Fidelity Smart MoneySM Playbook

Going from 0 to 60 with investing

Investment accounts to choose from

Investing accounts are tools to help you reach your financial goals. Like hammers, saws, and screwdrivers, different types of investment accounts serve different purposes for your money. Some are specialized for a specific job, such as saving for retirement, while others are more general. But it's hard to know where to invest without all the info, like how each account works and its pros and cons. Browse types of investment accounts that could fit your investing goals.

6 min estimated reading time
note

Answer the question below to learn more about types of investment accounts that could help you save for your goals.

What goal are you investing for?

Retirement Education (yours or a loved one's) Health care (yours or your family's) A child's future savings Something else I'm not sure

Help me take action

1. With a traditional IRA, there is no income limit to contribute. Your contribution may reduce your taxable income and, in turn, your federal income taxes if you are eligible for the tax deduction. Earnings can grow tax-deferred until withdrawn, although if you make withdrawals before age 59½, you may incur both ordinary income taxes and a 10% penalty. 2. For 2024, full deductibility of a contribution is available to covered individuals whose 2024 Modified Adjusted Gross Income (MAGI) is $123,000 or less (joint) and $77,000 or less (single); partial deductibility for MAGI up to $143,000 (joint) and $87,000 (single). In addition, full deductibility of a contribution is available for non-covered individuals whose spouse is covered by an employer sponsored plan for joint filers with a MAGI of $230,000 or less in 2024; and partial deductibility for MAGI up to $240,000. If neither you nor your spouse (if any) is a participant in a workplace plan, then your traditional IRA contribution is always tax deductible, regardless of your income. 3. A distribution from a Traditional IRA is penalty-free provided certain conditions or circumstances are applicable: age 59½; qualified first-time homebuyer (up to $10,000); birth or adoption expense (up to $5,000 per child); emergency expense (up to $1,000 per calendar year); qualified higher education expenses; death, terminal illness or disability; health insurance premiums (if you are unemployed); some unreimbursed medical expenses; domestic abuse (up to $10,000); substantially equal period payments; Qualified Federally Declared Disaster Distributions or tax levy. 4. A distribution from a Roth IRA is tax-free and penalty-free provided that the 5-year aging requirement has been satisfied and one of the following conditions is met: age 59½, death, disability, qualified first time home purchase. 5. For a distribution to be considered qualified, the 5-year aging requirement has to be satisfied, and you must be age 59½ or older or meet one of several exemptions (disability, qualified first-time home purchase, or death among them). 6. For 2024, eligibility for a full Roth IRA contribution is available to joint filers whose 2024 MAGI is $230,000 or less ($230,000-$240,000 partial contribution). For single filers, full eligibility is available to those whose 2024 MAGI is $146,000 or less ($146,000-$161,000 partial contribution). 7. $0.00 commission applies to online US equity trades, exchange-traded funds (ETFs), and options (+ $0.65 per contract fee) in a Fidelity retail account only for Fidelity Brokerage Services LLC retail clients. Sell orders are subject to an activity assessment fee (historically from $0.01 to $0.03 per $1,000 of principal). A limited number of ETFs are subject to a transaction-based service fee of $100. See full list of ETFs subject to this service fee here. There is an Options Regulatory Fee that applies to both option buy and sell transactions. The fee is subject to change. Other exclusions and conditions may apply. Employee equity compensation transactions and accounts managed by advisors or intermediaries through Fidelity Institutional® are subject to different commission schedules. 8. You could lose money by investing in a money market fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Fidelity Investments and its affiliates, the fund’s sponsor, is not required to reimburse the fund for losses, and you should not expect that the sponsor will provide financial support to the fund at any time, including during periods of market stress. 9. The Cash Balance in the Fidelity Cash Management Account is swept into an FDIC-Insured interest-bearing account at one or more program banks and, under certain circumstances, a Money Market mutual fund (the "Money Market Overflow"). The deposits swept into the program bank(s) are eligible for FDIC Insurance, subject to FDIC insurance coverage limits. Balances that are swept to the Money Market Overflow are not eligible for FDIC insurance but are eligible for SIPC coverage under SIPC rules. At a minimum, there are 20 banks available to accept these deposits, providing for up to $5,000,000.00 of FDIC insurance. If the number of available banks changes, or you elect not to use, and/or have existing assets at, one or more of the available banks, the actual amount could be higher or lower. All assets of the account holder at the depository institution will generally be counted toward the aggregate limit. For more information on FDIC insurance coverage, please visit www.FDIC.gov. Customers are responsible for monitoring their total assets at each of the Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits at Program Banks are not covered by SIPC. For additional information please see the Fidelity Cash Management Account FDIC Disclosure Document (PDF). 10. You are always able to take money from your IRA. Some withdrawals may be taxable and some may be subject to a 10% early withdrawal penalty. If you are over age 59½, you aren't subject to a 10% early withdrawal penalty. Other exemptions may apply. 11. With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. Please consult with your tax advisor regarding your specific situation. 12. 529 Participants may take up to $10,000 in distributions tax free per beneficiary for tuition expenses incurred with the enrollment or attendance of the designated beneficiary at a public, private, religious elementary or secondary school, certain apprenticeship costs, or student loan repayments per taxable year. The money may come from multiple 529 accounts; however, the $10,000 amount will be aggregated on a per beneficiary basis. Any distributions in excess of $10,000 per beneficiary may be subject to income taxes and a federal penalty tax. Some states do not conform with federal tax law. Please check with your home state to determine if it recognizes the expanded 529 benefits afforded under federal tax law, including distributions for elementary and secondary education expenses, apprenticeship programs, and student loan repayments. You may want to consult with a tax professional before investing or making distributions. 13. The new beneficiary must be an eligible family member of the original beneficiary to avoid federal income taxes and the 10% federal penalty. A family member is a person who has one of the following relationships with the original beneficiary: (1) son or daughter; (2) stepson or stepdaughter; (3) brother, sister, stepbrother, or stepsister; (4) father, mother, or an ancestor of either; (5) stepfather or stepmother; (6) son or daughter of a brother or sister; (7) brother or sister of a father or mother; (8) son or daughter-in-law, father or mother-in-law, brother or sister-in-law; (9) spouses of the individuals listed in (1)–(8) or the spouse of the beneficiary; and (10) any first cousin. Note that a new account will be required in order to change the beneficiary. 14. Beginning January 2024, the Secure 2.0 Act of 2022 (the "Act") provides that you may transfer assets from your 529 account to a Roth IRA established for the Designated Beneficiary of a 529 account under the following conditions: (i) the 529 account must be maintained for the Designated Beneficiary for at least 15 years, (ii) the transfer amount must come from contributions made to the 529 account at least 5 years prior to the 529-to-Roth IRA transfer date, (iii) the Roth IRA must be established in the name of the Designated Beneficiary of the 529 account, (iv) the amount transferred to a Roth IRA is limited to the annual Roth IRA contribution limit, and (v) the aggregate amount transferred from a 529 account to a Roth IRA may not exceed $35,000 per individual. It is your responsibility to maintain adequate records and documentation on your accounts to ensure you comply with the 529-to-Roth IRA transfer requirements set forth in the Internal Revenue Code. The Internal Revenue Service (“IRS”) has not issued guidance on the 529-to-Roth IRA transfer provision in the Act but is anticipated to do so in the future. Based on forthcoming guidance, it may be necessary to change or modify some 529-to-Roth IRA transfer requirements. Please consult a financial or tax professional regarding your specific circumstances before making any investment decision.

