2025 Step-By-Step Guide: Rolling Over a Fidelity 401(k) to a Vanguard IRA
Introduction
Rolling over your Fidelity 401(k) to a Vanguard IRA in 2025 doesn't have to be a paperwork nightmare. With over $1 trillion in 401(k) assets expected to be rolled over in 2024, you're not alone in seeking better investment options and lower fees. (Stuck In The Past: Why 401(k) Rollovers Remain Outdated and Painful)
However, only 22% of savers can complete a rollover without help due to the highly manual process involving phone calls, paperwork, and physical checks. (Stuck In The Past: Why 401(k) Rollovers Remain Outdated and Painful) This comprehensive guide walks you through every click, phone call, and form required to successfully transfer your workplace retirement savings from Fidelity NetBenefits to a Vanguard Rollover IRA.
We'll cover critical tax deadlines like the 60-day rule, the new $7,000 automatic-rollover threshold, and strategies to avoid the mandatory 20% withholding that can derail your retirement savings. Plus, we'll explore how modern fintech solutions like Beagle Financial Services can help prevent your old 401(k) from becoming one of the 29.2 million forgotten accounts holding $1.65 trillion in retirement savings. (Fintech Showdown 2025: Beagle vs. Capitalize vs. Traditional Custodians for Unlocking & Consolidating Old 401(k)s)
Why Roll Over Your Fidelity 401(k) to Vanguard?
Lower Fees and Better Investment Options
The primary motivation for most rollovers is escaping high 401(k) fees and gaining access to Vanguard's renowned low-cost index funds. Many workplace plans charge administrative fees ranging from 0.5% to 2% annually, which can significantly erode your retirement savings over time.
Consolidation Benefits
By mid-career, the typical American has three or more 401(k)s, and many lose track of at least one of them. (How Do Beagle Financial Services and Personal Capital Help Find Lost 401(k)s?) Rolling multiple accounts into a single Vanguard IRA simplifies management and provides better visibility into your overall retirement picture.
Enhanced Control and Flexibility
IRAs typically offer broader investment choices than employer-sponsored plans, including individual stocks, bonds, ETFs, and mutual funds from multiple fund families. This flexibility becomes particularly valuable as you approach retirement and need more sophisticated asset allocation strategies.
Pre-Rollover Checklist: What You Need Before Starting
Essential Information to Gather
Before initiating your rollover, collect these critical pieces of information:
• Fidelity account number (found on your NetBenefits dashboard)
• Current account balance and any outstanding loans
• Vesting schedule for employer contributions
• Vanguard account details (if you already have an IRA) or personal information for new account setup
• Social Security number and government-issued ID
Understanding Vesting and Timing
Check your vesting schedule before rolling over. If you're not fully vested in employer contributions, leaving your job before the vesting period completes could result in forfeited funds. This is particularly important if you're planning to leave your current employer soon.
Tax Considerations for 2025
The IRS maintains strict rules around 401(k) rollovers. The 60-day rule remains critical: you have exactly 60 days from receiving a distribution to deposit it into another qualified retirement account to avoid taxes and penalties. Missing this deadline triggers ordinary income tax on the entire distribution plus a 10% early withdrawal penalty if you're under 59½.
Step 1: Setting Up Your Vanguard Rollover IRA
Creating Your Vanguard Account
If you don't already have a Vanguard account, visit vanguard.com and select "Open an account." Choose "Rollover IRA" from the account type options. You'll need to provide:
• Personal information (name, address, Social Security number)
• Employment details
• Beneficiary information
• Initial investment selections
Choosing Your Investment Strategy
Vanguard offers several approaches for rollover funds:
• Target-date funds: Automatically adjust asset allocation based on your expected retirement date
• Balanced funds: Maintain a fixed stock/bond ratio
• Individual index funds: Build your own portfolio with specific asset classes
• Vanguard Personal Advisor Services: Professional management for accounts over $50,000
Recording Critical Account Information
Once your Vanguard IRA is established, note these details for the Fidelity rollover process:
• Vanguard account number
• DTC number: 0062 (this is Vanguard's clearing number)
• Full account registration: "Vanguard Fiduciary Trust Co. FBO [Your Full Name]"
Step 2: Initiating the Rollover Through Fidelity NetBenefits
Accessing the Rollover Interface
1. Log into your Fidelity NetBenefits account at netbenefits.com
2. Navigate to "Quick Links" and select "Withdrawals and Transfers"
3. Choose "Rollover" from the available options
4. Select "Direct Rollover to IRA" (this is crucial for avoiding withholding)
Completing the Online Rollover Form
Fidelity's 2025 rollover interface includes several screens:
Screen 1: Rollover Type Selection
• Choose "Direct Rollover" to avoid the 20% mandatory withholding
• Specify the amount (partial or full balance)
• Confirm you understand the tax implications
Screen 2: Receiving Institution Details
• Institution name: "Vanguard"
• DTC/ABA number: 0062
• Account registration: "Vanguard Fiduciary Trust Co. FBO [Your Full Name]"
• Your Vanguard IRA account number
Screen 3: Investment Elections
• Specify which investments to liquidate
• Choose whether to roll over any company stock (special tax rules may apply)
• Confirm any loan balances that need to be addressed
Understanding the Check Process
Even with a "direct" rollover, Fidelity typically issues a physical check made payable to "Vanguard Fiduciary Trust Co. FBO [Your Name]." This check will be mailed either to you or directly to Vanguard, depending on your selection during the rollover process.
