Making The Most Of Fidelity Investments

Making contributions to Fidelity Investments is a straightforward process, offering a range of options to suit your needs. You can contribute to your Fidelity account in several ways, including direct deposits, electronic funds transfers, and check deposits. The process is similar for various types of accounts, such as Health Savings Accounts (HSAs), Individual Retirement Accounts (IRAs), and 401(k) plans. It's important to be mindful of annual contribution limits and tax implications when making contributions. Additionally, you have the flexibility to adjust your contribution amounts and settings to align with your financial goals and long-term planning.

Depositing money into a Fidelity account

Direct Deposit:

You can set up direct deposits of your paycheck, Social Security, or pension benefits directly into your Fidelity account. To do this, you will need to provide your employer, government agency, or third party with the routing (ABA) number and account number of your Fidelity account. This information can be found on the Direct Deposit and Direct Debit Information page or your Portfolio Summary page. It may take a few pay periods for your direct deposit to become active, and your employer should send a confirmation once it is set up.

Electronic Funds Transfer (EFT):

Another convenient option is to transfer funds electronically from your bank account to your Fidelity account. Before initiating an EFT, you will need to link your bank account to your Fidelity account. This can be done through the "Link a Bank Account" feature. With this method, you can make one-time deposits or schedule automatic or recurring deposits for frequent investing.

Wire Transfer:

If you prefer, you can also wire money from a bank or third-party account to your Fidelity account. To initiate a wire transfer, you will need to start the transaction from the institution you are sending money from.

Check Deposit:

Fidelity offers the flexibility to deposit a check through mobile upload or by mailing a paper check. When depositing a check via mobile upload, you can use the Fidelity Mobile app. If you choose to mail a paper check, make it payable to "Fidelity Management Trust Company" for the benefit of [your name]. Remember to include your account number and the contribution tax year in the check's memo field.

Third-Party Payment Apps:

Fidelity also accepts deposits made through popular third-party payment apps such as Venmo or PayPal. This option provides a convenient and fast way to transfer funds to your Fidelity account.

Internal Transfers:

If you have multiple Fidelity accounts, you can easily transfer money between them. This feature allows you to consolidate your funds or allocate them according to your investment strategies.

Remember to review the specific terms and conditions associated with each deposit method, as well as any applicable fees or processing times. Additionally, consider consulting a financial advisor or tax professional for personalized guidance based on your unique circumstances.

Contributing to a 401(k) or 403(b)

A 401(k) or 403(b) plan is a great way to save for retirement, offering tax advantages and the potential for long-term growth. Here's a step-by-step guide to making contributions to these plans with Fidelity:

Step 1: Understand the Plans

Firstly, it's important to understand the differences between 401(k) and 403(b) plans. A 401(k) is a common type of retirement plan offered by employers, allowing employees to save and invest for retirement. On the other hand, a 403(b) plan is available for employees in specific sectors, including health care, education, and tax-exempt organisations. Both plans offer tax benefits, but these differ slightly between the two.

Step 2: Check Employer Plans

Check with your employer to see if they offer a 401(k) or 403(b) plan. Some employers may automatically enrol new employees at a low contribution rate. It's also important to find out if your employer offers matching contributions, as you'll want to contribute enough to take full advantage of this benefit.

Step 3: Decide on Contribution Amount

As a general rule, it's recommended to save at least 15% of your pre-tax income for retirement. This includes any matching contributions from your employer. However, the exact amount you can contribute may depend on factors such as your age, income, and the specific rules of your plan. For example, in 2024, employees under 50 could contribute up to $23,000 to a 403(b), while 401(k) plans have their own contribution limits.

Step 4: Set Up Contributions

Once you know how much you want to contribute, you can set up contributions to your 401(k) or 403(b) plan. Log in to NetBenefits® to review your balances and contributions for plans managed by Fidelity. You can use the same username and password that you use for your other Fidelity accounts. If you need to make changes to your contribution schedule or amounts, you may need to contact your employer or plan administrator, as they set up these plans.

Step 5: Choose Investments

After contributing to your 401(k) or 403(b), you'll need to choose how to invest your money. Your employer may offer products within the plan to help with investment decisions. You can choose a simple option like a target date fund or a more personalised approach with a managed account service. Alternatively, you can select your own investment mix from the options provided by your employer.

Remember, it's important to consider your financial goals and comfort with risk when deciding how much to contribute and how to invest your retirement savings.

Contributing to an IRA

• Direct deposit of a paycheck or government check to a Fidelity account.
• Automatic deposits from a bank account or Fidelity Cash Management Account to specific investments.
• Electronic funds transfer (EFT) or wire transfer from a bank or third-party account.
• Check deposit via mobile upload or mail.
• Transfer money from one Fidelity account to another.
• Transfer money via a third-party payment app like Venmo or PayPal.

When you make a contribution to your IRA, the money goes into your core account. This is where your money is held until you or your advisor choose investments to purchase with the money. You don't have to wait for the funds to be available in your account to choose your investments, though it may take a few days for transferred money to be available.

Fidelity makes it easy to contribute to your IRA, showing you the annual maximums when you contribute online. The contribution limit for IRAs, including Roth and traditional IRAs, is $7,000 for 2024 and 2025. If you're age 50 or older, you can contribute an additional $1,000 annually. This allows for a "catch-up" contribution for those nearing retirement.

Contributing to a 529 college savings plan

Understand the Basics of 529 Plans

529 plans are flexible, tax-advantaged accounts designed for education savings. They can be used for a wide range of qualified education expenses, including college costs, K-12 tuition, apprenticeship fees, and student loan repayments. The account owner maintains control and can make investment decisions. Additionally, there are no income restrictions, and anyone with a Social Security or Tax ID number can be a beneficiary.

Know the Contribution Limits

While there is no annual contribution limit for 529 plans, contributions up to $19,000 per year are not subject to federal gift tax. You can also contribute up to $95,000 ($190,000 per married couple) per beneficiary in a single year without affecting your lifetime gift-tax exclusion.

Set Up Your 529 Account

To open a 529 account, you must be a US resident aged 18 or older, with a US mailing and legal address, and a Social Security number or Tax ID. You will also need the child's date of birth and Social Security number, as well as your preferred investment choices. Fidelity offers a free college gifting program that makes it easy for family and friends to contribute.

Make Your Contributions

There are several ways to contribute to your 529 plan:

• Set up direct deposit from your paycheck or government check.
• Schedule automatic or recurring transfers from your bank account or investment accounts to your 529 plan.
• Deposit a check via mobile upload or mail.
• Transfer money from one Fidelity account to another.
• Use a third-party payment app like Venmo or PayPal.

Remember that contributions to your 529 plan are invested based on your existing instructions, which you established when opening the account. You will receive a confirmation from Fidelity once your contributions have been invested.

Contributing to a Health Savings Account (HSA)

• Make one-time or recurring contributions from a bank account or eligible Fidelity account, deposit a check, or set up direct deposit from your payroll.
• Transfer some or all of your balance from another HSA or HSAs to consolidate your accounts.
• Move money from your IRA to your HSA once in your lifetime for a federal income tax deduction.

There is no minimum amount required to open a Fidelity HSA, and your contributions are tax-deductible. The IRS defines HSA contribution limits each year, and you can use Fidelity's HSA calculator to determine how much you should save in your HSA. Anyone can make an after-tax contribution to your Fidelity HSA, although these contributions are generally not tax-deductible for the contributor. Additionally, if you are married and covered by a family health plan, you and your spouse can both contribute to your HSA, and all contributions will count toward the yearly contribution limit for family health plans.

Frequently asked questions