Fidelity Announces Additional Roth IRA Conversion Resources and Guidance for Americans Seeking to Minimize Taxes in Retirement

New Roth Conversion Evaluator Now Available to Help Investors Determine if Converting to a Roth IRA is Right For Them

• Press Release
• Source: Fidelity Investments
• On 8:50 am EST, Thursday November 5, 2009

BOSTON--(BUSINESS WIRE)--Fidelity Investments today announced the addition of new resources to its comprehensive Roth IRA Conversion guidance initiative to help investors determine if converting retirement assets to a Roth IRA makes sense within the context of their overall retirement plan. The resources include a new Roth Conversion Evaluator, additional content on Fidelity.com and guidance from Fidelity’s financial representatives who have been trained extensively to help investors make informed decisions for their personal situation.

A recent study¹ by Fidelity found that nearly half of investors (47 percent) who don’t own a Roth IRA and earn in excess of $100,000 annually are actively looking for ways to minimize taxes in retirement. While investors may not know what their tax rate will be in retirement, tax diversification within their overall retirement portfolio and the use of a Roth IRA may help them better minimize taxes on distributions during retirement.

In order to help investors determine if converting to a Roth IRA may be right for them, Fidelity has enhanced its suite of online retirement planning resources. The new Roth Conversion Evaluator will help investors determine whether or not a full or partial Roth IRA conversion makes sense for them in the context of their overall retirement plan.

As with Fidelity’s other retirement tools such as myPlan Retirement Quick Check, Retirement Income Planner and Portfolio Review, the Roth Conversion Evaluator can be used online by all investors, whether they are a Fidelity customer or not (www.fidelity.com/rothevaluator), or with assistance from a trained Fidelity representative either on the phone or at any of Fidelity’s 132 local Investor Center branches.

“Fidelity believes that the opportunity to convert to a Roth IRA is an important consideration for all investors, particularly those who will become eligible for a conversion in 2010,” said Chris McDermott, senior vice president, investor education, retirement and financial planning, Fidelity Investments. “Every investor should weigh a variety of tax strategies when saving for retirement. Saving in a Roth IRA, which offers tax-free growth potential and tax-free withdrawals at retirement, if certain conditions are met, can be an effective part of a broader plan to distribute income and minimize taxes.”

New Tool to Help Roth Conversion Decision

To help investors who are considering converting retirement assets, like those found in a Traditional IRA or 401(k) with a former employer, into a Roth IRA, Fidelity‘s new Roth Conversion Evaluator guides investors to:

1. Estimate current and future tax situations. Based on a series of basic questions, users can quickly receive an assessment to determine if they may benefit from a Roth IRA conversion. Users who have access to additional information, such as their recent tax filing and investment strategies, can adjust values to more closely reflect their personal situation.

2. Evaluate “how much” to convert. Fidelity believes that users should minimize their tax cost when considering an amount to convert to a Roth IRA. This may be the entire amount of eligible balances, but is often likely to be a lesser amount or partial conversion. The Evaluator helps users explore this very important aspect of a conversion by allowing them to see the possible tax and growth impact of converting various amounts of their retirement balances to a Roth IRA.

3. Explore sensitivity to key factors. The Roth Conversion Evaluator is designed to help illustrate how changes in key factors, like tax rates or withdrawal rates, might affect the outcome of an investor’s Roth IRA conversion decision.

“In under 20 minutes, an investor can use the Evaluator, with a trained Fidelity representative or on their own, to determine if converting to a Roth IRA makes sense,” said McDermott. “The calculator doesn’t assume investors have all the answers regarding their tax rates or the more fundamental question of how much to convert. We built the Evaluator to provide guidance in these areas as they determine answers to these tough questions.”

Due to the complexity of the decision, it’s important that investors seek guidance when evaluating whether a Roth IRA conversion is right for them. In fact, Fidelity’s study found that most investors (82 percent) would get assistance with the conversion process, either from a financial advisor or from a tax or estate planning specialist. Fidelity encourages all investors to consult a tax advisor before making a decision.

New Online Content will Focus on Tax Efficiency in Retirement

To help educate investors on the benefits of building a tax-diversified retirement portfolio, Fidelity has ongoing Roth IRA content planned for its online weekly, monthly and quarterly investor publications.

As part of this initiative, Fidelity just published a Viewpoints article on Fidelity.com that specifically addresses tax diversification in retirement. The article outlines three basic options with distinct tax benefits, including deferring taxes until retirement by investing in a traditional IRA or workplace plan; paying taxes now and benefiting from potential tax-free growth by investing in a Roth IRA, if eligible, or a Roth 401(k) if available; and using a combination of investment vehicles to pay some taxes now and defer some until retirement. As well, this article helps address the critical question of when an investor should pay taxes on his or her retirement assets. The article is available at www.fidelity.com/taxdiversification.

Fidelity is committed to providing investors with the information they need to make an informed decision around the Roth IRA conversion opportunity, including a recent article on Roth IRA conversions (www.fidelity.com/rothpov), enhanced educational seminars, and new online content (www.fidelity.com/rothconversion) that includes clear next steps to complete a Roth IRA conversion. As well, Fidelity representatives are ready to help investors with the decision making process both on the phone at 1-800-FIDELITY or in-person at any of the company’s 132 investor centers across the United States.

About Fidelity Investments

Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.1 trillion, including managed assets of nearly $1.5 trillion, as of Sept. 30, 2009. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to over 20 million individuals and institutions as well as through 5,000 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity, Fidelity Investments and the Pyramid design logo are registered service marks of FMR LLC.

The results of the Fidelity Roth IRA Conversion Study may not be representative of all retirement plan owners meeting the same criteria as those surveyed for this study.

The Roth Evaluator is intended to serve as an educational tool and should not be construed as tax advice. Your circumstances are unique; therefore if you believe that you need personalized tax advice, you should consult a tax advisor. Because your circumstances will probably change overtime, it is a good idea to review your financial strategy periodically to be sure it continues to fit your situation.

Fidelity Brokerage Services LLC, Member NYSE, SIPC

900 Salem Street, Smithfield, RI 02917

535724.1.0

¹ Data was collected between 8/14/09 and 8/28/09, by Knowledge Networks and Data Star, Inc., through a national online survey of 800 retirement plan owners, half of whom have household incomes of $100,000 a year or more. Neither Knowledge Networks nor Data Star, Inc., is affiliated with Fidelity Investments.

Fidelity Investments
Corporate Communications, 617-563-5800