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Fidelity 401k

Investment

Fidelity 401k, how it works, and what you should know

Fidelity 401k – The instance of retirement calls for deep thought and how an employee tends to survive at retirement, a time you are no longer considered active to work and fend for yourself.

Given this retirement, several companies deal in retirement savings and management, however not every company may meet your choice when it comes to “Individual Retirement Account.”

Fidelity 401k may just provide the much-needed answers to your retirement and investment questions.

What is Fidelity 401k?

Fidelity is a fund company that offers a 401k plan as part of its services, it’s a low-cost company which several of its funds are cheaper than the market average, adding to the fact that it’s one of the largest fund companies in the world.

Not too conversant with a 401k plan? Read about the 401k plan here then come back and continue.

But in brief, a 401k plan is retirement savings and the investment employers offer their employees, which are withdrawn automatically from the employee’s paycheck, can be considered tax-advantaged savings.

Investment products by Fidelity

  • Mutual funds
  • Retirement & IRAs
  • Trading
  • Stocks
  • Fixed income, Bonds & CDs
  • ETFs
  • Options
  • Sector investing
  • Cash management & credit cards
  • Managed accounts
  • 529 college savings
  • Health savings account
  • Annuities
  • Life insurance & long term care
  • Charitable giving

How Fidelity 401k works

Fidelity offers the traditional IRA and Roth IRA

Traditional IRA

This is a contribution made by an employer concerning the retirement of an employee in the future.

The employee will survive from such funds having worked actively during his/or her days on the job, employees are encouraged to make contributions possibly to match the employer’s during this phase to ensure a financially balanced retirement.

The traditional IRA account is a tax advantage account which implies the amount contributed is not taxed, however, tax applies to the balance after deductions have been made, such deductions are made from the paycheck before the employee receives the available balance.

While this plan is not being taxed at source, tax applies at the withdrawal point after the employee has retired or meets the IRS rules for withdrawal before retirement.

The Roth IRA

The idea with the Roth IRA is that if you want to access your contributions at retirement without taxes or penalties whatsoever before retirement, however, want to pay your taxes at source then the Roth IRA is the deal for you.

Your retirement contributions are taxable, this means to say that your earned income tax is deducted before contributions at the point of payment, tax does not apply at the withdrawal of such contributions provided it’s been 5 years since your first contribution.

At Fidelity, you can have access to control your former workplace 401k or 403b from a centralized account.

Fidelity 401k withdrawal

This refers to an instance where you withdraw or take a loan from the 401k account, while no one wants this situation before retirement, life happens and you may have a need to access your contribution.

If you choose to take a loan or withdraw from your account kindly be aware of the following pros and cons associated with it.

You may qualify for what the IRS defines as the hardship withdrawal which is occasioned by having heavy financial need, where a plan allows hardship withdrawal to be mindful of the below.

Pros

  • You will not pay back withdrawals and 401k assets
  • For loans under this circumstance, you are not charged taxes and penalties
  • The interest you pay goes back into your 401k account
  • If you default on your loan or miss a payment, it won’t impact your credit score in any way since this default is not reported to credit bureaus.

Cons

  • In a situation you leave your current job, you will be forced to repay your loan in full within a short time frame. In any way, you could not pay you’ll be said to have defaulted which will have you owe both taxes and a 10% penalty if you are under 59 and half years.
  • In this case, be sure to lose out on investing the money you borrowed in a tax advantage account/traditional 401k.

How to withdraw or take a loan from your Fidelity 401k account

It’s advised that before you could think of withdrawing/taking a loan from this account you should have exhausted other options, wherein if they failed you can proceed to the 401k as your last resort.

  • To take this loan, kindly submit a request for a 401k loan/withdrawal, log in to your Net benefits for if you have your account with Fidelity, review your balances. Available loan amounts, and withdrawal options.

Fidelity phone number

You may contact Fidelity regarding your account by phone on

  • 800-343-3548

Investment phone number

  • 800-544-6666

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