Cashing Out Your Fidelity Investments: A Step-By-Step Guide

Cashing out your Fidelity Investments can be done in several ways, including bank transfers, PayPal, Venmo, and Apple Pay. The process is relatively simple and can be done by contacting Fidelity through their website or by phone. It's important to note that while basic withdrawals are free, there may be additional costs, delays, or difficulties depending on your specific situation. For example, if you need to liquidate any holdings, there may be associated commissions or mutual fund fees. Additionally, if you are under 59 and a half years old, withdrawing from your 401(k) may result in tax penalties.

Withdrawing money from a Fidelity 401(k)

If you've decided that taking money from your 401(k) is your best option, here are the steps to follow:

• Contact Fidelity: Visit their website and request a check, or call them at 800-343-3548 with any questions about the process.
• Download the withdrawal request form: You can find this on Fidelity's website.
• Fill out the form: Provide your personal information, account details, reasons for withdrawal, and the amount you wish to withdraw. If you are under 59 1/2 years old, you will need to fill out the form differently, and you may need to provide proof of financial hardship.
• Submit the form: You can mail it to the address listed on the form, or you can provide your bank account number on the form if you prefer to have the funds deposited directly into your account.
• Receive your funds: Fidelity will process your request, and you should receive your check or have the funds deposited within five to seven business days.

It's important to note that if you are under 59 1/2 years old, you may have to pay tax penalties on your withdrawal, and you will need to pay income tax on the money. Additionally, if you have any holdings in your 401(k) that need to be liquidated, there may be associated commissions or mutual fund fees.

How to avoid a 401(k) withdrawal penalty

Generally, if you withdraw money from your 401(k) before the age of 59 1/2, you will pay an additional 10% in income tax as a penalty. However, there are some exceptions that allow for penalty-free withdrawals. Here are some ways to avoid the 401(k) withdrawal penalty:

• Unreimbursed medical bills: You can withdraw money from your 401(k) to pay for unreimbursed deductible medical expenses that exceed 10% of your adjusted gross income. The withdrawal must be made in the same year that the medical bills were incurred.
• Disability: If you are totally and permanently disabled, you can withdraw money from your 401(k) without penalty. The easiest way to prove disability to the IRS is by collecting disability payments from an insurance company or Social Security.
• Health insurance premiums: You can make penalty-free withdrawals from an IRA if you're unemployed and use the money to pay for health insurance premiums. To avoid any issues in the case of an audit, it's best to have the money sent directly to the insurance carrier.
• Beneficiary withdrawals: When a 401(k) account holder dies, beneficiaries can make withdrawals without penalty. However, if a spouse inherits the account and treats it as their own, they may be subject to the penalty if they withdraw before the age of 59 1/2.
• Owing the IRS: If the IRS places a levy against your IRA for unpaid taxes, you can make a penalty-free withdrawal to pay them.
• First-time home purchases: You can withdraw up to $10,000 from an IRA for a first-time home purchase without penalty. This is also applicable to homebuyers who have not owned a home in the previous two years.
• Higher education expenses: IRA withdrawals for qualified higher education expenses are penalty-free. This includes expenses for yourself, your spouse, children, grandchildren, or immediate family members, such as books, tuition, supplies, room, and board.
• Substantially equal periodic payments: Section 72(t) of the tax code allows for penalty-free withdrawals if you take substantially equal periodic payments over time. The shortest amount of time for these payments is five years.

While these exceptions can help you avoid the 10% early withdrawal penalty, it's important to remember that you may still have to pay regular income taxes on the withdrawal. Additionally, early withdrawals can impact your retirement savings in the long term. It's recommended to consult a financial advisor before making any early withdrawals from your 401(k) to understand the potential costs and consequences.

How to make a hardship withdrawal

To make a hardship withdrawal from Fidelity Investments, there are a few steps to follow. Firstly, it's important to understand what a hardship withdrawal is and when it may be appropriate. A hardship withdrawal is typically considered a last resort when facing a sudden financial need. While it is an option to access your funds, there may be tax implications and penalties involved.