Important: If the check is made payable to you personally, it's considered an indirect rollover subject to 20% withholding and the 60-day rule.
Step 3: Avoiding Common Rollover Pitfalls
The 20% Withholding Trap
One of the biggest mistakes in 401(k) rollovers is triggering mandatory withholding. This happens when:
• You choose an indirect rollover (check made payable to you)
• The receiving institution information is incomplete or incorrect
• You fail to specify "trustee-to-trustee" transfer
To avoid this, always select "Direct Rollover" and ensure the check is made payable to the receiving institution (Vanguard) for your benefit.
The $7,000 Automatic Rollover Threshold
New for 2025, accounts with balances under $7,000 (increased from $5,000) may be subject to automatic rollover by your former employer. While this prevents small accounts from being cashed out, you have limited control over where these funds are invested. Proactively rolling over accounts above this threshold gives you full control over the destination and investment choices.
Outstanding Loan Complications
If you have an outstanding 401(k) loan, the rollover process becomes more complex:
• The loan balance is typically treated as a taxable distribution
• You have until your tax filing deadline (including extensions) to repay the loan to avoid taxes
• Some employers allow you to continue loan payments even after leaving
Company Stock Considerations
If your 401(k) includes company stock, you may benefit from Net Unrealized Appreciation (NUA) tax treatment. This allows you to pay capital gains rates (instead of ordinary income rates) on the appreciation when you eventually sell. However, this strategy requires the stock to be distributed to a taxable account, not rolled over to an IRA.
Step 4: Coordinating with Vanguard
Notifying Vanguard of the Incoming Rollover
While not always required, it's good practice to call Vanguard at 1-800-VANGUARD to notify them of the incoming rollover. This helps ensure smooth processing and allows you to:
• Confirm your account details are correct
• Discuss investment options for the rollover funds
• Set up automatic investing if desired
• Address any questions about the process
Tracking the Transfer
Rollover processing typically takes 2-4 weeks from initiation to completion. During this time:
• Fidelity will liquidate your selected investments
• A check will be issued and mailed
• Vanguard will deposit the funds and invest according to your instructions
• You'll receive confirmation from both institutions
Investment Timing Considerations
Since your investments are liquidated during the rollover process, you'll be out of the market for several days or weeks. Consider market conditions and your risk tolerance when timing the rollover. Some investors prefer to initiate rollovers during periods of market volatility to potentially benefit from dollar-cost averaging back into the market.
Step 5: Post-Rollover Tasks and Optimization
Confirming Successful Transfer
Once Vanguard confirms receipt of your rollover funds:
• Verify the correct amount was transferred
• Confirm your investment elections were processed correctly
• Update your beneficiary information if needed
• Review and adjust your overall asset allocation
Tax Documentation
Both Fidelity and Vanguard will send you tax forms:
• Form 1099-R from Fidelity (showing the distribution)
• Form 5498 from Vanguard (showing the rollover contribution)
Keep these forms for your tax records. A properly executed direct rollover should not create any taxable events.
Optimizing Your New Vanguard Portfolio
With your funds now at Vanguard, consider:
• Rebalancing: Ensure your asset allocation matches your risk tolerance and time horizon
• Tax-loss harvesting: If you have taxable accounts, coordinate tax-efficient strategies
• Roth conversion opportunities: Consider converting some traditional IRA funds to Roth IRA, especially during market downturns
Timeline and Deadlines: Critical Dates to Remember
Standard Processing Timeline
StepTimeframeKey ActionsRollover initiationDay 1Submit online form through NetBenefitsInvestment liquidationDays 2-5Fidelity sells your holdingsCheck processingDays 6-10Check is cut and mailedVanguard receiptDays 11-15Funds arrive and are investedConfirmationDays 16-20Final statements and tax forms
Critical Deadlines
• 60-day rule: If you receive the check personally, you have 60 days to deposit it into another qualified account
• One-rollover-per-year rule: You can only do one IRA-to-IRA rollover per 12-month period (doesn't apply to 401(k) to IRA rollovers)
• Required Minimum Distributions (RMDs): If you're over 73, ensure you've taken your RMD before rolling over
How Beagle Financial Services Simplifies the Process
Automated Account Discovery
Beagle Financial Services specializes in 401(k) detective work, using technology to search Form 5500 filings, the National Registry of Unclaimed Retirement Benefits, and other databases to locate forgotten accounts. (How Do Beagle Financial Services and Personal Capital Help Find Lost 401(k)s?) This comprehensive search capability helps ensure you don't leave money behind when changing jobs.