15. If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, Arizona, or Connecticut resident, you may want to consider, before investing, whether your state or the beneficiary's home state offers its residents a plan with alternate state tax advantages or other state benefits such as financial aid, scholarship funds and protection from creditors.


The UNIQUE College Investing Plan, U.Fund College Investing Plan, DE529 Education Savings Plan, AZ529, Arizona's Education Savings Plan, and the Connecticut Higher Education Trust (CHET) 529 College Savings Plan - Direct Plan are offered by the state of New Hampshire, MEFA, the state of Delaware, and the state of Arizona with the Arizona State Treasurer's Office as the Plan Administrator and the Arizona State Board of Investment as Plan Trustee, and the Treasurer of the state of Connecticut respectively, and managed by Fidelity Investments. Units of the portfolios are municipal securities and may be subject to market volatility and fluctuation.

Please carefully consider the plan's investment objectives, risks, charges, and expenses before investing. For this and other information on any 529 college savings plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view one online. Read it carefully before you invest or send money.

 16. Zero account minimums and zero account fees apply to retail brokerage accounts only. Expenses charged by investments (e.g., funds, managed accounts, and certain HSAs) and commissions, interest charges, or other expenses for transactions may still apply. See Fidelity.com/commissions for further details. 17. For a distribution to be considered qualified, the 5-year aging requirement has to be satisfied, and you must be age 59½ or older or meet one of several exemptions (disability, qualified first-time home purchase, or death among them).

Investing involves risk, including risk of loss.

Past performance is no guarantee of future results.

The third parties mentioned herein and Fidelity Investments are independent entities and are not legally affiliated.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

 The Fidelity Investments and pyramid design logo is a registered service mark of FMR LLC. The third-party trademarks and service marks appearing herein are the property of their respective owners.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

 © 2024 FMR LLC. All rights reserved. 1156506.1.0