Fidelity is one of the leading retirement account providers in the investment world and the 401k is one of the most popular options offered for retirement savings. If your employer offers a 401k or if you plan on opening a solo 401k through Fidelity, you need to understand how the account works and what options you have.
Opening an Account
If your employer offers a Fidelity 401k plan, you will have to meet the requirements that are set up through your employer. For example, you might have to work in the company for a certain amount of time before you are eligible to open an account. If you are self-employed, you may be able to open up a solo 401k. With either option, you will need to fill out a form to open your account with Fidelity. On the form, you will need to include information, such as your name, address, Social Security number and the amount that you want to withhold from your paycheck to contribute.
Once you open an account with Fidelity, you will have many investment options to choose from. For example, Fidelity typically offers hundreds of different mutual funds and exchange-traded funds to invest in. Depending on the type of 401k you open, you may also be able to invest in annuities. Fidelity also offers access to Fidelity Freedom Funds. These are target date funds that allow you to simply choose when you want to retire and start investing. The portfolio will be allocated to ensure growth early on and stability later.
When you put money into a Fidelity 401k, you not only have many investment options to choose from, but you also have access to resources that can help you be successful as an investor. For example, you have access to videos and documents that show you how to use your account. You also have access to research tools that will allow you to determine which investments you need to put your money into and which ones to stay away from, depending on your risk tolerance.
When you open a 401k with Fidelity, the money you contribute will not have taxes taken out of it. When you invest, the money you earn will not be taxed either. You will only be taxed once you reach the age of 59 1/2 and start taking withdrawals. Each year, you can contribute up to $16,500 to your 401k. Once you reach the age of 50, you can start contributing up to $22,000 per year.