How to Close a Fidelity 401(k)

Closing a Fidelity 401(k) account isn't that difficult, in terms of shutting down the account once you removed all of your funds. You can close your account by phone, using Fidelity's virtual assistant, by visiting a Fidelity branch, using your online access to your account or by writing a letter.

However, the ramifications of closing any 401(k) or retirement account can have serious impacts on your taxes and retirement assets. Reviewing what happens when you close a 401(k) will help you take the right steps to minimize – and even eliminate – your losses.

​Consider also:​ What Services Are Offered for Your Fidelity 401(k)?

Fidelity provides a helpful 401(k) FAQ page on its website to discuss your options for transferring your 401(k) funds. For example, you can transfer them to an IRA via a rollover. One of the benefits of doing this is that you can withdraw money penalty-free if you're under 59 ½ years old and will use the money for higher education costs or a qualifying first-time home purchase.

If you're changing jobs, you can leave your current funds with your old employer's plan and start a second account with your new employer, or you can transfer your current 401(k) funds to your employer's new plan. Check with a tax professional to compare the two accounts – if your new option is better than the old, you might want to put all of your money into that account. If not, you can keep your old account.

Be careful how you transfer your funds. If you move your money directly from one account to another, the transfer is penalty-free. If you have your old account manager send the money to you, then put it into your new account, you might end up delaying the transfer due to a hold your previous employer might have to pay on some of your funds.

​Consider also:​ Fidelity 401(k) Hardship Withdrawal Rules

If you cash out your account before age 59 ½ and don't put the money into another tax-deferred account, you might have to pay income tax on that money and might face an early withdrawal of up to 10 percent of the entire account balance.

Withdrawing ​$50,000​ early could cost you ​$20,500​ in state and federal taxes and early withdrawal fees, explains Fidelity. This might not happen depending on your age when you separated from your previous employer – this is why you need to check with a financial advisor before acting.

If you qualify for a hardship withdrawal due to medical issues, the purchase of a house or tuition payments, you might be able to withdraw your money with no penalties.

​Consider also:​ How to Withdraw From a Fidelity 401k

If you don't want to pay taxes and fees when you access your 401(k) funds, you can take out a loan, which you pay back monthly, with no taxes and penalties. Each employer's plan has different rules for accessing funds, so check with your plan provider to see what fees and interest rates it charges.

When you're ready to close your Fidelity 401(k) account, have the following information ready, recommends Stilt.com:

• Name as it appears on your account
• Account number
• Social Security number
• Street address and phone number

Call the Fidelity customer service number on your latest statement or call ​800-343-3548​ (the number provided by Fidelity on its website for closing accounts). Discuss your needs with the rep and let her know exactly how you want to close your account and where you want the money sent.

Make sure to get the customer service rep's name and employee number and record the date of the call. Ask for an email or text confirming that you have closed your account.

According to Fidelity's website, you can only close your account online or by phone, but you might be able to start the process by mail. If you choose to try and close your account by mail, don't mail it to the return address on the envelope you received – that's often the address of a mailing house.

Look on the back of your statement for Fidelity's correspondence address. Write a detailed letter telling Fidelity that you want to close your account and how you want the account closed (for example, a check sent to you or a direct rollover to another institution). Provide your information, but only send the last four digits of your Social Security number, in case your letter is lost or stolen.

Even if you provide all of this information correctly, expect a courtesy call from Fidelity, so make sure to provide them with your phone number and the best time(s) to call you. Send your letter by certified mail or using a commercial carrier so you get signature confirmation that your letter was received.

As of April 2022, you are only able to close accounts online if the account has a zero balance, according to Fidelity's website. You will use Fidelity's Virtual Assistant to do so. You can also try to access your account directly using Fidelity's NetBenefits website. If you haven't set up online access to your account, you'll need to click on Register as a New User, create an account, then log in.