Fidelity 401k Withdrawal Rules

Written by steve brachmann
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Fidelity is one of the largest American investment companies involved with various types of retirement accounts, including 401k retirement plans. 401(k) plans allow a worker to save part of his wages while employed. Workers who have a 401k retirement account held by Fidelity may withdraw funds from the account, even if technically ineligible to receive funds. Withdrawals are subject to Fidelity's fraud policy rules and IRS tax penalties in certain cases.

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Rolling Over Funds

Fidelity allows owners of 401k retirement accounts to withdraw funds from that account to deposit them into a different IRA account held by Fidelity. This action is known as rolling over funds. The money you have invested stays with Fidelity, but is held in a different retirement account. Fidelity rollovers of 401k account funds typically take 60 days, or about two months, to be completely processed.

Change of Address

Fidelity allows 401k account holders the choice to have funds withdrawn from a 401k retirement account deposited directly into a bank account or sent as a check to the account holder's address. To protect against account fraud, Fidelity has restrictions on how much money can be withdrawn from a 401k or other retirement account after the main mailing address contact for the account has been changed. A Fidelity 401k account holder may withdraw a maximum of £6,500 via mailed check within 15 business days of an address change. Withdrawals to a bank account or rolled over into another IRA may be made up to £65,000 after an address change.

Minimum Required Distribution

Most retirement accounts offered by Fidelity, including 401ks and most types of IRAs, have minimum required distribution rules, or minimum annual withdrawal amounts that must be made when an account owner reaches a certain age. For Fidelity investment accounts, minimum required distributions kick in the calendar year during which the account owner turns 71 1/2 years of age. Minimum required distributions are calculated at the beginning of the calendar year and are typically calculated by dividing the account funds by the owner's remaining life expectancy.

Early Withdrawals

Fidelity 401k account holders may make withdrawals on their account before their normal eligibility begins at age 59 1/2. However, these withdrawals are subject to Internal Revenue Service fines and penalties for early retirement withdrawals. Many account holders take out a 401k withdrawal in the form of a loan that must be repaid within five years, according to IRS rules. If the loan repayment terms are not met, the IRS treats the loan as a taxable distribution and assigns income taxes to the withdrawal, as well as a 10 per cent tax penalty on the outstanding balance for account holders under age 59 1/2.

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