A rollover IRA is an account you open at Fidelity to move money from an old retirement plan into a single place

When you leave a job or retire, your 401(k), 403(b), or other employer retirement plan stays where it is unless you do something with it. A rollover IRA is a regular Individual Retirement Account you set up at Fidelity specifically to receive that money. The money moves from your former employer's plan directly to Fidelity, and you keep the same tax-deferred status you had before — no taxes are owed on the transfer itself.

The main reason people open rollover IRAs is to consolidate retirement savings in one place, often with lower fees and more investment choices than an employer plan offers. You can also roll money from multiple old plans into a single Fidelity rollover IRA. Once the money is there, you manage it like any other IRA — you choose how to invest it, and you cannot withdraw it before age 59½ without penalty (with some exceptions).

Key Takeaways

  • A rollover IRA at Fidelity receives money directly from your old employer retirement plan, keeping its tax-deferred status intact.
  • You can roll over money from a 401(k), 403(b), 457 plan, or another employer plan, but not from a Roth account into a traditional rollover IRA without tax consequences.
  • The transfer happens directly between your old plan and Fidelity (called a direct rollover), so you avoid taxes and penalties that come with taking the money yourself.
  • Fidelity charges no account maintenance fees for rollover IRAs, though you pay fees on individual investments you choose within the account.
  • Once money is in the rollover IRA, you must start taking required minimum distributions at age 73, unless you are still working and your plan allows you to delay.

Direct rollover versus indirect rollover: which one matters

A direct rollover means your old plan sends the money straight to Fidelity without you ever touching it. This is the cleanest route: no taxes are withheld, no penalties apply, and there is no 60-day deadline to worry about. Fidelity can walk you through this process and will coordinate with your former employer's plan administrator.

An indirect rollover means the old plan sends you a check, and you deposit it into a Fidelity rollover IRA within 60 days. The plan administrator usually withholds 20 percent for federal taxes, even though you are rolling the money over. If you miss the 60-day window, the IRS treats it as a withdrawal, and you owe income tax plus a 10 percent penalty if you are under 59½. Most people choose direct rollover to avoid these complications.

What types of retirement plans can roll into a Fidelity rollover IRA

You can roll over money from a 401(k), 403(b), 457 plan, or similar employer-sponsored retirement account. You can also roll over money from an old IRA into a rollover IRA at Fidelity, though there is no practical difference — it is still an IRA. Fidelity accepts rollovers from most major plan types, and their customer service can confirm whether your specific plan qualifies.

Do not roll a Roth 401(k) or Roth 403(b) into a traditional rollover IRA — the tax treatment changes, and you will owe taxes on the conversion. Instead, roll Roth employer plans into a Roth IRA at Fidelity. If you have both traditional and Roth money in the same employer plan, you must split them into separate rollover accounts at Fidelity.

How to start a rollover IRA at Fidelity

Open an account online at Fidelity's website or call their rollover team. You will need your Social Security number, the name of your old employer or plan, and your account number with that plan. Fidelity will ask whether you want a direct rollover (recommended) or whether you already have a check in hand.

If you choose direct rollover, Fidelity generates paperwork and sends it to your old plan administrator. The administrator processes the request and sends the money to Fidelity, usually within one to two weeks. You do not need to do anything else — Fidelity deposits the funds into your new rollover IRA account. Once the money arrives, you can invest it in stocks, bonds, mutual funds, or other options Fidelity offers.

Investment choices and fees within a Fidelity rollover IRA

Fidelity does not charge a monthly or annual account maintenance fee for rollover IRAs. However, you pay fees on the individual investments you hold inside the account. Fidelity offers its own mutual funds and exchange-traded funds (ETFs), many with no transaction fee. If you buy stocks, you pay a per-trade commission. If you buy third-party mutual funds, you may pay a transaction fee or an ongoing expense ratio.

When you first open the account, Fidelity may offer to help you choose investments based on your age and risk tolerance, or you can manage the account yourself. The money stays invested according to your choices until you withdraw it or reach age 73, when required minimum distributions begin.

Required minimum distributions and withdrawal rules

At age 73, the IRS requires you to withdraw a minimum amount from your rollover IRA each year, based on your age and account balance. Fidelity calculates this amount and can set up automatic withdrawals if you want. If you do not take the required amount, you owe a penalty of 25 percent of the shortfall (reduced to 10 percent if you correct it within two years).

Before age 59½, you can withdraw money from a rollover IRA, but you owe income tax on the withdrawal plus a 10 percent penalty. Exceptions exist for disability, medical expenses above a threshold, and a few other situations, but they are narrow. If you need access to the money before retirement, a rollover IRA is not the right tool — a taxable brokerage account might be better.

Rollover IRA versus keeping money in your old plan

When you leave a job, you have four main choices: roll the money to a Fidelity IRA, leave it in your old employer's plan, roll it to your new employer's plan (if one is available), or cash it out. Leaving money in the old plan works if the plan has low fees and good investment options, but most people find they have less control and fewer choices. Rolling to a new employer's plan is an option only if your new employer's plan accepts rollovers, which not all do.

Cashing out is almost never the best choice — you owe income tax on the full amount plus a 10 percent penalty if you are under 59½, which can eat up 30 to 40 percent of your savings. A rollover IRA gives you control, usually lower fees, and more investment options than most employer plans, which is why it is the most common choice.

Frequently Asked Questions

Can I roll over money from a Roth 401(k) into a Fidelity rollover IRA?

No — rolling a Roth 401(k) into a traditional rollover IRA converts it to pre-tax money, and you owe taxes on the conversion. Instead, open a Roth IRA at Fidelity and roll the Roth 401(k) there. The tax-free status stays intact.

How long does it take for money to arrive in my Fidelity rollover IRA?

A direct rollover usually takes one to two weeks from the time your old plan receives Fidelity's paperwork. If you do an indirect rollover (you receive a check), you have 60 days to deposit it at Fidelity. Fidelity can tell you the exact timeline once your request is submitted.

What happens if I do not take my required minimum distribution?

The IRS charges a 25 percent penalty on the amount you should have withdrawn but did not. Fidelity can calculate your required amount each year and set up automatic withdrawals so you do not miss the deadline.

Can I have both a rollover IRA and a regular IRA at Fidelity?

Yes — they are separate accounts. However, contribution limits apply to all your IRAs combined, and required minimum distributions are calculated on the combined balance. Fidelity can help you track both accounts.

What if my old employer plan does not allow direct rollovers?

Some small plans do not offer direct rollover. In that case, you can do an indirect rollover — the plan sends you a check, and you deposit it at Fidelity within 60 days. Be aware that 20 percent will be withheld for taxes, even though you are rolling the money over.