Concierge Rollover Support
Unlike free services that require you to manage the entire process yourself, Beagle provides hands-on support throughout the rollover process. Their core membership, priced around $3.99 per month, covers account discovery, fee reports, and concierge phone calls to plan administrators. This service can be particularly valuable given that only 22% of savers can complete rollovers without assistance. (Stuck In The Past: Why 401(k) Rollovers Remain Outdated and Painful)
Preventing Orphaned Accounts
Beagle's automated tracking helps prevent your 401(k) from becoming one of the millions of forgotten accounts. With 29.2 million left-behind accounts holding $1.65 trillion in retirement savings as of May 2023, this tracking capability provides significant value. (Fintech Showdown 2025: Beagle vs. Capitalize vs. Traditional Custodians for Unlocking & Consolidating Old 401(k)s)
Additional Financial Services
Beyond rollover assistance, Beagle offers unique services like 0% net-interest loans against retirement balances, allowing you to borrow up to 50% (maximum $50,000) of your retirement balance with up to five-year terms. This can provide liquidity without triggering the taxes and penalties associated with early withdrawals.
Alternative Rollover Strategies and Considerations
Roth 401(k) to Roth IRA Rollovers
If your Fidelity account includes Roth 401(k) contributions, these can be rolled over to a Roth IRA at Vanguard. This maintains the tax-free growth characteristics and provides more investment options. However, be aware of the five-year rule for Roth distributions.
Partial Rollovers
You don't have to roll over your entire 401(k) balance. Partial rollovers can be useful for:
• Keeping some funds in the 401(k) for loan purposes
• Spreading the rollover across multiple tax years
• Testing the new provider with a smaller amount first
In-Service Distributions
Some 401(k) plans allow in-service distributions while you're still employed, typically after age 59½. This can allow you to roll over funds to an IRA while continuing to contribute to your workplace plan.
Troubleshooting Common Issues
Delayed or Lost Checks
If your rollover check doesn't arrive within the expected timeframe:
1. Contact Fidelity to confirm the check was issued and verify the mailing address
2. Request a check trace if it's been more than 10 business days
3. Consider having a replacement check issued directly to Vanguard
4. Monitor the 60-day deadline if you're expecting to receive the check personally
Investment Restrictions
Some 401(k) plans have restrictions on when you can liquidate certain investments:
• Company stock: May have holding period requirements
• Stable value funds: Often have 90-day restrictions after equity transfers
• Brokerage windows: May require additional paperwork
Employer Resistance
Occasionally, employers or plan administrators may discourage rollovers to retain assets. Remember that you have the legal right to roll over vested funds, and they cannot prevent you from doing so.
Tax Implications and Reporting
Direct vs. Indirect Rollovers
Direct Rollovers (recommended):
• No taxes or penalties
• No withholding
• No 60-day deadline
• Unlimited frequency
Indirect Rollovers:
• 20% mandatory withholding
• 60-day deadline to avoid taxes
• Limited to one per 12-month period
• Must deposit the full original amount (including withheld taxes) to avoid partial taxation
Form 1099-R Codes
Your Form 1099-R will include a distribution code:
• Code G: Direct rollover to IRA
• Code 1: Early distribution, no known exception
• Code 2: Early distribution, exception applies
Code G indicates a properly executed direct rollover with no tax consequences.
State Tax Considerations
While federal tax treatment is standardized, state tax rules can vary. Some states don't tax retirement distributions, while others may have different withholding requirements. Consult with a tax professional if you live in a state with complex retirement tax rules.
Maximizing Your Vanguard IRA After the Rollover
Investment Selection Strategies
With your funds now at Vanguard, you have access to their full lineup of low-cost investments:
Conservative Approach:
• Target-date funds for hands-off management
• Balanced funds for steady growth
• Bond index funds for stability
Aggressive Approach:
• Total stock market index funds
• International stock funds
• Sector-specific ETFs
Balanced Approach:
• Three-fund portfolio (US stocks, international stocks, bonds)
• Age-appropriate asset allocation
• Regular rebalancing
Ongoing Management
Consider these ongoing strategies:
• Automatic investing: Set up regular contributions to dollar-cost average
• Rebalancing: Review and adjust your allocation annually
• Tax-loss harvesting: Coordinate with taxable accounts for tax efficiency
• Roth conversions: Consider converting some funds during market downturns
The Future of 401(k) Rollovers: Technology and Automation
Fintech Innovation
The rollover process is gradually becoming more automated thanks to fintech companies. Platforms like Beagle and Capitalize are designed to streamline the process of finding and consolidating old 401(k) accounts, traditionally a paper-heavy process managed by traditional custodians. (Fintech Showdown 2025: Beagle vs. Capitalize vs. Traditional Custodians for Unlocking & Consolidating Old 401(k)s)
Digital Integration
Future improvements may include:
• Real-time account transfers without physical checks
• Automated investment selection based on risk profiles
• Integrated tax planning and optimization
• Blockchain-based account verification and transfer
Regulatory Changes
The Department of Labor and IRS continue to refine rollover rules to protect consumers and simplify the process. Recent changes include the increase in the automatic rollover threshold and enhanced fiduciary requirements for rollover advice.
