Keep retirement assets working for you

Allows eligible rollover money to remain invested on a tax-deferred basis without paying current income taxes or penalties.

Potential impact of taking an early cash distribution from a 401(k) plan versus transferring eligible retirement assets to a Rollover IRA

20% mandatory federal incometax withholdingAssumptions:10% early distribution penalty5% additional federal incometaxes are owedInvestment remains tax deferredNo current income taxesor penalties$30,000 early cashdistribution:$30,000 transfer to aRollover IRA:$30KRemaining$10.5KPenalties & Taxes$19.5KRemaining

The chart illustrates the potential impact of taxes and penalties that a cash distribution from a 401(k) plan might trigger if taken before age 59½, assuming a 25% federal ordinary income tax rate.

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Fidelity Advisor Rollover IRA Details

Target Market

  • Baby boomers with large 401(k) accounts
  • Pre-retirees and retirees who may want to pass assets on to beneficiaries
  • Job changers—including those offered severance or early retirement packages

Eligibility Requirements

  • Assets must come from an eligible retirement plan
  • Direct rollover: distribution check payable to rollover custodian
  • Indirect rollover: distribution check payable to participant—must be rolled over within 60 days

Fund Offering

  • Fidelity Advisor funds in multiple share classes

Maximum Contributions

  • None: no limit on eligible rollover assets


  • Indirect rollovers must be completed within 60 days of distribution from an eligible plan


  • Deductible contributions and any earnings are taxable as ordinary income in the year distributed
  • Penalty-free distributions after age 59½
  • 10% IRS early withdrawal penalty if taken before age 59½; however, a distribution may be penalty-free if taken for:
    • qualified first-time home purchase ($10K lifetime limit)
    • qualified higher education expenses
    • certain medical expenses over 7.5% of AGI
    • certain health insurance premiums if unemployed
    • disability or death
    • substantially equal periodic payments1
  • Required minimum distributions (RMDs) beginning at age 72. The change in the RMD age requirement from 70 to 72 only applies to individuals who turn 70 on or after 1/1/20. Please speak with your tax advisor regarding the impact of the SECURE Act on future RMDs.
  • Qualified charitable IRA distributions2

Product Advantages

  • Consolidates multiple retirement plan accounts to make them easier to manage
  • Preserves tax-deferred status of eligible retirement plan assets (assets are not taxed until withdrawn)
  • Qualified 401(k) assets rolled over to a Rollover IRA may now enjoy the same federal protection from creditors that 401(k) plan assets currently enjoy3
  • Flexible distribution options for estate planning and tax management

Get Started with Your Clients

Meet with your client to discuss retirement goals and create an income plan
Share the IRA Enrollment Guide with your client
Complete the new account application or rollover form

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