February 13, 2007

step by step guide to opening a fidelity IRA

To facilitate the recharacterization of my Roth IRA contribution from last year, I had to open up a traditional IRA at Fidelity. Even though I had four separate accounts with Fidelity at that time, I actually never went through their online account opening process. I was surprised and pleased just how easy it was (disclaimer: I'm not getting paid for this endorsement, though I wouldn't mind ).

The process literally took fewer than 10 steps, and they were very, very easy. (Also, it was great to have the option to save my application at any time, and return to it later if needed.)

Step 1:

First, I logged into my online account, and then clicked on the "Open Account" link up to. On the screen that showed up, I selected "Traditional IRA."

Step 2:

After selecting the type of account I wanted to open, Fidelity gave me a "prep" page that told me the type of information I'd need to complete the process. Most of it is stuff you should know off the top of your head (e.g., social security number, employer information, etc.) but some stuff you have to dig out -- for me, that stuff included driver's license, beneficiary information and bank account information.

Step 3:

The next page that popped up was for my personal information. Luckily, since I was already logged in, most of the fields were already populated. The information I filled out included social security, citizenship, driver's license and addresses.

Step 4:

After my personal information was in, I was then asked to fill out information about my employer, and whether or not I was affiliated with a brokerage, NASD or served as a corporate officer in a public company. Nyet to all of that.

Step 5:

With that stuff out of the way, Fidelity then asked me to choose my investment profile. This involved providing my income, net worth and investment objective. The latter is where you indicate if you're a cautious investor (can't stomach huge risk), or if you're more aggressive. Since I'm relatively young, and I like the idea of big gains (no risk, no reward, right?), I checked off the "most aggressive" box. Keep in mind that you're not bound by your selection here -- I think its just a way for Fidelity to understand the type of investor you are.

Step 6:

This was really the only step I wasn't sure about. The section is called Key Account Features, and this is where you put in your beneficiary information and choose whether to go paperless. Neither of those things confused me. Rather, it was the question on how much I wanted to start the account with.

Since I was recharacterizing, and not really putting in "extra" money, I wasn't sure if I could put in the amount I was transferring over, or if I had to put in something other than that. I gave Fidelity a quick call, and they told me I could put anything, as long as it was over $2,500. Again, the answer here wasn't binding (at least not immediately).

Step 7 & 8:

(Yes, they were that easy I decided to combine them.) In these two steps, I basically verified the information I had entered, and checked off the appropriate boxes to indicate I understood and agreed with Fidelity's terms.

Step 9:

Voila! My account was created, and my new account number appeared right away. Since I was already set up with an online account, my new IRA also showed up on my portfolio within minutes. Very impressive.

Overall, the process of opening up a traditional IRA for the recharacterization was very easy. I also spoke with Fidelity's customer service reps to ask some questions about the recharacterization form. There was some trickiness with question 1c (basically asking what holding within the Roth IRA I wanted to transfer from), but other than that, it was as smooth and painless as the account opening process. The total number of questions on that page was less than 3, if I remember correctly.

After that was done, I signed it, and walked the document over to the Fidelity office one block away from where I work. If only everything in personal finance could be that easy. =P

**I completed this Friday afternoon, so the transfer hasn't been fully completed yet. I'm keeping my fingers crossed that there'll be no hiccups -- if there are, you'll be sure to know about it! =)

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