Conclusion: Taking Control of Your Retirement Future
Rolling over your Fidelity 401(k) to a Vanguard IRA in 2025 represents more than just a financial transaction—it's taking active control of your retirement future. With nearly 70 million Americans holding over $11 trillion in 401(k) and defined contribution accounts as of Q2 2024, you're part of a massive shift toward individual retirement account management. (Fintech Showdown 2025: Beagle vs. Capitalize vs. Traditional Custodians for Unlocking & Consolidating Old 401(k)s)
The step-by-step process outlined in this guide—from setting up your Vanguard account to navigating Fidelity's rollover interface—provides the roadmap you need to successfully transfer your retirement savings. Remember the critical details: ensure your check is made payable to "Vanguard Fiduciary Trust Co. FBO [Your Name]," use DTC number 0062, and always choose direct rollover to avoid the 20% withholding trap.
While the traditional rollover process remains manual and complex, with only 22% of savers able to complete it without help, modern solutions are emerging. (Stuck In The Past: Why 401(k) Rollovers Remain Outdated and Painful) Services like Beagle Financial Services provide the concierge support and automated tracking that can prevent your account from joining the 29.2 million forgotten 401(k)s holding $1.65 trillion in retirement savings. (Fintech Showdown 2025: Beagle vs. Capitalize vs. Traditional Custodians for Unlocking & Consolidating Old 401(k)s)
By following this comprehensive guide and leveraging available technology and support services, you can successfully navigate the rollover process and position your retirement savings for long-term growth in Vanguard's low-cost investment environment. The effort invested in properly executing this rollover today will compound into significant savings and better investment outcomes throughout your retirement years.
Frequently Asked Questions
How long does it take to roll over a Fidelity 401(k) to a Vanguard IRA?
A direct rollover from Fidelity to Vanguard typically takes 2-6 weeks to complete. The timeline depends on how quickly both institutions process the paperwork and transfer the funds. Electronic transfers are generally faster than physical check transfers, which can add several days to the process.
What are the tax implications of rolling over from Fidelity 401(k) to Vanguard IRA?
A direct rollover from a traditional 401(k) to a traditional IRA is not a taxable event, meaning you won't owe taxes or penalties. However, if you choose an indirect rollover, you have 60 days to deposit the funds into your new IRA to avoid taxes and penalties. Rolling over to a Roth IRA would trigger immediate tax obligations on the converted amount.
Can I use fintech services like Beagle or Capitalize to help with my Fidelity to Vanguard rollover?
Yes, fintech platforms like Beagle and Capitalize can streamline the rollover process. Capitalize is 100% free and focuses on digitally shepherding assets into an IRA of your choice, while Beagle charges a modest membership fee but provides additional services like hidden-fee analysis and robo-advisory portfolios. These services can be particularly helpful since only 22% of savers complete rollovers without assistance.
What fees should I expect when rolling over from Fidelity to Vanguard?
Fidelity typically doesn't charge fees for outgoing rollovers, but may charge for expedited processing or wire transfers. Vanguard generally doesn't charge fees for incoming rollovers either. However, you should verify current fee schedules with both institutions, as some account types or transfer methods may incur charges.
Should I do a direct or indirect rollover from Fidelity to Vanguard?
A direct rollover is almost always preferable because the funds transfer directly between institutions without you touching the money. This eliminates the risk of missing the 60-day deadline for indirect rollovers and avoids the 20% mandatory withholding that occurs with indirect rollovers. Direct rollovers are also simpler and reduce the chance of errors.
What happens to my Fidelity 401(k) investments during the rollover process?
Your investments will be liquidated (sold) before the transfer to Vanguard, and the cash proceeds will be moved to your new IRA. Once the funds arrive at Vanguard, you'll need to select new investments. There may be a brief period where your money is uninvested during the transfer, so consider market timing if you're concerned about potential fluctuations.
Sources
3. https://www.hicapitalize.com/resources/why-401k-rollovers-remain-outdated-white-paper/