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Moving a Roth IRA from TIAA to Fidelity

Question: Can I Move My Roth IRA From TIAA to Fidelity?

Transferring a Roth IRA from TIAA to Fidelity is a process that many consumers consider for various reasons, such as seeking better investment options, lower fees, or improved customer service. This article will guide you through the process, potential benefits, and important considerations to help you make an informed decision.

Understanding Roth IRA Transfers

A Roth IRA is a type of individual retirement account that provides tax-free growth and tax-free withdrawals in retirement, given that certain conditions are met. When it comes to transferring a Roth IRA from one provider to another, the process is often referred to as a rollover or a transfer. Understanding the two main methods of moving your account—direct transfer and indirect rollover—will help ensure that you don't face any unintended tax consequences.

Direct Transfer

  • Definition: A direct transfer, also known as a trustee-to-trustee transfer, involves moving funds directly from one IRA provider to another without you taking possession of the funds.
  • Benefits: This method avoids tax liabilities and penalties because the funds are transferred directly between financial institutions.
  • Process: Contact Fidelity to initiate the transfer. They usually take care of most of the communication with TIAA, minimizing your involvement.

Indirect Rollover

  • Definition: An indirect rollover requires you to take possession of the funds before transferring them to the new IRA provider.
  • Risks: You have 60 days to deposit the funds into the new IRA to avoid taxes and potential penalties. If you fail to meet this deadline, the withdrawal may be subject to income taxes and penalties.
  • Withholding: The original provider might withhold 10% or more to cover potential taxes, complicating the process further.

Benefits of Moving to Fidelity

Fidelity Investments is a well-known financial services corporation offering a wide range of investment products. Here are some potential benefits of moving your Roth IRA to Fidelity:

1. Investment Options

  • Diverse Fund Choices: Fidelity offers an extensive range of mutual funds, ETFs, stocks, and bonds, allowing you to tailor your investment strategy.
  • Target-Date Funds: These funds are designed for investors with a particular retirement date in mind, automatically adjusting their allocation over time.

2. Fees and Expenses

  • Competitive Pricing: Fidelity is known for its low expense ratios on many investment products, which can lead to significant savings over the long term.
  • No-Fee Accounts: Some types of accounts and services at Fidelity have no annual fees, reducing your overall investment costs.

3. Customer Service

  • 24/7 Support: Fidelity offers around-the-clock customer service, which can be invaluable for investors needing immediate assistance.
  • Online Tools: Their robust online platforms and tools can help manage and optimize your investment portfolio more effectively.

Step-by-Step Guide to Transferring Your Roth IRA

Here is a detailed guide on how to move your Roth IRA from TIAA to Fidelity:

Step 1: Open a Fidelity Roth IRA

  1. Visit Fidelity's Website: Navigate to the Roth IRA section and begin the account opening process.
  2. Provide Personal Information: You'll need to supply personal details such as your Social Security number, birthdate, and contact information.
  3. Fund Your Account: Although you're opening this account to transfer funds, you may choose to make an initial deposit to start investing immediately.

Step 2: Contact Fidelity

  1. Initiate the Transfer: After opening your account, inform Fidelity about your desire to transfer funds from TIAA. They typically offer a Transfer of Assets form.
  2. Provide Account Details: Share your TIAA account information to facilitate the transfer.
  3. Authorize Fidelity: Once Fidelity has all the necessary details, they will reach out to TIAA to initiate the direct transfer.

Step 3: Monitor the Transfer

  1. Follow Up: Keep in touch with Fidelity to ensure the process is proceeding smoothly.
  2. Confirm the Transfer: Once completed, verify that the funds and asset allocations appear correctly in your new Fidelity account.

Step 4: Review and Reallocate Investments

  1. Assess Your Portfolio: Once the assets are in your Fidelity account, evaluate your investment allocation and goals.
  2. Reallocate as Needed: Use Fidelity’s platform to make adjustments to better align with your retirement goals.

Important Considerations

Tax Implications

Moving a Roth IRA via direct transfer should have no immediate tax implications. However, if you decide on an indirect rollover, remember the strict 60-day deadline to re-deposit the funds to avoid taxes and penalties.

Coding of Transactions

Ensure that Fidelity and TIAA code the transactions correctly to reflect a non-taxable direct transfer. Incorrect coding can result in unnecessary tax complications.

Timing

The transfer can take anywhere from a few days to several weeks. Avoid making withdrawal or trading decisions during this time, as it may delay the transfer.

Common Questions and Misconceptions

Will transferring my Roth IRA affect my contributions for the year?

No, transferring or rolling over your Roth IRA does not impact your annual contribution limit. You can still contribute up to the allowed limit for the tax year.

Can I transfer in-kind investments?

Yes, many types of investments can be transferred in-kind without being liquidated, depending on the policies of both (TIAA and Fidelity) involved institutions. Check with both providers to see which assets may qualify for an in-kind transfer.

What if I have a Roth IRA CD at TIAA?

If your Roth IRA includes a Certificate of Deposit (CD), consider the maturity date and potential penalties for early withdrawal before initiating the transfer.

Additional Resources

For further information on Roth IRAs and transferring accounts, consider exploring reputable financial websites, consulting with a financial advisor, or reviewing IRS guidelines on retirement accounts.

By understanding the processes and potential benefits, you can make informed decisions about your retirement planning. Exploring Fidelity's offerings can reveal opportunities that align more closely with your financial goals, potentially enhancing your retirement strategy.