IRA Fidelity Vs. Savings Account

Fidelity Investments has become a leader in retirement savings assets. It administers many company-sponsored retirement plans along with helping individual investors manage investment portfolios. Understanding the difference between a Fidelity IRA and basic savings assists in proper financial planning.

Fidelity IRA

A Fidelity IRA is a tax-deferred account that allows an investor to buy or sell securities without concern of capital gains tax. An IRA is generally held until age 59-1/2 when distributions are not penalized by the Internal Revenue Service (IRS).

Savings

A savings account is a deposit account where investors put money with the intention of holding it for emergency needs or future purposes. A savings account may be a bank or brokerage account.

Fidelity Savings

Fidelity offers more than just equity investment options. An investor can open a fixed income or money market account to serve as a savings account.

Fidelity IRA Savings

An IRA is an Individual Retirement Account for retirement savings. A Fidelity IRA is considered a Fidelity retirement savings account. An IRA account allows for tax-deferred growth while assets remain in the account.

FDIC Coverage

Savings accounts, whether IRA or not, qualify for Federal Deposit Insurance Corporation (FDIC) insurance coverage if held at a member FDIC bank. Brokerage accounts, such as a Fidelity account, do not qualify for FDIC coverage which means even conservative investments at Fidelity have no federal protection.

References

• Fidelity Investments: Saving for Retirement
• Investopedia: Savings Account
• Federal Deposit Insurance Corporation: Consumer News