Fidelity just announced a novel way to attract your IRA retirement money: a match on your contributions for three years if you roll over money to Fidelity from a competitor.
But is it Fidelity IRA match the best deal for rolling over your money?
Here’s how it works
When you roll over money from a non-Fidelity IRA account, you’ll get a match on all of your new contributions for the next three years if you use this link to handle the rollover.
There are five tiers of matching:
- 1% for rollovers of $10,000
- 1.5% for rollovers of $50,000
- 2.5% for rollovers of $100,000
- 5% for rollovers of $250,000
- 10% for rollovers of $500,000
You can contribute up to $5,500 to an IRA each year ($6,500 if you’re over age 50) and you can earn up to $1,950 in matching over the 3 years.
Here’s an example:
Let’s say you have $100,000 sitting in an IRA and you roll it over to Fidelity.
Then you contribute as follows, earning the 2.5% match on the contributions because you rolled over $100,000.
- Year 1: Contribute $5,500, get a $138 match
- Year 2: Contribute $4,000, get a $100 match
- Year 3: Contribute $5,000, get a $125 match
That’s $363 in extra money Fidelity is adding to your account.
There may be better deals
Unless you’re doing a really large rollover for the bigger matches, you might earn more with a simple one time bonus.
For example, Fidelity itself has these lucrative one time bonuses via a different promotion:
$200 for rollovers of $50,000 – $99,999
On a rollover of $50,000, you’d earn only $165 from the ‘match’ bonus if you contribute $5,500 each year
$300 for rollovers of $100,000 – $249,999
On a rollover of $100,000 you’d earn $248 from the ‘match’ bonus if you contribute $5,500 each year
$600 for rollovers of $250,000 – $499,000
On a rollover of $250,000 you’d earn $825 from the ‘match’ bonus if you contribute $5,500 each year
$1,200 for rollovers of $500,000 – $999,000
On a rollover of $500,000 you’d earn $1,650 from the ‘match’ bonus if you contribute $5,500 each year
$2,500 for rollovers of $1,000,000
On a rollover of $1,000,000 you’d earn $1,650 from the ‘match’ bonus if you contribute $5,500 each year
Other major brokers like Schwab, Ameritrade, and ETrade offer similar one time deals.
And if you are a die hard maximizer, you could rollover your money each year to a new broker and collect bonuses each time. That would earn you substantially more than the Fidelity ‘match’ bonus could over 3 years.
But all in, while the idea of rewarding new contributions to your IRA each year is a great one as it reinforces good behavior, the actual rewards are sub-par in many cases. Do a little math first to make sure you’re not short changed.