Fidelity Investments IRA Overview
While Fidelity is known for its great customer service and range of fund offerings, the broker also offers a wide selection of Individual Retirement Accounts (IRAs). With low commissions and good trading tools, this firm is worth taking a look at.
Fidelity IRA Account Types
Fidelity customers have a variety of IRAs to choose from. The broker offers Traditional, Roth, Rollover, Minor Roth, Inherited, SEP, and SIMPLE versions. SEP and SIMPLE retirement accounts are designed for small businesses. Traditional and Roth IRAs were created for individual investors. The Inherited IRA is an account that has been inherited, obviously. The Rollover is an IRA whose balance has been transferred from a previous employer's plan. And the Minor Roth is for parents who want to start saving for the children's retirement.
Fidelity IRA Fees and Minimums
Retirement accounts at Fidelity come with no account minimums, no inactivity fees, and no annual fees. For a regular brokerage account, the firm requires an initial deposit of at least $2,500 to open an account, although for an IRA there is no minimum.
Once the IRA has been opened, Fidelity’s standard commission schedule will apply to the account. This includes a $0 charge for stock and ETF trades. Placing a trade over the phone with a live broker costs $29.95.
Fidelity Mutual Funds
Traders can avoid the above commissions by investing in the broker's selection of commission-free funds. The firm provides over 11,000 mutual funds for its clients. Exactly 3,580 have no transaction fee, and about half of these also have no load. Funds that carry a transaction fee are $49.95 to purchase. The commission depends on the fund. There is no charge to sell a transaction-fee fund.
Fidelity has a large selection of mutual funds designed for retirement savers. They are called Freedom Funds. Over time, the portfolio of each fund is rebalanced, increasing the amount of short-term debt and decreasing the amount of equity. Each fund has a target date, which is the expected year of retirement. The Fidelity Freedom 2025 Fund, for instance, is designed for investors who plan to retire around 2025. These funds typically reach their least aggressive portfolio construction 10–20 years beyond the target date. The funds are ideal for retirees who prefer to trust their retirement account to professional investors without paying a lot for the service. The funds have expense ratios below 1% and carry no transaction fee.
IRA Calculators
Fidelity has several retirement calculators. These tools can provide useful information. An IRA contribution calculator helps figure how much an investor can contribute to an IRA in a given tax year. The tool also can determine how much of a contribution is tax deductible.
The broker has a valuable calculator for investors who are thinking about switching from a Traditional IRA to a Roth. Users simply input required data into the tool, such as account balance, state of residence, and tax bracket. The tool then figures if making the conversion is a good idea or not.
A minimum required distribution calculator helps Fidelity clients figure if and when withdrawals from an IRA must be taken according to IRS guidelines. The calculator shows the minimum amount that must be taken out of the account, and when withdrawals must begin. The calculator also shows when the account will be completely withdrawn.
IRA Videos and Learning Materials
Fidelity has a large library of educational material on its website relating to retirement. These resources include videos, webinars, articles, self-guided courses, and infographics. These instructional materials cover a variety of topics important to retirees, such as how to reverse a Roth IRA conversion, how to create a retirement income plan, and information on Minor Roth IRAs. These materials are classified at the beginner or intermediate level.
IRA Basics Course
Fidelity offers a good self-guided course on IRAs. Course objectives include understanding which IRA is the right choice based on various investor characteristics, learning how to manage an IRA, knowing the tax implications of both Roth and Traditional accounts, and understanding the key terms and concepts associated with IRAs. The course is composed of both articles and videos.
Comparison
Fidelity's no minimum opening deposit requirement is lower than Charles Schwab's $1,000 minimum. Most brokers don't operate their
own target funds, which gives Fidelity an advantage. Fidelity also offers more commission-free funds compared to several other
brokers, such as Firstrade and Wellstrade.
On the other hand, Webull
has more commission-free products, and Ally Invest is much better
priced.
Fidelity IRA Review Summary
Retirement savers can do well at Fidelity. With no fees for their IRAs and a great selection of commission-free funds, including
target date funds, retirees can have their portfolios managed by the pros for only a minimal cost. But there are lower cost
brokers to consider, with Ally Invest being the most appealing among them.
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