How to Transfer an Inherited IRA from Fidelity to Betterment

Transferring an inherited IRA can feel overwhelming, especially when you’re trying to protect the account’s tax-advantaged status. If you’re moving an inherited IRA from Fidelity to Betterment, the process requires extra care and attention to detail — but it’s manageable with proper planning.

At Carry, we want to make financial decisions feel more manageable, even if you’re handling them outside our platform.  This guide breaks down the steps to transfer your inherited IRA from Fidelity to Betterment smoothly and penalty-free. Please note that while we try to provide the most up-to-date information, these processes are subject to change without notice, so be sure to check with your provider before moving forward. 

Quick Transfer Checklist

Before getting started, make sure you have the following ready:

✅ Death certificate of the original IRA holder
✅ Fidelity inherited IRA account number
✅ Government-issued photo ID
✅ Most recent IRA statement from Fidelity
✅ Completed transfer authorization forms
✅ Proof of relationship to the original account holder
✅ Direct communication with Betterment’s rollover team

Step 1: Prepare for the Transfer

Moving an inherited IRA isn’t the same as transferring a regular retirement account. In this case, the goal is to protect the tax treatment and unique rules tied to the original account. Before initiating the transfer:

✅ Confirm that you’re working with the inherited IRA version of the account
✅ Gather all required paperwork in advance
✅ Understand that inherited IRAs are highly regulated

Each step must be executed precisely to avoid tax implications or disruptions to the account’s structure.

Step 2: Use a Direct Transfer

The safest method to move inherited IRA funds is through a trustee-to-trustee direct transfer. This ensures the account retains its tax-deferred status and  prevents it from being treated as a taxable distribution.

To ensure a smooth transfer:

✅ Do not take possession of the funds
✅ Do not initiate a rollover — this could result in tax consequences
✅ Contact Betterment’s rollover team at rollovers@betterment.com to start the process

Betterment will guide you through the specific documentation needed to handle inherited IRA accounts.

Step 3: Gather Required Documents

Before initiating the transfer, make sure these items are ready:

✅ Death certificate of the original account holder
✅ Your Fidelity inherited IRA account number
✅ A valid government-issued ID
✅ Your most recent IRA statement from Fidelity
✅ Completed transfer authorization forms
✅ Proof of your relationship to the original account holder

Organizing everything ahead of time helps reduce delays and ensures a smoother transition.

Step 4: Understand the Rules Around Inherited IRAs

Inherited IRAs come with unique rules. Your relationship to the deceased, the age of the original account holder at the time of death, and the type of IRA will all affect the process.

✅ Understand required minimum distribution (RMD) rules
✅ Be aware of timing considerations — some RMDs may still apply during the transfer
❌ Missing an RMD deadline could result in penalties

📝 Tip: When in doubt, speak with a tax advisor or financial planner who understands inherited IRA rules.

Step 5: Know the Timeline and Fees

Most inherited IRA transfers can take 14–21 business days, depending on how quickly both providers respond and whether your documentation is complete.

📝 Tip: Save all correspondence and documents related to the transfer for your records.

Fees:

✅ Betterment charges a $75 transfer fee.

✅ Fidelity generally does not charge for incoming SEP IRA transfers

✅Verify if any account closure or administrative fees apply before initiating the transfer

Step 6: Avoid Tax Mistakes

✅ Direct trustee-to-trustee transfers are not taxable if completed correctly.
✅ The inherited IRA must retain its designation throughout the process.
❌ Taking a check or deposit directly could result in the entire account becoming taxable.

✏️ Hypothetical Example: If you mistakenly accept a check from Fidelity and don’t deposit it into another inherited IRA within 60 days, the IRS may treat it as a full distribution and tax it accordingly. 

Step 7: Verify and Finalize the Transfer

Once you’ve submitted everything:

✅ Confirm that Betterment supports your specific inherited IRA type
✅ Check that all account details and beneficiary info are correctly transferred
✅ Follow up with both Fidelity and Betterment to ensure the process is complete

Final Thoughts on Transferring Your Inherited IRA

Transferring an inherited IRA from Fidelity to Betterment requires more documentation and caution than a typical IRA transfer, but it’s very manageable with a direct transfer and the right support.

The main takeaways:

✅ Use a direct transfer to avoid tax consequences
✅ Maintain the inherited status of the account throughout the process
✅ Communicate clearly with both institutions and keep documentation

This type of transfer is highly personal and rule-dependent, so don’t hesitate to ask for help or consult a professional if needed.

📌 If you need any additional guidance, be sure to check out these related articles:

IRA Transfer Best Practices

IRS | Retirement topics – Required minimum distributions (RMDs)

Inherited IRAs: How they work and what to do with them

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Disclaimer:

The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.

The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. All investments involve the risk of loss, and past performance does not guarantee future results. Investment growth or profit is never a guarantee. All statements and opinions included on the Carry Learning Center are intended to be current as of the date of publication but are subject to change without notice.

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