How to Close a Fidelity 401k
Fidelity 401k plans are designed to help you save toward retirement. There are many reasons why someone may want to close a Fidelity 401k account, including changing employers, retiring or needing to access funds for debt or financial hardship. Depending on your age and the reason for closing the account, you may be assessed ordinary tax and penalties on distributions that don't meet specific exemptions. When in doubt consult a tax adviser.
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Instructions
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1
Evaluate your employment status. If you are no longer employed at the company, go to Step 2. If you are still employed at the company, go to Step 3.
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2
Open a Rollover Individual Retirement Account (IRA) at a brokerage firm or bank that you wish to do business with. Request Rollover Paperwork from your 401k plan administrator and submit it. The account will be liquidated and a check will be sent to you. Be sure to deposit this check within 60 days of liquidation to satisfy Internal Revenue Service (IRS) regulation for rollovers and maintain a tax-free transaction.
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3
Determine if you qualify for an IRS exemption. Hardship exemptions include medical expenses in excess of 7 percent of your annual income, tuition for yourself or a dependent, a home purchase, funeral expenses or costs related to preventing foreclosure or eviction.
If you qualify for an exemption, you can close the account as long as it doesn't exceed the amount you need for the cost of the hardship bills. Request paperwork from your Fidelity plan administrator for the distribution. Be sure to mark the exemption to prevent taxes from being withheld from the amount.
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4
Consult your Fidelity plan administrator if you are still employed but want to close the account for any other reason. Each plan has rules and regulations specific to employer's plan. All funds that you pull out of the account that don't go into a qualified plan will be added to your adjusted gross income and assessed a 10 percent tax penalty if you are younger than 59 1/2 years of age.
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Tips & Warnings
Some employers have vesting schedules for matching Fidelity 401k plan contributions. If you have not been with the company for required time frame, you may not be able to withdraw all employer contributions.
References
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