rate. Most people invest the money within days of funding the account to start building long-term growth. If you are unsure what to buy, a target-date fund is a simple choice.

Can I move my Roth IRA from Fidelity to another firm later?

Yes. You can request a direct transfer to another firm at any time. Contact the new firm and ask them to initiate the transfer; they will handle the paperwork with Fidelity. This is tax-free and does not count against your annual contribution limit. Transfers usually take five to ten business days.

What if I contribute to a Roth IRA but then lose my job and need the money?

You can withdraw your contributions (the money you put in) at any time without taxes or penalties. Withdrawals of earnings are subject to taxes and a 10% penalty unless you meet an exception. If you contributed $5,000 and it grew to $6,000, you can withdraw the $5,000 penalty-free, but withdrawing the $1,000 in earnings triggers taxes and a penalty.