To initiate the process, log in to your Fidelity account and navigate to the "Accounts & Trade" or "Retirement Distributions" section. From there, you should be able to select the option for "Hardship Withdrawal" and follow the prompts to complete the process. Keep in mind that you may only withdraw funds that are available as uninvested cash. If your funds are currently invested, you will need to liquidate those assets first, which can take additional time.

Before proceeding with a hardship withdrawal, it's essential to consider other options, such as using emergency savings, utilising a credit card with a 0% interest rate, or exploring low-interest loan alternatives. These steps can help minimise the impact on your long-term financial health.

Additionally, be aware of the potential tax consequences and penalties associated with hardship withdrawals. Depending on your age, the type of account (e.g., 401(k), Traditional IRA, or Roth IRA), and the specific circumstances, you may owe income taxes and/or a 10% penalty on the amount withdrawn. Therefore, carefully review the rules and regulations surrounding hardship withdrawals before proceeding.

How to cash out without a bank account

If you don't have a bank account, you can withdraw money from your Fidelity brokerage account by requesting a check. You can do this by selecting "Withdraw Money" from the "Select Action" drop-down box on the Portfolio Summary page. There are no fees for requesting a check, and no penalties for withdrawing from a non-retirement account via check.

If you've changed the address on your account, you don't have to wait to make a withdrawal by check. However, to protect against fraud, if you've changed your mailing address within the last 15 days, the most you can request to withdraw by check online is $10,000. Depending on your location and the type of account, it generally takes between three to five days to receive your check once you've requested it.

If you have investments in your account, you will need to place a sell order before withdrawing the cash. Sell orders from stocks and Exchange-Traded Funds (ETFs) take two business days to settle after the trade date. Trades must be fully settled in a cash account before you can withdraw the proceeds to your bank. For example, if you sold a stock on Wednesday, the proceeds will settle and be available to withdraw on Friday. Most mutual funds only take one business day to settle, though it is fund-specific. You can monitor the amount available to withdraw by referencing the "Available to Withdraw" line on your Balances tab.

How to cash out Fidelity investments without fees

To cash out your Fidelity investments without fees, you can follow these steps:

Step 1: Log into Your Fidelity Account

Use your username and password to access your account on the online platform, where you can navigate to the "Accounts" or "Account Settings" section. Here, you can manage your personal information, set up electronic funds transfers, and view important details such as your account balance, transaction history, and performance reports.

Step 2: Navigate to Your Stock Holdings

Once you're logged in, go to the "Accounts & Trade" tab, then select "Portfolio" followed by "Positions" to see a detailed list of your holdings. This will allow you to check the quantity of each security, the number of shares you own, and the current value of your investment funds.

Step 3: Select the Stocks to Cash Out

Based on your financial goals and market conditions, choose the specific stocks you wish to liquidate. Consider factors such as the company's performance, industry trends, and the overall economic outlook. It's advisable to maintain a diversified portfolio to mitigate risks.

Step 4: Choose the Cash Out Option

Fidelity offers various cash-out options, including selling all shares or a specific amount. You can transfer funds directly to your linked bank account, sell securities or assets, or transfer assets to another financial institution or as an in-kind transfer.

Step 5: Review and Confirm Your Transaction

Before finalizing the cash-out, carefully review the transaction details to ensure accuracy. Contact Fidelity's customer service if you have any questions or need assistance. Confirming transactions is crucial to prevent errors and ensure the funds are processed correctly, avoiding any delays or inconvenience.

Step 6: Withdraw Funds

To withdraw funds from your Fidelity account, log in to your account online and navigate to the "Transfer" or "Move Money" section. From there, select the option to transfer funds to an external bank account. Provide the necessary details of the bank account, such as the routing and account number, and double-check the information for accuracy before confirming the transfer.

It's important to note that different withdrawal methods may have varying processing times and associated fees, so be sure to review all the details before finalizing your transaction. Additionally, consider any potential tax implications, as capital gains tax may apply to any profits made from selling your stocks.

Frequently asked questions