Some individuals don’t do enough to plan for their retirement—but others almost do too much, accumulating multiple retirement accounts over the course of a career. Certainly, it is not unusual for a person to have a 401(k) and potentially a couple of IRAs. The question is, is there any merit to rolling all of those accounts together—consolidating them into a single retirement account?
That’s ultimately a question that must be handled on an individual basis, alongside your financial planner. Consolidating accounts can sometimes incur some penalties and tax burdens. With that said, there can often be significant advantages to rolling all of your retirement assets into a single IRA.
Reasons to Consolidate
Here are a few of those advantages:
It makes it easier to manage investments. Once you retire, you will want to coordinate withdrawals from your retirement accounts so that you get a reasonable weekly or biweekly “paycheck” without depleting your retirement reserves. This is much easier to do when you have a single account.
It might allow you to minimize the fees you pay. You’ll likely pay some kind of a fee to the custodian of your IRA—and the more accounts you have, the more fees you’ll be on the hook for. Streamlining your retirement investment will enable you to drop some of those fees.
It makes it easier to keep up with your minimum annual distributions. Once you hit a certain age, you’ll be required to take money out of your IRA each year—and if you don’t, you could be slapped with a penalty. Having a single IRA, as opposed to several of them, makes it much easier to stay on top of these distributions.
Combining accounts will free up your time. Ultimately, with a single retirement account, you’ll have less paperwork, fewer statements, less documentation arriving in the mail… in short, you’ll have more free time to focus on other things.
Consolidate Your Retirement Accounts Today?
Please be sure to speak to your advisor to carefully consider the differences between your company retirement account and investment in an IRA. These factors include, but are not limited to changes to availability of funds, withdrawals, fund expenses, fees, and IRA required minimum distributions.
To start the conversation about rolling your IRA and 401(k) accounts together, give us a call today. The Stonepath Wealth Management team would love to walk you through the ins and outs of the consolidation process. Contact us today!