How To Set Up Investments from Money in a Fidelity Roth for a Target Date Index Fund?

Investing
#1

Hi Jeremy! A question for you…

I have money in a Fidelity Roth 401k, and I also have automatic contributions. I believe the next step is to invest that money within the 401k. I would like to know how I can do this for a Target Date Index Fund (FXIFX), and heck - a traditional index fund while we’re at it too! Could I trouble you to please give me the rundown?

Also - does Fidelity allow an option for these investments (like the Roth contributions) be set to recurring or automatic? Or, do I have to manually place the investment order every time there’s new cash in the Roth account?

Thank you in advance!

1 Like
#2

Hey Roselyn!

401(k)s are employer sponsored plans. You can only choose from the investment options they have provided for you. (Weird I know). And generally, when you set up your 401k contributions you’re forced to make that choice. It’s a common mistake to contribute money to a Roth IRA then forget to invest it, but I rarely see that with a 401k. So I SUSPECT, you have already picked your 401k investment choice, but maybe you didn’t realize it?!

And yes, 401(k) contributions (by law… again, weird I know) have to come directly out of your paycheck as a payroll deduction, and then it is automatically invested in that investment you set up.

401ks are all set up a little differently, so I don’t have a video or post on how exactly to find the investment choices, but if you can’t find it by logging into Fidelity and clicking around, I’d probably reach out to your HR department or try calling Fidelity for help?

And yes, once you get there, try to pick a target date index fund, failing that an index fund, failing that a low fee target date fund, failing that, a few diversified mutual funds (again, depends on what your company offers) :slight_smile:

#3

Ahh! Sorry - I meant a ROTH IRA!!
Apologies for the confusion.

I’m not sure why I said 401k! :woman_facepalming:
I don’t contribute to my company’s IRA bc they don’t match. So yes - how would I go about setting up the investments from my Fidelity Roth IRA to a target date index fund or traditional index fund, and can that be set up to occur automatically?

Thank you, Jeremy!

#4

bump @Jeremy - wanted to make sure you saw my follow up. thanks!

#5

Ah yes!

Investing in a Roth IRA is a two step process:

  1. Put the money in (called a contribution, capped at $6,000/year)
  2. Use the money to buy an investment

And yes, you can automate both those steps, so (for example) $500/month comes out of your checking account, goes into your IRA and right into an index fund!

This post walks through the basic steps to get investing with Fidelity:

And to set up the auto-investments, see this post:

Or click here for Fidelity:

https://www.fidelity.com/cash-management/automatic-investments